KGL RESOURCES LIMITED — Capital/Financing Update 2005

Feb 8, 2005

KA KENTOR GOLD LTD

prospéctus 2005

For the issue of 12,000,000 Shares at an issue price of \$0.50 each to raise (16,000,000)

Lead Manager and Underwriter: Tolat is Nost Limited Oo Manager Melbourne Capital Limited Financial Acviser

Investor Pescurees Limited

Angertant Information

This is an important document that strong the read in its antitely. If you do not understand it you should consult your professional adviser. Investment in Shares of Kentor Gold Lid should be regarded as stesilatte.

ENTOR GOLD LTD

investment highlights

Kentor is exploring in the Kyrgyz section of the Tien Shan, host to world-class gold denosits. Traversing Central Asia, through Uzbekistan, Tajikistan and the Kyrgyz Republic, the Tien Shan mountain range defines a major metallogenic province which contains many world-class orogenic gold deposits, including Muruntau (170 Moz*) in Uzbekistan and Kumtor (12 Moz*) in the Kyrgyz Republic, two of the world's ten biggest gold deposits.

The Kyrgyz Republic is well endowed with mineral resources. In addition to Kumtor, larger deposits include Makmal (1 Moz*), Taldybulak-Levoberezhni (3 Moz*) and Jerooy (3 Moz*) and recent gold discoveries have been made in the Chatkal region. Whilst the prospective Tien Shan metallogenic belt in the Kyrgyz Republic is rich in data from the Soviet era, it lacks the interpretation and exploration that can be applied with modern technology.

Kentor's strategic Ertash Licence partially surrounds Centerra Gold's Kumtor Mine. The Kumtor mine, situated within an area totalling approximately 37,625 hectares. has produced 5 million ounces since start-up in 1997 at a reported cash cost of approximately US\$170 per ounce.

Centerra Gold Inc, owner of the Kumtor mine, successfully listed on the Toronto Stock Exchange in 2004 (TSE code: CG). Ertash, Kentor's largest granted tenement, covers 1,790 km² including some 60 km of strike over the Kumtor stratigraphic trend. Numerous high priority geological and geochemical anomalies displaying the key indicators of a gold deposit have been identified within Ertash. Field work using MMI geochemistry has identified a series of highly anomalous gold targets interpreted as bedrock sourced. These are on a scale that gives Kentor encouragement that the targets are prospective for the giant orogenic gold deposits characteristic of this region. Kentor intends to commence drilling on these targets in 2005.

In addition to Ertash, Kentor has been exploring 3 tenements covering 730 km² and has a 40% interest in another exploration licence of 149 km². In December 2004, 3. additional licences were granted, covering 1,006 km² of carefully selected porphyry gold-copper target areas in the Talas region of the Kyrgyz Republic.

Proiect generation integrates ASTER satellite image mapping with Soviet era data. Kentor has utilised approximately 400,000 geochemical multi-element data points, structural information and geology to develop a comprehensive Geographic Information System. ("GIS"), allowing Kentor's geologists to rapidly focus the project generation and exploration effort onto areas with the highest prospectivity to host gold deposits.

Kentor has operated in the Kyroyz Republic since 1998. It is well integrated as a corporate citizen into the business life of the country. Operating company CJSC Kentor uses its minority shareholder, the state owned Kyrgyz Geophysical Expedition ("KGE") as the preferred contractor for field operations. leveraging KGE's local expertise to source appropriate personnel and materials and implement exploration programs on the ground.

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Kentor has the core expertise to discover major gold deposits. Kentor's board of directors and senior management deliver a strong balance of exploration, mining and corporate expertise. The board comprises 2 non-executives, chairman John Barr and executive director Andrew Daley, and 2 executive directors, managing director David Royle and director Hugh McKinnon. David Royle has over 30 years experience in exploration and management. Hugh McKinnon has lived in the Kyrgyz Republic for more than 7 years and heads Kentor's Bishkek office with

Orozbai Tohtonazarov, the General Director of CJSC Kentor and a Director of the Kyrgyz Geophysical Expedition. Supporting the management group, CJSC Kentor's Bishkek office has 6 staff providing year-round support, and during the exploration field season, this increases by up to 60 KGE staff and contractors including geologists, surveyors, field hands, drivers and medical staff.

In addition to Kentor management, Global Ore Discovery Pty Ltd ("Global Ore") consults to Kentor on an exclusive basis in the Kyrgyz Republic. Global Ore's principal geologists Steven Nano and Daryl Nunn previously worked under David Royle at MIM Holdings Ltd. Global Ore provides Kentor with access to state-of-the-art image processing and interpretation, resulting in multiple target generation and prioritisation, and also assists with supervision of in-country fieldwork during the summer exploration season.

table of contents

section

page

	Investment Highlights	inside cover
	Important Notice	3
	Message from the Chairman	4
1	Investment Summary	5
2	Details of the Offer	9
3	The Company and Projects	15
4	Board of Directors and Senior Management	29
5	The Kyrgyz Republic	33
6	Investment Risks	37
7	Independent Geologist's Report	41
8	Investigating Accountant's Report	79
9	Legal Report	91
10	Additional Information	103
11	Glossary	119
	Application Form	123
	Corporate Directory	inside back cover

Important notice

This Prospectus is dated 31 January 2005 and was lodged on 31 January 2006 with the Australian Securities & Investments Commission ("ASIC"). The Company will apply to the Australian Stock Exchange Limited ("ASX") within seven days of the date of this Prospectus for admission to the official list of the ASX and permission for quotation on the ASX of both the Shares offered by this Prospectus and existing Shares of the Company.

ASIC and ASX take no responsibility for the contents of this Prospectus. No securities will be allotted or issued on the basis of this Prospectus later than 13 months after the date of issue of this Prospectus. The Corporations Act prohibits the Company from processing any Applications received until after the expiration of the seven day period after the date of lodgement of this Prospectus ("Exposure Period"). The Exposure Period may be extended by ASIC by up to a further seven days. Applications received during the Exposure Period will not be processed until after the expiry of that period. No preference will be given to Applications received by Kentor during the Exposure Period.

This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make an offer. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. No person is authorized to give any information or make any representation in connection with the Offer described in this Prospectus which is not contained in this Prospectus. This Prospectus will be issued in paper form and is available in electronic form on the Company web site at www.kentorgold.com.au. The Offer of securities pursuant to this Prospectus in electronic form is available only to persons receiving an electronic form of this Prospectus within Australia.

An investment in Kentor is highly speculative, therefore before deciding to invest in Kentor, potential investors should read this Prospectus in its entirety and, in particular, consider the risk factors set out in Section 6 that could affect the performance of Kentor. You should carefully consider these factors in light of your personal circumstances (including financial and taxation issues) and seek professional advice from your accountant, stockbroker, lawyer or other professional advisor before deciding whether to invest.

Certain abbreviations and technical and defined terms used throughout this Prospectus are set out in Section 11. All references to currency are in Australian dollars unless otherwise specified. Dollar amounts in this Prospectus are exclusive of GST, unless otherwise specified. The photographs in this Prospectus do not depict the operations of the Company unless specified.

Indicative Dates

Prospectus lodged with ASIC Offer opens (Opening Date) Offer closes (Closing Date) Expected despatch of transaction confirmation statements Expected commencement of trading of Shares on ASX

31 January 2005 8 February 2005 4 March 2005 11 March 2005 16 March 2005

The above dates are indicative only and may vary. The Company, in consultation with the Underwriter, reserves the right to vary the Opening Date and Closing Date of the Offer without prior notice.

message from the chairman

On behalf of the Directors, I am pleased to present this Prospectus for an initial public offering and to invite you to become a Shareholder in Kentor Gold Ltd. Under this Prospectus, Kentor is offering 12,000,000 Shares for subscription at an issue price of \$0.50 per Share, to raise \$6 million. The net proceeds of the Offer will be primarily applied to exploration of the Company's tenements and project evaluation in the Kyrgyz Republic.

Each year the world's top six publicly listed gold producers are faced with major depletion of their gold reserves as they produce over 30 million ounces of gold. To replace these reserves, they must find major new deposits. With few geologically attractive under-explored areas left in the world, there will almost certainly be significant exploration in the remaining frontier areas falling into this category.

Kentor has, since its formation in 1998, focussed its exploration on one such area, the Tien Shan belt in the Kyrgyz Republic. One of the last great, relatively under-explored, gold belts of the world, the Tien Shan belt stretches over 3,500km from Uzbekistan (the home of one of the world's largest gold deposits, Muruntau) through the Kyrgyz Republic to western China and Mongolia. Although extensive and valuable geochemical and other surface sampling of the Tien Shan area was carried out during the Soviet era, so far as the Directors are aware the data from this sampling has never been interpreted by integrating it into a digital database together with modern Western satellite imaging techniques. This offers an outstanding opportunity in this highly prospective area for Kentor to identify deposits that do not outcrop.

The Directors believe that Kentor, through its 80% owned Kyrgyz operating company CJSC Kentor, has amassed a significant and strategic tenement position, including the 1.790 km² Ertash tenement which partially surrounds the 12 million ounce Kumtor gold mine owned and operated by Centerra Gold, Inc. Indeed the tenement package is considered by the Independent Geologist to have outstanding prospectivity for the discovery of significant new mineralisation

During the last two field seasons (2003 and 2004), the Company has undertaken intensive fieldwork, primarily on the Ertash tenement, including the use of MMI geochemistry technology. Preliminary indications are that the results are very promising, with gold mineralisation identified in numerous rock chip and stream sediment samples. Of even more significance is the identification of an outstanding series of "gold in soil" anomalies extending through the Akbel and Choloktor areas along trend to the south-west of Centerra's Kumtor mine. These targets are scheduled to be drilled in 2005.

The Company's prospective ground holdings, advanced project generation skills, established local relationships and experienced management group give us confidence that we will continue to advance our existing properties towards the goal of a significant gold discovery in addition to identifying new areas for tenement acquisition, exploration and development of mineral deposits.

Before you make your investment decision, please carefully read this Prospectus in its entirety and seek financial advice, if required. Once again, on behalf of the Directors, I invite you to subscribe for Shares in Kentor and look forward to your participation in its growth.

Yours faithfully

John Barr AM Chairman

investment summary

This section provides a summary of information relating to Kentor and the Shares offered by this Prospectus. It is not intended to provide complete information and prospective investors should read this Prospectus in full.

1.1 The Company

Kentor Gold Ltd was established in May 1998, with the intention of exploring and developing gold properties in the Kyrgyz Republic.

Kentor's vision is to build wealth for its Shareholders through project generation and the discovery of multi-million ounce gold deposits primarily in the Kyrgyz segment of the Tien Shan metallogenic belt of Central Asia. The Tien Shan is host to some of the world's largest gold deposits, including the Muruntau mine (170 Moz*) in Uzbekistan and the Kumtor mine (12 Moz*) in the Kyrgyz Republic, yet remains under-explored relative to other major gold provinces of the world.

Kentor operates in the Kyrgyz Republic through CJSC Kentor, a Kyrgyz registered Closed Joint Stock Company, 80% owned by Kentor and 20% owned by the state owned Kyrgyz Geophysical Expedition.

The Company has licence interests in 3.675 km² of prospective ground in the Kyroyz Republic including the Ertash exploration licence partially surrounding the Kumtor gold mine along the Kumtor Fault Zone.

Kentor's strategy is to systematically build and explore a tenement portfolio via multi-streamed target generation and application of leading edge technology, with emphasis on rapidly screening prospects and identifying those that may host significant gold orebodies.

1.2 Capital Structure

Set out below is the Company's capital structure summarising the issued and paid up capital of the Company prior to and at the time of the completion of the Offer. On completion, the largest current Shareholder will hold 6.52% of the Company's issued capital and the top 20 current Shareholders will hold 48.1%, assuming they do not acquire more Shares in the Offer (see Section 10.3).

	Number of Issued Shares	Paid up Issued Canital	% owned on Completion of Offer
Shares on issue at the date of this Prospectus	22.151.132	\$3.572.197	64.9%
Shares offered pursuant to this Prospectus	12.000.000	\$6,000,000	-35.1%
Issued capital on completion of the Offer	34.151.132	\$9.572.197	100.0%

The Company has 10,186,225 unlisted options to acquire Shares on issue at the date of this Prospectus as set out in Section 10.4. Of this number, 7,919,558 options have been issued to seed investors, employees and contractors for seed capital and the provision of services. In addition, 2,266,667 executive options have been issued - 1,366,667 options to a company associated with managing director, David Royle and 900,000 options to executive director Hugh McKinnon (see Sections 10.4 and 10.6). The Company also has a potential obligation to Global Ore to issue 266.667 options as a bonus for signing the 2006 Consultancy Agreement (see Section 10.1.3).

Some of the Shares and options on issue at the date of this Prospectus will constitute Restricted Securities for the purpose of the Listing Rules (see Sections 2.8 and 10.5).

Further details of Shares and options issued to directors are set out in Section 10.6 of this Prospectus.

1.3 Purpose of the Offer

The proceeds of the Offer will be applied to exploration of the Company's tenements and project generation in the Kyrgyz Republic and other prospective parts of the Tien Shan belt in Central Asia consistent with the Company's Kyrgyz exploration program, together with working capital for the Company as set out below. Table 1 below summarises the Company's proposed use of funds raised by the Offer while Table 7 in Section 3.6 sets out the use of funds in more detail. The total expenses associated with the Offer are estimated at \$540,000 (see Section 10.11).

Table 1: Use of Funds Summary - 2005-2006 Budget

	Exploration on Projects Exploration Control Activity , , , , , , , , , , , , , , , , , , ,		2005 Budget 2006 Sudget 191 - Jean Marie (9)
CJSC Kentor Tenements	Exploration Evaluation, geochemistry geophysics & diamond drilling	1.357800	1.636.600
CJSC Kyldoo JV Tenement	Exploration: Evaluation of work completed by tarm-in party.	30700	nil
Tien Shan generative & reconnaissance	Exploration Image processing, tenement accursition, field assessment (including an allowance for diamond drilling of one prospect)	657.000	698 100
Sub-Total Exploration	(m. 1952), in matematica est.	2,045,500	2,334,700
Administration and management		595.400	555.000
Costs of Otter		540.000	лW
Budgeted Expenditure (1)		3,488,900	2.829,780

(1) Budgeted expenditure exceeds the amount to be raised by the Offer. The balance of budgeted expenditure will be met out of the Company's existing funds. The Company commenced 2005 with approximately \$675.000 cash at bank.

1.4 Risks

An investment in Shares issued pursuant to this Prospectus should be regarded as speculative. In addition to the general risks of investing in exploration companies, there are specific risks associated with an investment in Kentor that are set out in Section 6 of this Prospectus.

section 2

details of the offer

2.1 Description of the Offer

Pursuant to this Prospectus, Kentor Gold Ltd is offering for subscription 12,000,000 Shares at an issue price of fifty cents (\$0.50) per Share payable in full on application, to raise \$6 million. All Shares being offered pursuant to this Prospectus will rank equally with each other and will rank equally with existing Shares on issue at the date of this Prospectus. The rights attaching to the Shares are described in Section 10.2. If for any reason this amount is not raised within three months of the date of this Prospectus then all Applications will be dealt with in accordance with the Corporations Act.

2.2 How to Apply

An Application for Shares will only be accepted on an Application Form attached to this Prospectus in either its paper or electronic format. Applications must be for a minimum of 4,000 Shares (\$2,000) and thereafter in multiples of 1,000 Shares (\$500).

The Prospectus is available in electronic form on the Company's website at www.kentorgold.com.au. The Offer constituted by the Prospectus in electronic form is available only to persons receiving the Prospectus within Australia. Applications may only be made an Application Form attached to or accompanying the Prospectus or as downloaded in its entirety with the electronic version of this Prospectus. There is no facility for online applications.

The Corporations Act prohibits any person passing on to another person the Application Form unless they accompany the complete and unaltered version of this Prospectus.

Any person may obtain a printed copy of the Prospectus free of charge by contacting the Company.

Completed Application Forms together with the accompanying Application Moneys may be lodged at any time after the lodgement of this Prospectus but will only be processed after the expiry of the Exposure Period and no later than the Closing Date. Cheques must be in Australian dollars and drawn on an Australian branch of an Australian bank and must be made payable to "Kentor Gold Share Offer" and crossed "Not Negotiable". The Company reserves the right, in conjunction with the Underwriter, to extend the Offer or to close the Offer early without notice.

Payment for the Shares is to be made in full on application. Sufficient cleared funds must be held in an applicant's account, as cheques returned unpaid may not be re-presented and may result in an Application being rejected.

Completed Application Forms and accompanying cheques or bank drafts must be mailed or delivered to the Share Registry as set out below:

If delivered by mail: Kentor Gold Share Offer ASX Perpetual Registrars Limited GPO Box 2785 Melbourne VIC 3001

If delivered by hand: Kentor Gold Share Offer ASX Perpetual Registrars Limited Level 4, 333 Collins Street Melbourne VIC 3000

No brokerage or stamp duty is payable by applicants under the Offer.

Submission of Application Forms together with Application Moneys constitutes an irrevocable offer by the applicant to the Company to subscribe for Shares on the terms and conditions set out in this Prospectus and in the Application Form.

2.3 Exnosure Period

In accordance with Chapter 6 D of the Corporations Act, this Prospectus is subject to an Exposure Period of 7 days from the date of lodgement with ASIC. This period may be extended by ASIC for further period of up to 7 days.

Applications received prior to the expiration of the Exposure Period will not be processed until the Exposure Period has expired. No preference will be conferred on Applications received during the Exposure Period merely because of the time at which they were received and all Applications received during the Exposure Period will be treated as if they were received simultaneously on the date the Offer opens.

2.4 Allocation of Shares

The Company will allot and issue Shares that are the subject of successful Applications as soon as possible after the Closing Date and the granting of ASX permission for official guotation of the Shares.

The Company, in consultation with the Underwriter, reserves the right to reject any Application or to allocate to any applicant a lesser number of Shares than the number for which the applicant applies or to accept a late Application. If the number of Shares allotted is less than the number applied for, the surplus Application Moneys will be refunded within 14 days of the allotment date. Interest will not be payable on Application Moneys refunded to applicants.

In accordance with the Corporations Act, all Application Moneys for Shares will, before the allotment and issue of Shares, be held by the Company in trust in a bank account established solely for the purpose of depositing Application Moneys received.

2.5 Lead Manager and Underwriter

Tolhurst Noall Limited has been appointed as lead manager and underwriter of the Offer, and Melbourne Capital Limited has been appointed as co-manager of the Offer. For a summary of the terms and conditions of the underwriting agreement refer to Section 10.1.5 of this Prospectus.

2.6 ASX Listing

Within 7 days of the date of this Prospectus, the Company will apply to the ASX to be admitted to the Official List of the ASX and for quotation of the Shares issued under this Prospectus and the existing Shares other than those existing Shares that are, or that the ASX is likely to treat as, Restricted Securities as defined in the Listing Rules.

The fact that the ASX may admit the Company to its Official List is not to be taken in any way as an indication by the ASX of the merits of the Company or the Shares offered by this Prospectus. The ASX, its officers and employees take no responsibility for the contents of the Prospectus, including the expert reports that it contains.

If the Shares are not granted official quotation by ASX within three months after the date of this Prospectus, the Company will refund all Application Moneys in full. No interest will be paid on Application Moneys that are refunded.

It is the responsibility of each applicant to confirm their allocation of Shares before trading in them. Any person who sells Shares before receiving confirmation of their allocation of Shares in the form of a transaction confirmation statement does so at their own risk. The Company and the Underwriter disclaim all liability, in negligence or otherwise, to any person who trades the Shares before receiving a transaction confirmation statement.

2.7 CHESS

The Company will apply for admission to participate in the Clearing House Electronic Subregister System ("CHESS") in accordance with the Listing Rules and the ASTC Settlement Rules. On admission to CHESS, the Company will operate an electronic issuer sponsored subregister and an electronic CHESS subregister. The two subregisters will together make up the Company's principal register of securities.

Successful applicants will be issued with a transaction confirmation statement setting out the number of Shares issued to them under this Prospectus. The transaction confirmation statement will also set out the Security Reference Number or Holder Identification Number for the respective issuer sponsored or CHESS holding.

At the end of the month following the allotment. CHESS (acting on behalf of the Company) will provide all Shareholders with a holding statement that confirms the initial transactions on their holding. A holding statement (whether issued by the Company or CHESS) will also provide details of each Shareholder's Shareholder Reference Number (in the case of a holding on the issuer sponsored subregister) or Holder Identification Number (in the case of a holding on the CHESS subregister). Following distribution of these initial transaction confirmation statements to all Shareholders, a holding statement will only routinely be provided to a Shareholder at the end of any subsequent month during which the balance of the Shareholder's holding of securities changes. Existing Shareholders, following quotation of existing Shares by the ASX (other than Shares designated by the ASX as Restricted Securities), will be issued holding statements to replace the Share certificates currently held by them.

2.8 Restricted Securities

As a condition of admitting the Company to the Official List, ASX may classify certain Shares and options held prior to the date of this Prospectus as Restricted Securities (see Section 10.5). The effect of such a classification is that the Restricted Securities, subject to limited exceptions, cannot be dealt with for a period as determined by the ASX. None of the Shares to be issued pursuant to this Prospectus will be Restricted Securities.

2.9 Taxation Considerations

The taxation consequences of any investment in Shares will depend on the investor's particular circumstances. It is an obligation of investors to make their own enquiries concerning the taxation consequences of an investment in the Company.

If you are in doubt as to the course you should follow, you should consult your stockbroker, lawyer, accountant or other professional adviser without delay.

2.10 Privacy Act

By completing an Application Form, applicants will be providing personal information to the Company (directly or via the Share Registry). The Company collects, holds and will use that information to assess the Application and, for successful Applications, to service Shareholder needs, communications and related administration. The information may also be disclosed to persons inspecting the register, bidders for securities in the context of takeovers, regulatory bodies, print service providers, mail houses and share registry activities generally. Shareholders can access, correct and update the personal information that the Company holds on them by contacting the Company or the Share Registry.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988, the Corporations Act and certain rules applicable to ASX listed securities. If applicants do not provide the information required on the Application Form, the Company may not be able to accept or process the Application.

2.11 Non-Resident Investors

This Prospectus does not constitute an offer or invitation in any place outside Australia where, or to any person to whom, it would not be lawful to make such an offer or extend such an invitation.

No action has been taken to register or gualify the Shares or the Offer or otherwise to permit a public offering of the Shares in any jurisdiction outside Australia. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and therefore persons outside Australia who come into possession of this Prospectus should seek advice and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

It is the responsibility of non-Australian resident applicants to obtain all necessary approvals for the issue to them of Shares under this Prospectus.

2.12 Expiry Date

The expiry date of this Prospectus is 13 months after the date of this Prospectus. No Shares will be issued on the basis of this Prospectus after that date.

2.13 Withdrawal

The Company, in consultation with the Underwriter, reserves the right not to proceed with the Offer at any time before the allocation of Shares to successful applicants. If the Offer does not proceed, Application Moneys will be refunded. No interest will be paid on any Application Moneys refunded as a result of the withdrawal of the Offer.

2.14 Enquiries Regarding the Offer

If applicants have any queries about the Offer they should contact their professional adviser or the Company on 03 9621 1344 or by email to applications@kentorgold.com.au.

the company and projects

3.1 Kentor History

Kentor is an exploration company with an established base of operations in the Kyrgyz Republic. Kentor has been active in the Kyrgyz Republic since 1998 and currently operates through its 80% owned Closed Joint Stock Company, CJSC Kentor, jointly with the state owned company Kyrgyz Geophysical Expedition (20% owner of CJSC Kentor). During this period the Company has put together a significant tenement position in highly prospective parts of the Kyrgyz Tien Shan belt, assembled an extensive proprietary technical database and developed excellent working relationships with governmental and regulatory agencies.

Kentor was incorporated as a no liability company on 18 May 1998 and changed its status to that of a public company limited by shares on 21 January 2005.

3.2 Kentor Strategy

Kentor's vision is to build wealth for its Shareholders through the discovery of large orogenic gold, intrusion hosted gold and porphyry style gold-copper deposits primarily in the Kyrgyz segment of the Tien Shan metallogenic belt of Central Asia. The Tien Shan is host to some of the world's largest gold deposits, including the Muruntau mine (170 Moz*) in Uzbekistan and the Kumtor mine (12 Moz*) in the Kyrgyz Republic (Figure 1), yet remains under-explored relative to other major gold provinces of the world.

Figure 1: Tien Shan Gold Belt - Central Asia

Kentor has interests in title over 3,675 km² of prospective ground in the Kyrgyz Republic. Its largest licence (by area) is the Ertash licence, which partially surrounds the Kumtor gold mine, including possible extensions along the Kumtor Fault Zone.

During the next two years (2005 and 2006). Kentor proposes to spend more than \$5 million to systematically advance exploration via multi-layered target generation to support field mapping and sampling in addition to drilling defined targets. Kentor will continue its active project generation program to target and apply for tenements over new areas in the Kyrgyz Republic and other prospective areas of the Tien Shan belt in Central Asia, rapidly assess the ground and where applicable initiate a comprehensive exploration program or surrender areas that do not meet the Company's exploration criteria.

Kentor's strategy is well underway with:

• Over \$3.7 million raised since incorporation in 1998, with \$1.5 million spent in the last two field seasons on exploration:
• Compilation of a proprietary country-wide GIS database covering over 40 years of Soviet exploration and the previous activities of international companies;
• Completion of the 2004 field program of mapping and sampling, utilising KGE as the preferred contractor to supply experienced local field teams and supported by consultants Global Ore:
• . MMI soil anomalies in the Akbel and Choloktor area of the Ertash tenement now defined and ready for drill testina:
• ASTER satellite image processing and integrated multilayered GIS framework studies to focus exploration teams onto prospective target areas;
• Recent exploration licence grants in the Talas region covering gold-copper porphyry style targets identified through the project generation process. Preliminary ground inspection confirms visible copper mineralisation and porphyry style alteration in each target area. Full evaluation can be undertaken when a work program has been agreed with Kyrgyz State Agency for Geology and Mineral Resources.

Kentor's work to date has applied new technology and a proven generative approach to an under-explored belt that has demonstrated world-class pedigree for gold and porphyry related gold-copper and intrusive hosted gold deposits.

3.3 Kentor's Projects

Summaries of the Company's projects are included in this Section and more detailed descriptions are included in the Independent Geologist's Report contained in Section 7 of this Prospectus.

Kentor Tenements

Seven tenements are held in the name of CJSC Kentor. An eighth tenement is owned by CJSC Kyldoo, a company in which each of CJSC Kentor and the ASX listed company Perseus Mining Ltd have a 50% ownership entitlement. The Kentor tenement portfolio is shown in Figure 2 and detailed in Table 2.

Figure 2: Kentor Prospecting Licences

Table 2: Kentor Tenements - Licence Status and Conditions - Kyrovz Regublic

Ertash is the most advanced prospecting licence area and is the core project in the Kentor portfolio. The other tenements have been selected on a conceptual basis by integration of the extensive Soviet database with satellite imaging technology and analysing the results through the perspective of the latest geological exploration models.

As conceptual targets, the reconnaissance areas are higher risk. Kentor does not expect that all of them will be upgraded to advanced exploration projects. Budgets have been prepared on the basis that only about a third of the areas targeted will advance beyond the first exploration season, but others will be acquired to take their place. An example is the Chonkyzylsu tenement, which will be relinguished after the conceptual targets within the tenement were downgraded during the 2004 field season following evaluation by stream sediment sampling, while in December 2004, successful applications were made for 3 new tenements covering 1,006 km². Kentor expects that work programs will be agreed for these new tenements in early 2005 and that they will be field evaluated during the 2005 season (see Figure 2).

Figure 3: Ertash Project - Gold Prospects and Geochemical Targets

Additional applications for exploration licences will be lodged as targets are identified from ongoing generative work.

Ertash

The Ertash tenement is located southeast of Lake Issyk-kul, approximately 350 km from the Kyrgyz capital of Bishkek and about 60 km north of the border with the Peoples Republic of China (see Figure 2). Much of the tenement area is mountainous alpine terrain ranging from 3000m to 4000m elevation. Access is good via roads along the valley floors. High tension power lines traverse the northern and southern boundaries of the property. Kentor has title to 1,790 km² of prospective ground, including extensions to the Kurntor Fault Zone that hosts the Kumtor Mine, one of the premier gold mines of Central Asia (see Figure 3). The Ertash tenement also covers 100% of the parallel Beshmoinok - Kurgaktepchi mineralised trend hosting multiple gold occurrences, none of which have been drill tested.

The Kumtor deposit, owned by Centerra, comprises a series of multi million ounce gold resources stretching over 15 km in a northeast-southwest direction along the trace of the Kumtor Fault. Kentor's Ertash tenement secures over 60 km strike extension of this key structure and the permissive carbonaceous host stratigraphy. Kentor's ground contains several outcropping and covered gold prospects defined by gold in rock chips, gold-in-soil anomalies, favourable structures, host rocks and hydrothermal alteration observed on ASTER images (see Figure 4). Kentor's more advanced prospects within the Ertash tenement, including Akbel and Choloktor, are interpreted by Kentor to lie along extensions of the Kemtor Fault Zone (see Figure 5).

Figure 4: Ertash ASTER Alteration & Gold Anomalies

Re-interpretation by Kentor of Soviet era geophysics and geology at the Akbel prospect has identified covered structural and gravity features that are prospective for Kumtor style shale hosted gold mineralisation. Results of the 2003 and 2004 MMI soil sampling have outlined a coincident Au-Ag-Pd-W anomaly where glacial moraine conceals bedrock geology (see Figure 5). The MMI soil anomaly, measuring 2.8km by 1.8km, is coincident with the interpreted intersection of the Kumtor Fault Zone and Akbel Fault, a structural setting similar to that at the Kumtor deposit located 15 km to the north east. The elemental association of anomalous Au-Ag-Pd ± As-W-Mo in soils is also consistent with Kumtor style mineralisation. These anomalies may represent leakage from a hard rock gold source concealed under the gravel cover. Trial bedrock geochemical drilling utilising a locally available drill rig to test these anomalies during 2004 was unable to penetrate the cover. Kentor plans to test this target in 2005 with early season IP/resistivity followed by deep drilling using modern drilling equipment.

While existing exploration plans allow for drilling only during the June-October summer field season, it is worth noting that a drill-out of an advanced project can be undertaken year round with suitable winterisation of the equipment.

Figure 5: Kentor - Gold Soil Geochemical Overview

Geological mapping and sampling in the Choloktor area by Kentor has outlined an extensive zone of altered Cambro-Ordovician carbonaceous meta-sediments extending over several kilometres. The controlling fault zone at Choloktor is parallel to, and may represent an offset of, the Kumtor Fault Zone. Kentor has used the results of 2003 and 2004 MMI soil sampling to define two separate elongated gold anomalous zones coincident with carbonaceous stratigraphy stretching over 2.5 km and 1.8 km along strike (see Figure 5). The eastern anomaly shows good coincidence in Au-Ag-Pd-W-Cu, while the western anomaly is offset from a strong As-W anomaly. Kentor intends to further refine these geochemical targets and to commence drilling during 2005.

Reconnaissance geological mapping and geochemical sampling by Kentor has defined a 40 km long semiconinuous belt of gold mineralisation known as the Beshmoinok - Kurgaktepchi Trend that is parallel to and south of the Kumtor Fault Zone (see Figure 4).

Beshmoinok, located 10 km south of the Kumtor mine, will be further evaluated during 2005. A 15 km zone of anomalous gold mineralization occurs on a major regional structure separating the Southern and Northern Tien Shan tectonic segments. Geology of the area reflects a tectonic melange of meta-sedimentary rocks and metabasalts with sepentinite intruding into the thrust system. Along the 15 km zone of interest, three discrete centres of more coherent gold anomalism have been identified. Follow-up rock sampling in some of these areas by Kentor returned anomalous gold values, however insufficient work has been performed to date to determine the style and significance of mineralisation. An intensive exploration program is planned by Kentor for 2005.

Along trend from Beshmoinok, mapping and rock sampling by Kentor at Kurgaktepchi has defined a large mineralized system developed over several kilometres. Gold is associated with tensional vein arrays in shoots and sheeted vein zones hosted in granodiorite. Kentor believes that initial results have confirmed a well mineralized system. Further mapping and sampling are scheduled in 2005 to demonstrate continuity of gold grade. Compilation of previous Soviet era soil geochemistry by Kentor has highlighted an open-ended +500m long zone of anomalous gold in soil with values up to 500ppb, coincident with Vendian sediments and granodiorite. The Kurgaktepchi prospect is located just within the border of the Sarychat-Ertash State Reserve where exploration activities are restricted (see Section 9 Legal Report).

In addition to the prospects described above. Kentor is systematically evaluating the Ertash tenement using its extensive GIS database containing over 80,000 sample points and ASTER satellite alteration mapping. Kentor's consultants have identified 54 untested gold anomalous drainages within the Ertash tenement with permissive geological settings. To date, 38 of the highest priority targets have been followed up as part of the 2004 field season. The results are vet to be fully evaluated and prioritised for follow-up in 2005. The exploration program planned for the Ertash project is shown in Table 3.

Activity Activity	2005 (8)	2006 (5)
Geochemistry	261.900	220.000
Geological supervision	146,700	172,000
Field support	234.700	136.000
Consultants	13.300	13.300
Drilling	453.000	786.700
Project supervision	174.400	222.00
Project Total	1,284,000	1.559.200

Table 3: Ertash Project - Proposed Exploration Expenditure

Kensu

The Kensu property, of approximately 168 km², lies 370 km ESE of Bishkek and to the northeast of the Ertash Tenement. ASTER alteration processing, lineament interpretations and regional geology indicate that targets within the Kensu tenement are similar to the Kumtor deposit in that they have a similar strong alteration signature, are hosted in similar Vendian shales and occur along a splay or analogous parallel structure that controls the Kumtor deposit (see Figure 6).

Kentor believes that the area has never been systematically explored for gold and represents a grassroots exploration property requiring an initial phase of regional reconnaissance exploration to assess the potential of ASTER alteration signatures for Kumtor-style gold mineralisation. To date, Kentor has completed about one third of the reconnaissance required to evaluate this tenement and expects to complete the initial assessment in 2005.

The budget for the exploration program planned for the Kensu project is shown in Table 4.

					Table 4: Kensu Project - Proposed Exploration Expenditure
--	--	--	--	--	-----------------------------------------------------------

20011111000022 Activity A	2905 (2)	200646)
Geochemistry and geophysics	5300	6.400
Geological supervision	8 000	8.400
Field support	6.700	9300
Consultants	7 300	6.200
Project supervision	4100	4600
Project Total	31.400	34.900

Note: Subject to results, some 2006 funds may be reallocated either to or from the Tien Shan Reconnaissance budget.

Figure 6: Kensu Project - Mineralisation and Alteration

Karasu

The Karasu tenement is located on the southern slopes of the Atoinak Range in the central-western part of the Kyrgyz Republic. Karasu lies mostly above the tree line at an altitude of 2200m and 2500m in alpine mountainous country. The nearest village is Karasu, 25 km to the south.

Work by Soviet geologists during the 1980s, identified quartz veins with gold in a small area excluded from the surrounding Kentor tenement. The veins form in multi-directional clusters or swarms arranged along the faulted

contact between Devonian limestone and a sequence of Devonian aged meta-volcanic (andesite-basaltic composition) and meta-sediments forming part of the Southern Tien Shan tectonic block.

Anomalies in adjacent drainages within the Kentor licence, identified by Kentor from previous stream sediment sampling and Kentor BLEG sampling in 2004, lead Kentor to believe that the Karasu region has potential for several clusters of high-grade gold quartz veins (see Figure 7). These anomalies now require systematic follow up exploration in 2005. The exploration program planned for the Karasu project is shown in Table 5.

Table 5: Karasu Project - Proposed Exploration Expenditure

Activity	2006-23)	2896 (9)
Geochemistry	10.900	13.400
Field subcort	13.400	20.000
Consultants	12.500	11.300
Project subervision	5.600	6.800
Project Total	42,400	51.500

Figure 7: Stream Gold Anomalies, Karasu area

Kvidno

The Kyldoo tenement is situated on the Talas-Fergana Fault within the Tien Shan gold belt in the central region of the Kyrgyz Republic, 4km from the 1 Moz* Makmal gold mine. Kyldoo lies mostly above the tree line at an aftitude of 2000m and 2200m in hilly alpine country.

The tenement has been held by CJSC Kentor for several years and was transferred to CJSC Kyldoo to facilitate a 2003 farm-in agreement with Afminex Ltd (subsequently replaced as a party by Perseus Mining Ltd) (see Section 10.1.4). Perseus eamt a 50% interest in CJSC Kyldoo by completing a minimum four-hole diamond drill program of approximately 550m in July 2004. Future exploration at Kyldoo will continue under the management of Perseus. Kentor has allocated \$30,700 to undertake an extensive data review and evaluation before committing any funds to the tenement.

Reconnaissance and Project Generation, including December 2004 Tenements

Kentor is pursuing an active regional generative and project acquisition program in the Kyrgyz Republic and other prospective areas in the Tien Shan belt in Central Asia driven by a multilayered GIS targeting approach. This incorporates extensive Soviet geochemistry, multi-spectral image processing and spatial analysis. The generative effort is directed towards belts of mineralisation with established pedigrees for multi-million ounce gold and goldcopper deposits. The budget allows for initial reconnaissance of the recently granted tenements in the Talas region in addition to future licence applications. Future exploration requirements on these and other areas will be assessed and prioritised within Kentor's overall exploration program. Additionally, an allocation has been made to cover the drill assessment of at least one new project area. No specific provision has been made for any prospective area outside the Kyrgyz Republic. The Company will apply the same strategy to exploration in any other part of Central Asia as it applies the Kyrqyz Republic. The exploration program planned for reconnaissance and project generation is shown in Table 6.

Activity Management	2005 (6)	2006 (6)
Geochemistry and geophysics	73.300.	64 500
Geological supervision	90.700	96.000
Field support	100.000	100 000
Consultants	127.300	126.500
Drilling	146.700	346700
Project supervision	119 000	164.400
Prolect Total	657,000	698.100

Table 6: Reconnaissance and Project Generation - Proposed Exploration Expenditure

Drill Rig - Kvidoo Prospect Area

3.4 Relationship with Kyrayz Geophysical Expedition

Kyrayz Geophysical Expedition is the minority 20% shareholder in CJSC Kentor and provides geological services to CJSC Kentor for its exploration activities (see Sections 10.1.1 and 10.1.6).

KGE is a "Uchrezhdeniye", that is, a State owned organisation with a Charter registered at the Kyrgyz Ministry of Justice. "Uchrezhdeniye" may also be translated as "Foundation". While an Uchrezhdeniye receives some funding from the State budget, it is expected to generate income from selling its services in both the public and private sectors. There is no governing Board at the KGE. The Director of the KGE is answerable to the Director of the State Agency for Geology and Mineral Resources, who in turn is answerable to the Prime Minister.

The Company considers that its relationship with KGE is important for several reasons, including:

Mitigation of Country Risk

The Company's relationship with the Kyrgyz Government through KGE may mitigate country risk. The Director of KGE speaks for CJSC Kentor at Government forums. Where appropriate, KGE deals with government inspectorates and agencies on behalf of CJSC Kentor. CJSC Kentor is not seen as a foreign entity, but part of the local corporate establishment.

A Channel of Geological Data

KGE maintains its own archives of geological data from the Soviet era, and has the right of access to other archives within the Kyrgyz Republic. On a limited basis, KGE has the right of access to many archives throughout the countries of the former Soviet Union. Whilst all geological data within the Kyrgyz Republic is now on open file, access can be difficult at a practical level for foreigners.

Successful Model

This model of relationship has successfully operated in other situations in the Kyrgyz Republic. For example, Centerra has such a relationship with the Kyrgyz Government through JSC Kyrgyzaltyn. JSC Kyrgyzaltyn held 16.1% of Centerra immediately after Centerra's initial public offering.

3.5 Modern Exploration Technology

The Company has the advantage of being in a position to apply modern exploration technology to an extensive GIS database. Compilation of a proprietary country-wide GIS database has covered over 40 years of Soviet exploration and the previous activities of international companies, including Teck Corporation and Santa Fe Gold. Two specific technologies being utilised by the Company are MMI and ASTER.

Mobile Metal Ion (MMI) is an advanced surface exploration technique for locating mineral deposits, developed to assist exploration companies looking to explore areas with deep soil cover for hidden ore deposits. The MMI technique measures mobile metal ions in surface soils. These mobile metal ions are released from deeply-buried ore bodies and travel upward toward the surface to accumulate in surface soils above mineralisation, indicating the metals that are derived from the mineralisation source. Using sophisticated chemical processes and instrumentation, the MMI technique measures these ions to determine accurately where buried mineralisation is located. The MMI technique accordingly allows more precise drill hole targeting than conventional larger and more expensive drilling programs.

ASTER (or Advanced Spaceborne Thermal Emission and Reflection Radiometer) is an imaging instrument that is flying on Terra, a satellite launched in December 1999 as part of NASA's Earth Observing System. ASTER is used to obtain detailed maps of land surface temperature, emissivity, reflectance and elevation, its specific application for geologists is the capture of detailed geologic information and monitoring of volcanic eruptions. It covers as many as six short wave infrared bands and five thermal infrared bands, thereby enhancing capabilities to detect minerals from their reflectance and to evaluate silica contents of rock from their radiation pattern.

Exploration Camp - Akbel Prospect area

By combining these technologies with its extensive historical database, the Company expects to maximise the cost-effectiveness of its exploration expenditure.

3.6 Use of Funds

A summary of the 2005 and 2006 budget for the exploration programs planned for Kentor's projects together with administration and corporate expenses is shown in Table 7. The budget includes funding for (i) exploration and evaluation of the Company's mineral interests; (ii) administration and corporate costs of the Company; (iii) acquisition of interests in mineral tenements; (iv) acquisition of incidental plant and equipment; and (v) the costs of this Offer, including legal and accounting fees, experts' and advisors' fees and costs of printing, publication and distribution of this Prospectus.

The Directors believe that on successful completion of the Offer, the Company will have sufficient working capital to undertake its stated objectives.

Table 7: Summary of 2005-2006 Exploration Program and Budget

Notes

(1) No separate allowance is made for contingencies, which are included in each sub-budget.

(2) Budgeted expenditure exceeds the amount to be raised by the Offer. The balance of budgeted expenditure will be met out of the Company's existing funds. The Company commenced 2005 with approximately \$675,000 cash at bank.

section 4

board of directors and senior management

4.1 Board of Birectors

The Kentor Board of Directors comprises two executive and two non-executive members, including the independent chairman John Barr. The Board of Directors is:

chairman, non-executive

John Barr AM, MAICD

John Barr has had a long involvement with the Australian minerals and metals industry having been Managing Director of Metallgesellschaft's Australian subsidiary since the company's inception in 1974 until his retirement in 1994. He is Chairman of Utilities of Australia Pty Ltd. a major infrastructure investment fund with assets as at 31 December 2004 in excess of \$700. million, a Director of Iluka Resources Limited and a former Director of Acacia Resources Ltd. Oxiana Limited and Transurban City Link Ltd.

managing director

Bavid Royle BSc (Hons) (Geology)

David Royle has extensive international experience in exploration for precious metals, base metals and diamonds with major multinational resource companies over the past 30 years. He has a track record for the discovery of a number of significant minerals deposits through grass roots exploration. His experience includes strategic planning and the design, budgeting, and implementation of exploration projects from reconnaissance to advanced stage and evaluation of projects valued up to \$1 billion, in over 20 countries.

In the past 20 years. David has worked as an exploration manager with Newmont Australia Ltd in Eastern Australia, Papua New Guinea, Fiji and Solomon Islands; taken the lead role of Exploration Manager Americas for Newcrest Chile Ltd where he managed Newcrest's exploration activities in South America; and held various positions over 6 years with MIM Holdings Ltd where in addition to exploration management roles, he performed corporate roles as Manager Acquisitions and Evaluations and General Manager Project Generation. David is experienced in leading multidisciplined, multicultural exploration teams.

David is a Fellow of the Australasian Institute of Mining and Metallurgy, a Chartered Professional Geologist and a Fellow of the Society of Economic Geologists.

executive director, country manager and general director - CJSC Kentor

Hugh McKinnon B.Eng. (Mining)

Hugh McKinnon has been involved in the mining industry in Australia, Africa, and Asia for 30 years in activities ranging from exploration ventures to mine production.

Hugh's career has included mining engineering and exploration work commencing in Australia with, amongst other companies, BHP Minerals, and in recent years working out of Australia in diverse environments including Zambia (with Zambia Consolidated Copper Mines) and Fiji.

Since early 1996, Hugh has worked on mining and exploration projects across Central Asia. He moved into this part of the former Soviet Union to join Apex Asia LDC as its Chief Engineer and worked with a team of Russian-speaking ex-Soviet mining industry professionals involved in the evaluation and development of precious and base metal properties, evaluating projects in Tailkistan, Uzbekistan, Mongolia and with a particular interest in the Kyrgyz Republic.

Hugh recognised the opportunity for Kentor in 1997 and, since then, has worked to turn this concept into the Company presented in this Prospectus. Hugh resides in Bishkek, the capital of the Kyrgyz Republic, and speaks Russian competently.

director, non-executive

Andrew Daley is a mining engineer and resources finance executive. Andrew spent several years working on mining projects in Africa before relocating to Australia as Senior Engineer with Fluor Australia in 1981. In late 1983 he joined the National Australia Bank resources project finance team in Melbourne. Since then, he has held positions as Executive Director and State Manager of NAB's Investment Bank in Sydney. Head of Barclays Australia's resource team in Sydney, Director of Chase Manhattan's project finance team in Melbourne and more recently Director of Barclays Capital mining team in London. He is a Chartered Engineer, a former Director of Oxiana Limited, a non-executive Director of Pan Australian Resources Limited, an executive Director of Investor Resources Limited, a Member of IOM3 and a Fellow of the Australasian Institute of Mining and Metallurgy.

4.2 Management and Key Consultant

In addition to the Managing Director. David Royle and Executive Director. Hugh McKinnon, the Kentor management team and consultants include:

general director CJSC Kentor

Orozbai Tohtonazarov MSc (equiv) (Geology)

Orozbai Tohtonazarov is a mining engineer-geologist with a higher degree in geologicalmineralogical science and is a Director of Kyrgyz Geophysical Expedition. During his career he has gained extensive exploration experience throughout the Kyrgyz Republic and has published 11 scientific articles relating to geology and mineralogy. Orozbai has also held the positions of President of the Professional Union of Geologists, and Vice-Chairman of the Federation of Trade Unions of the Kyrgyz Republic.

company secretary

Christopher Bain, a director of Investor Resources Limited, has been appointed as company secretary for an initial period to 31 March 2005 pending a review of the Company's requirements.

consultant

Global Ore Discovery Pty Ltd

Global Ore is an exploration consultancy that provides services to Kentor in project generation and management, database management and remote sensing processing. Stephen Nano has 20 years experience in project generation, evaluation and management in Australasia and the Americas, Daryl Nunn brings to Kentor five years of specialist skills and experience in remote sensing processing, GIS database management and visualization and project generation. The Company's consultancy agreement with Global Ore is summarised in Section 10.1.3. Global Ore works for Kentor on a exclusive basis in the Kyrgyz Republic.

4.3 Cornorate Governance

4.3.1 The Board of Directors

The Directors acknowledge the importance of sound corporate governance and the quidelines set out in the ASX Principles of Good Corporate Governance. The Board will embrace and take measures, so far as is practicable, to comply with the ASX Principles of Good Corporate Governance, having regard to the size and nature of the various companies making up the group. The Board is committed to the establishment and maintenance of appropriate ethical standards.

4.3.2 Composition of Board

The Company has 2 executive Directors and 2 non-executive Directors, including the independent chairman of directors. John Barr.

The non-executive Directors are all fully independent of management and free to make their own decisions and independent judgments. This is the case notwithstanding that Mr Daley would not be considered to be an independent director under the ASX Principles of Good Corporate Governance due to his employment with Investor Resources Limited, which has been a material professional adviser to the Company. They derive no benefits from the Company for their services as directors other than their fees and potential capital gains and dividends on their interests in Shares in the Company and, in the case of Andrew Daley, from his indirect interest in options held by Investor Resources Limited.

The non-executive Directors are high calibre professionals and sufficient in number for their views to carry significant weight in the Board's deliberations and decisions. The Chairman has a casting vote in the event of a tied vote, except for the event where there are only 2 directors at a meeting entitled to vote.

The Board retains full and effective control over the Company. Apart from reqular meetings, additional meetings are arranged when necessary to review strategy, planning, operational, financial performance, risk and capital expenditure and human resource and environmental management.

4.3.3 Director's Remuneration

Under the Constitution, each non-executive Director may be paid remuneration for ordinary services performed as a Director. The maximum remuneration that may be paid to the non-executive Directors is \$150,000 per annum in aggregate. Any change to this amount requires Shareholder approval.

Effective from the date of listing on the ASX, non-executive Directors John Barr and Andrew Daley will be paid \$60,000 and \$30,000 per annum respectively for their services.

Mr Royle has a contract of employment as Managing Director of the Company. Mr McKinnon has a contract of employment as Executive Director of the Company and Country Manager. Details of the contracts are contained in Section 10.1.2.

The remuneration of executive directors will be decided by the Board, based upon recommendation by its Remuneration Committee. Affected executive directors will not participate in the decision-making process in relation to their own remuneration.

4.3.4 Board Committees

The Board will establish committees as required to assist the Directors in carrying out their responsibilities. Each of the Committees will be required to coordinate and assess information provided by management, staff or external bodies with a view to presenting such information to the Board.

The Audit Committee will be formed after admission to the ASX for the purpose of monitoring and reviewing the effectiveness of the Company's internal control systems.

The Remuneration Committee of the Board currently comprises Mr Barr and Mr Daley and will recommend the remuneration of executive directors.

section

the kyrgyz republic

5.1 Demographics and Geography

The Kyrgyz Republic is a land-locked independent republic situated in Central Asia, bordered by Kazakhstan in the north. China in the east. Tailkistan in the south and Uzbekistan in the west. Bishkek is the capital city and is located in the northern part of the country. Osh is the second largest city, located in the south.

The Kyrgyz Republic has a total area of approximately 200,000km² (about the same size as the Australian State of Victoria). The climate is dry continental to polar in the high Tien Shan, subtropical in the south-west Fergana Valley region and temperate in the northern foothill zone. The mountainous peaks and associated valleys and extensive river systems of the Tien Shan encompass the entire nation. The population of the Kyrgyz Republic is approximately 5 million.

The official languages of the Kyrgyz Republic are Kyrgyz and Russian. In terms of religion. 75% of the country is Muslim, and 20% are Russian Orthodox.

5.2 Politics and Government

The area that is now the Kyrgyz Republic was annexed by Russia in 1864. The country declared its independence from the Soviet Union in 1991 and became a member of the Commonwealth of Independent States, Since 1991. the Kyrayz Republic has overall been a politically-stable constitutional democracy.

The Kyrgyz Constitution, adopted on 5 May 1993, lays down the division of powers between the executive, the legislature and the judiciary.

• The executive power is vested in the President, who is elected for a five year term. All citizens over the age of 18 years are eligible to vote. The President is head of state and commander in chief of the armed forces and may only serve for two consecutive terms in office. The Prime Minister, Ministers and leading state officers are appointed by the President, in the case of the Prime Minister with the consent of a majority of the Kyrgyz parliament. The next presidential election is currently set for November or December 2005.
• The Kyrgyz parliament, the Jogorku Kenesh, consists of two chambers of People's Representatives (45 seats) and the Legislative Assembly (60 seats). Deputies of the Jogorku Kenesh are elected for a 5 year term. Parliamentary elections are due on 27 February 2005 for the election of representatives who will take office in September 2005. At that time the current two-chamber parliament will cease to exist and be replaced by a one chamber parliament of 75 deputies. The new one-chamber parliament will have broader constitutional powers, with certain powers being relinquished to it by the President.
• Justice in the Kyrayz Republic is administered by the Constitutional Court, the Supreme Court, the Higher Arbitration Court and local courts (courts of oblasts, Bishkek City court, district and municipal courts, arbitration courts of the oblasts and city of Bishkek, military courts). The Constitutional Court is the highest judicial body for the protection of the Constitution. The Supreme Court of the Kyrgyz Republic is the highest judicial body in the areas of civil, criminal and administrative court proceedings.

5.3 Economy

The national currency of the Kyrgyz Republic, the Som, is freely convertible at a floating exchange rate and has remained relatively stable over the last four years. The economy is predominantly agricultural, with two thirds of the country's population living in rural areas. The country contains deposits of gold and rare earth metals as well as locally exploitable coal, oil and natural gas.

The Kyrgyz economy has undergone a transition to a market-oriented economy and is showing positive economic signs, with inflation of 5.1% and gross domestic product growth of 6.7% in 2003. The Kyrgyz Republic is a member of the World Trade Organization and has received financial support from the International Monetary Fund ("IMF"). The IMF is forecasting gross domestic product growth of 4.0% in 2004.

The relatively small size of the economy means that mining, and specifically the Kumtor mine operated by Canadian company Centerra Gold Inc. plays a particularly important role in the economy. Kumtor has operated without interruption for seven years and is the largest private sector employer, the largest foreign investment in the country and contributes approximately 35% of Kyrgyz export earnings. Consequently exploration and potential mine development has a very high profile within the country.

5.4 Exploration Activities

The exploration field season is generally in the months from June to October. During that time, the Company puts its exploration team into the field for intensive exploration activity. The Company's prospects are located in the lower part of the country (2000m) where the season is slightly longer and high country (3000m to 4000m) where conditions are more extreme and the season is approximately one month shorter.

The climatic conditions do not prevent development from exploration to year-round mining, as shown by Centerra's Kumtor mine which operates all year round.

5.5 Mining Law

The legal system has undergone substantial reform since the country became an independent state in 1991 and is still evolving. Many exploration and mining related laws are now similar to those typical of countries with a strong mining sector. Mining tenure is governed by the "Law on Underground Mineral Resources". This law regulates the relationship between government and private entities when conducting mineral resource exploration and mining. The two forms of licence relevant to the Company's activities are (i) the licence for geological study of underground mineral resources (equivalent to the type of tenement known in Australia as an exploration licence) and (ii) the licence for development of mineral deposits (equivalent to the type of tenement known in Australia as a mining fease or licence). All the tenements held by CJSC Kentor and CJSC Kyldoo are licences for geological study of underground mineral resources. The "Law on Underground Mineral Resources" is administered by the State Agency for Geology and Mineral Resources. The operation and administration of the "Law on Underground Mineral Resources" are discussed in more detail in the Legal Report in Section 9 of this Prospectus.

section 6

investment risks

6.1 Investment Consideration

Investors wishing to subscribe for the Shares offered by this Prospectus should read the Prospectus in its entirety in order to make an informed assessment of the assets and liabilities, financial position and performance, profits and losses and prospects of the Company and the rights attaching to the Shares offered by this Prospectus.

This Section is not intended to be an exhaustive list of the considerations to be taken into account by an investor or of the risk factors to which the Company is exposed. Some of these risks can be mitigated by the use of safeguards and appropriate systems and actions, but many are outside the control of the Company and cannot be mitigated.

There are numerous risks associated with investing in any form of business and with investing in the share market in particular. Kentor is a mineral exploration company. An investment in Kentor carries with it risks normally associated with investment in a business of this type. All investors should consult their professional advisers if they are in doubt as to any aspect of this Prospectus or any matters relating to an investment in the Company.

6.2 General Risk Factors

The Shares offered by this Prospectus are speculative because of the nature of the business and assets of the Company. They carry no quarantee with respect to return of capital, payment of dividends or the price at which they will trade on the ASX. There is also a range of specific risks associated with Kentor's business and its involvement in the exploration and mining industry. These risk factors are largely beyond the control of Kentor and its directors because of the nature of the Company's proposed business.

Future viability and profitability of Kentor will be dependent on a number of factors, including but not limited to the specific risks referred to below.

6.3 Specific Risks

6.3.1 Country Risk

Consideration should be given to the risks associated with operating in the Kyrgyz Republic. As the Kyrgyz Republic is a developing country, its economy and legal system differs from economies of most developed countries. Since 1991, the Kyrayz Republic has been undergoing a substantial political transformation from a centrally controlled command economy under communist rule to a pluralist, market-orientated democracy. There can be no assurance that the system of government and the political system will remain stable or that the political and economic reforms necessary to complete such a transformation will continue or succeed. There can be no guarantee that government regulations in the Kyrgyz Republic relating to foreign investment, repatriation of foreign currency, taxation and the mining industry (including export of mineral ore or refined metal) will not be amended and / or replaced in the future to the detriment of Kentor's business, although the Directors are unaware of any such proposals as at the date of this Prospectus. The Kyrgyz Republic has experienced minor occurrences of the civil unrest and disruption that have occurred in most former Soviet countries since 1991. Kentor's executives do not consider that the risk of such events has impeded their normal day-to-day activities to date. The current level of risk compares favourably with conditions for exploration companies operating in other developing countries. There can be no quarantee that civil, ethnic or military unrest will not break out in the Kyrgyz Republic in the future.

6.3.2 Exploration and Mining Risk

Mineral exploration, including the acquisition, processing and interpretation of geological and geophysical data, is a high risk business with no quarantee of success. Currently, there are no defined mineral resources on the exploration licences controlled by Kentor. There is no assurance that exploration on any of the exploration licences described in this Prospectus, or on any of the mineral tenements that may be acquired in the future will result in the discovery of a mineral deposit. In the event of a discovery, development of a mine may not prove to be economically viable due to factors outside the Company's control. Although Kentor is not aware of the enforcement by the Government of the Kyrayz Republic of the production sharing agreement law referred to in section 2.2, schedule 2 of the Legal Report in Section 9, there is no assurance that, in the event of a discovery, such law will not be enforced.

The future exploration activities of the Company may be affected by a range of factors including, geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical difficulties, industrial and environmental accidents, changing government requlations and many other factors beyond the control of the Company.

The success of the Company will also depend upon the Company being able to maintain title to its exploration licences, and obtaining all required approvals for its activities. In the event that exploration programs prove to be unsuccessful, this could lead to a diminution in the value of the tenements, a reduction in the cash reserves of the Company and possible relinquishment of the exploration licences.

The success of the Company will also depend upon the Company having access to sufficient development capital, being able to maintain title to its exploration licences, and obtaining all required approvals for its activities. In the event that exploration programs prove to be unsuccessful, this could lead to a diminution in the value of the tenements, a reduction in the cash reserves of the Company and possible relinquishment of the exploration licences.

6.3.3 Environmental Risk

The Company's projects are subject to various laws and regulations regarding the discharge and disposition of wastes, the decommissioning, reclamation and rehabilitation of exploration and mining sites and other environmental matters. The Company may be required to comply from time to time with environmental management issues that arise from factors beyond its control. The Company's operations are and may in the future be subject to various environmental permits, licences and approvals that contain conditions that must be meet. Failure to meet these conditions or to comply with environmental management issues could have a material adverse effect on the Company's future.

6.3.4 Tenement Title Risk

Exploration licences are granted subject to various conditions including, but not limited to, expenditure conditions. Failure to comply with these conditions may expose the licences to forfeiture.

All of the licences in which the Company has an interest will be subject to application for renewal from time to time. The renewal of the term of each licence is subject to the applicable legislation in the Kyrgyz Republic. If a licence is not renewed for any reason, the Company may suffer significant damage through loss of the opportunity to develop and discover any mineral resources on that licence. However, the Directors are not aware of any reason why renewal of the term of any licences will not be granted.

Investors should refer to the Legal Report in Section 9 for a report on legal aspects of the tenements.

6.3.5 Technical and Managerial Personnel

The Company's success depends to a significant extent on retaining its key management personnel. The loss of services of certain such personnel could have a material adverse effect on the Company's future.

The future and success of the Company also depends on its ability to attract and retain highly qualified technical and managerial personnel, particularly those personnel based in the Kyrgyz Republic. Competition for such personnel can be intense. The inability to attract and retain the necessary technical and managerial personnel could have a material adverse effect on the Company's future.

6.3.6 Gold Price and Exchange Rate Risk

As the Company's potential earnings are intended to be derived from the sale of gold, these earnings will be closely related to the price of this commodity. The sale of this commodity may expose the Company to commodity price and exchange rate risks. The international price of gold is denominated in United States Dollars.

Expenditure obligations for exploration operations in the Kyrgyz Republic by law are incurred either in the Kyrgyz Som or United States Dollars. The Company has funded exploration activities by loans to CJSC Kentor in Australian Dollars, which are then converted into the required currency.

The expenditure of the Company is, and will be, taken into account in Australian Dollars. The potential income stream and exploration expenditure of the Company and the ability of partly-owned subsidiaries to repay intercompany group loans will be exposed to the fluctuations and volatility of the commodity price and the rate of exchange between the United States Dollar and the Australian Dollar as determined by international markets.

6.3.7 General Share Market Risks

There are risks associated with investment in equities generally. The trading price of Shares in Kentor may fluctuate with movements in equity capital markets in Australia and internationally, which in turn are driven by factors including investor sentiment, general economic conditions, interest rates, monetary and fiscal policy.

Returns from investment in Kentor Shares will depend on general share market and economic conditions as well as the specific performance of Kentor. Neither the Company, nor the Directors, warrant the future performance of the Company or any return on an investment in the Company.

6.3.8 Insurance Risk

The Company maintains an insurance program in line with normal industry standards. These policies have exclusions and deductibles in accordance with normal industry and insurance market principles.

The insurance industry in the Kyrgyz Republic is still in the process of development. Due to the difficulty for smaller companies in obtaining cost-effective insurance in the Kyrgyz Republic, CJSC Kentor and CJSC Kyldoo are not insured for workers compensation insurance, third party public liability insurance or property insurance. Risk is mitigated through the use of KGE to carry out on-the-ground activities involved in the exploration program (see Section 10.1.6). The Company occupies secure premises at its offices in Bishkek and maintains data management protocols to ensure the security and backup of its Kyrgyz-based database to Australia.

The Company will continue to monitor the development of the insurance market in the Kyrovz Republic and the availability of insurance in other insurance markets covering activities in the Kyrgyz Republic. The Company will undertake future insurance cover for prospective liability arising in the Kyrgyz Republic, as considered by the Company to be appropriate and cost-effective. In the event of a substantiated claim, CJSC Kentor and CJSC Kyldoo may incur uninsured losses or liability. If CJSC Kentor were to suffer a substantial claim or series of claims, the Company's budgets for exploration and development may be reduced and the value of the Company's assets may be reduced.

6.3.9 Capital Raising Risk

The Company has no operating income at the present time and will fund its current exploration programs through equity capital raised in this Offer. The continued financial viability of the Company is dependent upon the success of this Offer, the discovery of one or more economically viable mineral deposits and the successful raising of capital in the future for further exploration and (in the event of a discovery) for development expenditure.

6.3.10 Economic Risk Generally

Changes in interest rates and the inflation rate, exchange rates, relevant taxation legislation and other legal regimes, and changes in government policy may adversely affect the Company.

6.3.11 Exploration in Parts of Central Asia Outside the Kyroyz Republic

The proceeds of the Offer will be applied primarily for exploration of the Company's tenements and project generation in the Kyrgyz Republic (see Sections 1.3 and 3.6). The Company may also conduct exploration in other prospective parts of the Tien Shan belt of Central Asia, consistent with the Company's Kyrqyz exploration programme. No specific provision has been made in the Company's budget for any prospective area outside the Kyrgyz Republic. If the Company does identify exploration opportunities outside the Kyrgyz Republic, the Company will apply the same strategy to exploration as it applies in the Kyrgyz Republic, including selection of tenements based upon similar risk profile and operational parameters. The same or similar risks as those listed above with respect to the Kyrgyz Republic will also apply in any other Central Asia country.

section 7

independent geologist's report

Vidoro Pty Ltd

ABN 28 094 217 482

.2 The Nook UNDERWOOD QLD 4119 AUSTRALIA

.			.
	$\text{TEL}: 61 - 7 - 34231041$
∵F∆X∙		3423.1042.

e-mail: jonesdg@bigpond.com

31 January 2005

The Directors Kentor Gold Ltd Level 3, 15 Queen St Melbourne. VICTORIA 3000

Dear Sirs

42

RE: INDEPENDENT GEOLOGIST'S REPORT ON THE MINERAL PROPERTIES OF KENTOR GOLD LTD.

The Directors of Kentor Gold Ltd ("Kentor" or "Company") have commissioned Vidoro Pty Ltd ("Vidoro") to prepare an independent geological report on mineral properties in the Kyrgyz Republic held or controlled by Kentor and Its associates.

This report is to be included in a Prospectus to be lodged with the Australian Securities & Investments Commission ("ASIC") on or about 31 January 2005, offering for subscription 12 million Shares at an issue price of \$0.50 per Share, to raise 6 million (before costs associated with the Offer). The funds raised will be used for the purpose of exploration and development of the existing and future mineral properties and project generation in the Kyrgyz Republic, together with working capital for the company. At Kentor's request, the scope of the inquiries and of the report included the following:

• A review of the exploration portfolio of the Company, excluding the newly granted Uzunbulak, Barkol and Karabalta tenements, with respect to exploration history, exploration potential and the Company's exploration strategy:
• $\bullet$ A review of the budgets proposed for the Company for its first two years;
• . A review of the budgets referred to above to determine if they accord with the Company's various joint venture arrangements and statutory expenditure levels:
• A review of the work plans associated with the budgets referred to above;
• $\bullet$ A review of the proposed geological models that the Company intends to employ on its Kyrgyz, tenements;
• $\bullet$ Anything else that Vidoro believed is necessary.

Section 7 - Independent Geologist's Report

Vidoro has not been requested to provide an Independent Valuation, nor has Vidoro been asked to comment on the Fairness or Reasonableness of any vendor or promoter considerations, and therefore no opinion on these matters has been offered.

This report is based on a large volume of technical data provided by Kentor to David G Jones, Principal of Vidoro, as well as discussions with staff of Global Ore Discovery, exploration consultants to Kentor; the Kyrgyz Geophysical Expedition, Kentor's joint venture partner and operator of its field programmes; the Kyrgyz State Agency on Geology and Mineral Resources: and Alex Stewart Assay and Environmental Laboratories Ltd in the Kyrgyz Republic. Kentor provided open access to all personnel and records necessary, in the opinion of Mr Jones, to enable a proper assessment of the Company's exploration licences. Kentor has warranted in writing to Vidoro that full disclosure has been made of all material information and that, to the best of Kentor's knowledge and understanding, such information is complete, accurate and true. Readers of this report must appreciate that there is an inherent risk of error in the acquisition, processing and interpretation of geological and geophysical data, and Vidoro takes no responsibility for such errors.

43

Additional relevant material was acquired independently by Vidoro from a variety of sources. The list of references at the end of this report lists the sources consulted. This material was used to expand on the information provided by Kentor and, where appropriate, confirm or provide alternative assumptions to those made by Kentor.

Three weeks were spent on data collection and analysis and preparation of this report. An additional five field days were spent in the Kyrgyz Republic examining key areas, including detailed inspection of prospects within Kentor's Ertash exploration licence, its principal asset in the opinion of Vidoro.

Appraisal of all the information mentioned above forms the basis for this report. The views and conclusions expressed are solely those of Vidoro Pty Ltd and D G Jones. When conclusions and interpretations credited specifically to other parties are discussed within the report, then these are not necessarily the views of Vidoro Pty Ltd or D G Jones. Vidoro Pty Ltd and Mr Jones have not been involved in the preparation of, or authorised issue of, any other part of the Prospectus in which this Independent Geologist's Report is included.

Mr Jones holds a Master of Science from the University of Adelaide, and is a Fellow of the Australasian Institute of Mining and Metallurgy, a Fellow of the Institute of Materials, Minerals and Mining (London), a Member of the Society of Mining Engineers (Denver) and a Member of the Geological Society of Australia. He has 40 years of postgraduate experience in the mining industry, including 21 years as Chief Geologist and in senior management roles with Newmont Mining Corporation and Newcrest Mining Limited ("Newcrest"), both major world gold-mining companies. In his role as Chief Geologist with Newmont Australia Ltd he had oversight of Newmont's exploration in the Telfer District some years ago and is familiar with the geology of such deposits. During his 10 years with Newcrest Mr Jones paid close attention to the exploration and development of the Cadia district and is thoroughly familiar with porphyry copper-gold deposits of the Cadia style. While Exploration Manager-Europe and Asia for Newcrest, Mr Jones supervised the team that discovered and developed the Gosowong gold mine in Indonesia. and has some 20 years accumulated experience in the exploration and evaluation of epithermal gold deposits. Mr Jones also prepared the Independent Geologist's Report in 2001 for Perseverance Corporation on the capital raising to fund exploration at the Fosterville project in Victoria, and has considerable recent experience and knowledge of the orogenic gold style of mineralisation at Fosterville and in the Victorian Gold Province, a model which is applicable to the major deposits of the Tien Shan Province in the Kyrgyz Republic.

Kentor's properties in the Kyrgyz Republic are all at an early stage of exploration and no mineral resources that meet the JORC Code have been established. Nevertheless, Vidoro considers that the properties have been acquired on the basis of sound technical merit and are sufficiently prospective, subject to varying degrees of exploration risk, to warrant further exploration and assessment of their economic potential, consistent with the programmes proposed by Kentor.

In preparing this report, Vidoro Pty Ltd has observed the Code and Guidelines for Technical Assessment and/or Valuation of Mineral and Petroleum Assets and Mineral and Petroleum Securities for Independent Expert Reports ("Valmin Code"). Neither Mr Jones nor Vidoro have, or have had, any financial interest in Kentor or its associates, other than the payment of normal professional fees for the work undertaken in preparing this report.

Vidoro Pty Ltd hereby consents to the inclusion of its Independent Geologist's Report in the Prospectus referred to above, in both electronic and paper form, in the form and context in which it appears. As at the date above, Vidoro, has not withdrawn its consent.

Yours sincerely

David G Jones MSc. FAusIMM, FIOM^®, MAIME, MGSA, JP (Qual), Vidoro Pty Ltd

SUMMARY

'Ad.

Section 7 - Independent Geologist's Report

At the date of this report, Kentor has a controlling interest in seven exploration licences covering 3,526 sq km in the Kyrgyz Republic, plus a 40% interest in an eighth license covering 149 sq km.

The directors of Kentor requested Vidoro Pty Ltd ("Vidoro") to review and report on the large volume of geoscientific. data, the exploration carried out to date, and proposed exploration, relating to Kentor's licences in the Kyrgyz Republic. The review was undertaken by David Jones, Principal of Vidoro. His review included a field visit to Kentor's Ertash licence, detailed field traversing, visits to various Kyrgyz State agencies, and the Alex Stewart Assay and Environmental Laboratories Ltd facilities at Kara-Balta, west of Bishkek.

Kentor has been active in the Kyrgyz Republic since 1998 and currently operates through joint ownership of CJSC Kentor with the influential state company Kyrgyz Geophysical Expedition (a 20% equity partner). During this period Kentor has compiled an extensive proprietary database of Soviet era exploration records, and developed valuable commercial, governmental, and political relationships. Utilising the database, Kentor has more recently carried out focused exploration programmes that have led to Kentor assembling major property positions in the most prospective parts of the Kyrgyz Tien Shan.

Kentor's tenements lie within the Tien Shan fold and thrust belt of Central Asia. The Tien Shan extends for some 3,500 km from western China through the Kyrgyz Republic and Tajikistan to Samarkand and Muruntau in Uzbekistan. It is the quintessential intracontinental mountain range, an inboard byproduct of the collision between India and Asia that formed the Himalayas. Many orogenic gold deposits have formed during the tectonic development of the Tien Shan, including the world's largest individual gold deposit. Muruntau (Wilde & Gilbert, 2000), with a total endowment (resources plus past production) exceeding 170 Moz.

David Jones considers that the tenement package assembled by Kentor has outstanding potential for the discovery, through the exploration programme proposed by Kentor, of significant new mineralization. The geological models that underlie the proposed exploration programme are well understood by Kentor's technical staff and consultants. These models have demonstrated validity, in that world class deposits such as Muruntau and Kumtor have already been discovered in the Tien Shan. The selection of the prospecting licence areas by Kentor is soundly based on good geoscientific evidence. The large, extremely prospective Ertash licence is notably impressive, as it contains apparent strike extensions of the same geological units that host the Kumtor deposit.

Kentor's tenements reviewed in this report are set out below. The Uzunbulak, Barkol and Karabalta tenements were granted in December 2004, too late for consideration in this report.

	ss km	MOSK HER
Eriashi	1790	Centred on (but excluding) the Kumtor mine
Chon Kyzylsui	491.	15km NW of the Kumtor mine
Kensu	168.	370km ESE of Bishkek
Kvidoo	149.	4km west of the Makmal gold deposit
Karasul	-71	Central western Kyrgyz Republic

All tenements are 100% owned by CJSC Kentor with the exception of Pchan (Kyldoo) which is held by CJSC. Kyldoo.

The legal status of the tenure of Kentor's tenements is the subject of a separate Legal Report, which appears in Section 9 of the Prospectus. The Kentor tenement situation has not been independently verified by Vidoro.

All of Kentor's mineral tenements are located in the Kyrgyz Republic, a land-locked Central Asian country that was once a southern buffer state of the former Soviet Union. Bordered by China to the southeast, Kazakhstan to the north, Uzbekistan to the west, and Tajikistan to the south, the Kyrgyz Republic is dependent on its neighbours for access to the outside world. There are regular international flights into Bishkek, the capital, while a road and rail system connects through Kazakhstan to Russia and Europe.

đË.

The climate is typically dry continental, but because of the latitude (between 40-45°N, similar to northern Colorado or southernmost New Zealand) and elevation, the temperatures in the mountains are sub-polar.

Global Ore Discovery Pty Ltd ("Global Ore") was commissioned by Kentor to develop systems for exploring in the Kyrgyz Republic. A variety of innovative exploration techniques have been employed, as well as more traditional methods.

The Kyrgyz Republic has been examined on a regional scale employing regional geological and metallogenic map compilation, together with lineament and alteration interpretations generated from images acquired by the ASTER and LandSat TM satellites. Global Ore has used state-of-the art GIS techniques to display and interpret these data. These include over 40 years of detailed geochemical sampling from the Soviet era, supplied by Kentor's partner KGE, as well as surveys conducted by Teck Corporation and Santa Fe Pacific Gold. The database is vast, in the Ertash licence area alone, for example, 30,600 individual stream sediment samples have been identified, as well as 39,350 soil samples and 16,400 rock samples. Information was collected on the analytical techniques as well as the sample type, method, length etc. Statistical levelling of the data was undertaken, as variations can occur between batches of samples and different analytical and sampling techniques, particularly in soil and stream sediments. The objective was to remove these variations and create an internally compatible compilation of data useful for targeting on a regional scale within large datasets. This work is continuing.

The dominant style of mineralization in the Kyrgyz Tien Shan is of the orogenic gold type (Groves et al. 1998). Formeny this style was known as "slate belt" or "turbidite-hosted" type. These deposits are characterized by the presence of gold in massive persistent quartz veins, mainly hosted by a regionally metamorphosed, very thick pile of clastic sediments originally deposited in continental margins.

The northern Tien Shan is also host to a number of significant porphyry and intrusion-hosted Cu-Au deposits, associated with the island arcs that characterized this region through the Palaeozoic. Other intrusion-related deposit types include skarn and epithermal gold mineralization.

In David Jones' opinion, Kentor's proposed annual expenditures on exploration of \$2.0 million and \$2.3 million respectively in the 2005 and 2006 calendar years are adequate to meet both their commitments and the minimum expenditures required to maintain their licences in good standing during that period.

Kentor's proposed exploration programme is a logical continuation of the excellent work done to date and manageable within the technical and financial resources currently available to Kentor. Given the high quality of the selected licence areas, it would not be surprising if the outcome of Kentor's endeavours is a significant new discovery. The balance of effort allocated to the individual properties is sensible, given the state of present knowledge as to the relative merit of each prospect.

THE COMPANY

Kentor is a natural resource company engaged in the acquisition, exploration and, if warranted, the development of mineral resource properties. Kentor's current properties are at the acquisition and exploration stage. All are located in the Kyrgyz Republic.

Kentor has been active in the Kyrgyz Republic since 1998 and currently operates through joint ownership of CJSC Kentor with the influential state organisation the Kyrgyz Geophysical Expedition (a 20% equity partner). During this period Kentor has compiled an extensive proprietary database of Soviet era exploration records, and developed valuable commercial, governmental, and political relationships. Utilising the database. Kentor has more recently carried out focused exploration programmes that have led to Kentor assembling major property positions in the most prospective parts of the Kyrgyz Tien Shan.

GENERAL PROPERTY DESCRIPTIONS AND LOCATION

The Kyrgyz Republic is a land-locked Central Asian country that was once a buffer state of the former Soviet Union. Bordered by China to the southeast, Kazakhstan to the north, Uzbekistan to the west, and Tajikistan to the south,

1. TANA MARA William .
   Muruntau 2. W. J. H. H. II AFIHAT I GEA EN ALANDARIA 500 km Compiled by D G Jones on to LandSat image provided by NASA

the Kyrgyz Republic is dependent on its neighbours for access to the outside world. There are regular international tlights into Bishkek, the capital, while a road and rail system connects through Kazakhstan to Russia and Europe.

Figure 1: Location of Kyrgyz Republic

East-west trending mountain chains to 7,400m altitude traverse the Kyrgyz Republic, separated by fertile valleys and lakes at altitudes generally around 2,000m. The mountains have always been formidable barriers, with few easy passes particularly in the south, so commerce and communications have followed east-west paths. Only 7% of the country is arable land (CIA Fact book 2003).

The climate is typically dry continental, but because of the latitude (between 40-45°N, similar to northern Colorado or southernmost New Zealand) and elevation, the temperatures in the mountains are sub-polar. Figure 2 below shows the rainfall and temperature data for Naryn, a city located mid-way between the Ertash and Kyldoo licences.

Figure 2: Average long-term climate data for Naryn

47

The economy of the Kyrgyz Republic is predominantly agricultural. Cotton, tobacco, wool and meat are the main agricultural products, although only tobacco and cotton are exported in any quantity. Industrial exports include gold, mercury, uranium, and natural gas and electricity. The country has considerable untapped hydro-power potential. The Kyrgyz Republic has 420km of railway line and 16,850km of paved roads (CIA Fact book 2003).

Kentor's tenements reviewed in this report comprise the following:

e permite	CAMAN	Urba qor
Friash	1790.	Centred on (but excluding) the Kumtor mine
Chon Kyzylsu	491	15km NW of the Kumtor mine
Kensul	168.	370km ESE of Bishkek
Kvidoo i	149.	4km west of the Makmal gold deposit
Karasul	71	Central western Kyrgyz Republic

Figure 3: Generalised Geology and Location of Kentor Licences

The Ertash and Kensu licences are located in the Ak-Shyirak Range, accessed by the Bishkek-Karakol highway, a distance of 320 km from Bishkek to the mouth of the Barskaun River. The nearest rail head is at Balykchy, about 245, km from the area.

Some prospects within the licences are accessible via the year-round Kumtor Mine road from Barskaun along the Arabel River. Dirt tracks that are not well developed but can be used by 4WD vehicles, are available during the summer season from June to October.

The climate is typical of a high alpine continental region. The average annual temperature is minus 10.7°C at 4000m. The average daily temperature in July is close to zero. Annual precipitation is approximately 370mm, 85% of which occurs from October to April. Daily water levels in river drainages fluctuate greatly in the summer months due to glacial melt.

A major power line runs to the Kumtor mine. There are abundant water resources. The Kumtor River originates from Petrov Lake, located at the foot of the Petrov glacier, and enters the Kumtor-Taragai-Naryn-Syr Darva river system of the Aral Sea basin. No local rivers flow towards scenic Lake Issyk-Kul. The Taragai River is formed approximately 20 km downstream of Kumtor and the Taragai and the Kara-Say Rivers join to form the Naryn River approximately 70 km downstream. There are numerous streams along the route, which drain the surrounding mountains and glaciers.

The Ak-Shyirak Range is mountainous and partly covered by glaciers. Elevations range from 3500 to 5000m, with isolated mountain peaks rising above 5100m. Some of the area comprises relatively gentle slopes and smooth undulating ridges.

The Karasu prospect is located on the Malatash stream, on the southern slopes of the Atoinak Range in Jalalabad Oblast in the central-western part of the Kyrgyz Republic. The nearest village is Karasu, 25 km to the south, while the nearest rail is at Malmak, 160 km away. The general location of the property is shown in Figure 1 above.

The property is accessed by the sealed Bishkek-Tash Kumyr Highway, a distance of 500km (8 hours drive), and then by an all weather dirt road to Karasu, the closest population centre, a distance of about 45km. From Karasu a 4WD vehicle track goes to the village of Kyzyl Kol and from there a well marked horse trail leads to the Karasu prospect, a distance of approximately 25km. The trip from Kyzl Kol to Karasu takes approximately 7 hours on horseback.

The climate of the area is continental with cold snowy winters and hot dry summers. Spring and autumn months have the most precipitation. Some parts of the region are prone to avalanches in the winter months. The field season spans the period mid-June to early-October.

Karasu lies mostly above the tree line, at an altitude of 2240m and 2490m in mountainous country. The relative difference in elevation between valley floors and ridge crests is about 400 meters. Slopes tend to be steep. The vegetation consists of alpine pasture. At lower elevations, wooded valleys contain ancient walnut, oak, poplar and fir trees.

The Kyldoo licence is located in the Kyldoo River valley on the western slope of the Yangyzkyr Range in the Chaartash area of central Kyrgyz Republic. The nearest village is Makmal, 4 km to the north. The general location of the property is shown in Fig. 1. Access is by the sealed Bishkek-Naryn Highway, a distance of 380km, and then by a sealed road to Baetovo, a further 120km. From Baetovo an all weather dirt road goes to Makmal, a distance of about 130km. From Makmal a 4WD vehicle track goes directly to the prospect.

The Makmal mine operated from 1986 through to 2002, and facilities associated with a medium-sized open pit operation are still in place. The property lies close to the Naryn River and ample water supplies are available.

The climate of the Kyldoo area is continental, with cold snowy winters and hot dry summers. Spring and autumn months have the most precipitation. The field season spans the period mid-July to early-October.

Kyldoo lies mostly above the tree line at an altitude of 2,000m and 2,200m in hilly country. The vegetation consists mostly of alpine pasture.

GEOLOGICAL SETTING

dR.

Kentor's tenements lie within the Tien Shan fold and thrust belt of Central Asia. The Tien Shan extends for some 3,500 km from western China through the Kyrgyz Republic and Tajikistan to Samarkand and Muruntau in Uzbekistan (refer Fig. 1 above). It is the quintessential intracontinental mountain range, an inboard byproduct of the collision between India and Asia that formed the Himalayas. Many orogenic gold deposits have formed during the tectonic development of the Tien Shan, including the world's largest individual gold deposit, Muruntau (Wilde & Gilbert, 2000), with a total endowment of 170 Moz. Endowment means the sum of past production plus current resources, and at Muruntau these total 1,410 million tonnes at 3.75 g/t Au (Goldfarb et al, in press).

49

Basement rocks in the Tien Shan are Archaean gneisses, schists and amphibolites exposed in the eroded cores of anticlines. These pass into quartzites and marbles with a U-Pb age of 2,600 Ma (Neoarchaean). During the Paleoproterozolo, the Tien Shan area was an active continental margin from 2,200 to 1,900 Ma in which carbonates and sandstones accumulated; subsequent large-scale thrusting of oceanic crust over the continental block led to intense deformation tectonic melange, migmatization, and emplacement of granitic plutons (Bakirov & Maksumova, 2001). Following a period of uplift and erosion, carbonate sediments, quartz sand and shale were deposited in epicontinental marine basins. Rifting commenced around 1,300 Ma, accompanied by acid volcanic activity, followed by lateral compression, metamorphism, and formation of granite plutons dated at 1,100 Ma.

Continental ritting resumed around 700 Ma, accompanied by acid volcanism, caused by the breakup of the Gondwana super-continent. Grabens were filled with non-marine sediments such as grits, red sandstone, carbonaceous silts, glacial debris and alkaline volcanic material such as rhyolite, dated around 600 Ma. This distinctive graben fill, named the Jetymtau Formation, is the host to the gold mineralization at Kumtor. As the eastern margin of Gondwana fragmented, the Tien Shan region broke into a number of micro-continents. separated by marginal marine basins.

From the end of the Proterozoic ("Vendian" time) around 545 Ma through to the beginning of the Early Ordovician (500 Ma), terrigenous and carbonate sequences were deposited on shelves and continental slopes in the marginal basins.

From the Early Ordovician onwards throughout the Palaeozoic, the Tien Shan record a great number of collision events, as a succession of fragments accreted on to the micro-continents. The first began about 475 Ma, with a north-plunging subduction zone forming after closure of the basins, accompanied by the development of alpinetype nappes. By the Middle Ordovician, island arcs formed along the margins, accompanied by calc-alkaline and shoshonitic volcanic-plutonic activity. At least two other collisions occurred in the Middle Ordovician-Silurian, enlarging the Tien Shan continent and accompanied by folding and emplacement of granitic plutons.

In the Late Devonian-Early Carboniferous period, the continental fragment that made up the central Tien Shan collided with the Tarim block to the south. Approximately 70 million years later, the northern Tien Shan island arc was accreted to the northern margin of the combined block, effectively closing the paleo-ocean basin and amalgamating all of Central Asia.

The repeated collision events through the last 2,000 million years have created an immensely complex series of east-west trending slices, with many episodes of tight folding and thrust faulting. Abundant deep mantle-tapping faults have allowed multiple episodes of fluid circulation to occur in the severely disrupted rock units, generating world-class orogenic gold and porphyry Cu-Au deposits along the entire length of the Tien Shan.

The region was tectonically quiet until India collided with Asia 50-55 million years ago (Ma). As India thrust under Tibet, the compressional forces generated intracontinental thrust sheets which produced the highest mountains in the world. The Himalayas commenced to rise around 35 Ma, tilting the Tarim Block down. (Figure 4)

Figure 4: Space shuttle image illustrating tilting of Tarim Block

The Tarim microcontinent retained its rigidity rather than folding (Neil & Houseman, 1997), and in turn began to thrust under the Tien Shan continental fragment around 20 Ma, causing the southern Tien Shan to begin uplifting about 11 Ma (Buslov & Klerkx, 2003). Squeezed against the Kazak Platform to the north, the Tien Shan responded with tight folding and thrust faulting, generating the highest mountain chain outside of the Himalayas (Figure 5). Pik Pobedy, in eastern Kyrgyz Republic, is 7,439m high (24,064 feet).

Despite the 500km separation between the northern Himalaya and the Tien Shan, around 40% of the 600km of crustal shortening that resulted from this collision can be accounted for in the Tien Shan (Abdrakhmatov et al, 1996), causing rapid uplift and exhumation (Figure 6). An estimated 2000m thickness has been eroded in the past 11 million years (Bullen et al, 2001), thus exposing deeply buried mineral deposits and possibly generating potentially large, yet-to-be-discovered gold placers. The ancient trade route from China to the West along the southern Tien Shan was known as "The Golden Road to Samarkand" because of the abundance of alluvial gold in the valleys, such as the very rich Darvaz deposit in southern Tajikistan.

Figure 6: Sketch section through the Tien Shan

Section 7 - Independent Geologist's Report

50

The "Nikolaev Line" (see Fig.3 above) defines the tectonic boundary between the extensively intruded island arc rocks to the north and the sedimentary strata, primarily carbonate and siliclastic rocks, to the south. The northern arc rocks in broad terms host porphyry Cu-Au deposits like Kalmakyr, while the orogenic gold deposits dominate. the sedimentary terrane to the south.

MAJOR DEPOSIT TYPES IN THE KYRGYZ REPUBLIC

In the Soviet period, the Kyrgyz Republic's 170 proven deposits put it in third place behind only Russia and Uzbekistan in gold endowment in the Union. Production at Makmal, the largest gold mine at that time, has ceased, but three more large gold deposits, at Kumfor, Jerooy, and Taldybulak-Levoberezhny, have been discovered in the Kyrgyz Republic. Forty-five other deposits with "resources" in Soviet terminology, said to be greater than 160,000 ounces of gold each, have been identified by the State Agency for Geology and Mineral Resources (SAGMR) of the Kyrgyz Republic (Bogdetsky, 2001). Kumtor is a world-class orogenic gold deposit with an estimated remaining resource of 51 Mt @ 3.5 a/t Au after production from 1996-2003 of 37 Mt @ 4.65 a/t Au (Centerra Prospectus dated 13 May 2004). Jerooy is a low-sulphidation, intrusive-hosted deposit containing an undeveloped resource of 25 Mt at 3.97 g/t Au (Newall, 2002). The relative importance of orogenic gold deposits and porphyry Cu-Au deposits in the region is illustrated by the following grade-formage diagram (Figure 7).

Figure 7: Grade-tonnage diagram, gold deposits of central Asia

Orogenic Gold

The dominant style of mineralization in the Kyrgyz Tien Shan is of the orogenic gold type (Groves et al. 1998). Formerly this style was known as "slate belt" or "furbidite-hosted" type. These deposits are characterized by the presence of gold in massive persistent quartz veins, mainly hosted by a regionally metamorphosed, very thick pile of clastic sediments originally deposited in continental margins. The sediments have been compressed, often through continental scale collision. Heating of the sediment pile, through one or a combination of a variety of causes, initiates and drives hydrothermal fluid migration over long distances. The fluids exploit regional fractures to travel and deposit quartz veins (and gold) over a great depth range, from 15-20 km deep through to the nearsurface environment. Because such a sequence of events has been repeated many times throughout geological

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time, deposits of this type have been formed from the middle Archaean through to the Mesozoic. Orogenic gold deposits younger than 55M years have not been identified to date, probably because erosion of thick young sediment piles has not reached sufficient depths to expose them.

The United States Geological Survey (USGS) has identified over 300 deposits of this type, with collective production in excess of 1,000 million ounces of gold (Berger 1986). A gold grade of 6.3 g/t Au or better has been a feature of 90% of the 313 deposits studied. The world's largest individual gold mine outside of the Witwatersrand, the Muruntau deposit in the western part of the Tien Shan, is of this type. It contains a total endowment of 170 million ounces of gold. Other major progenic gold provinces like the Tien Shan include the Bendigo gold field in Victoria, Australia (>25 Moz produced); the Ashanti district of Ghana (production plus resources exceeding 39 Moz); the Barberton gold field of South Africa and the Meguma Terrane of Nova Scotia, Canada.

The description of the Tien Shan described above under "Geologic Setting" shows that the Tien Shan has evolved in almost precisely the manner appropriate for the formation of orogenic gold deposits. The presence of Muruntau and Kumtor, and the many other deposits shown in Figure 7 above, testify to the prospectivity of the Tien Shan for this style of deposit.

The Kumtor gold mine is excluded from the Ertash licence, but obviously represents a style of mineralization that would be a prime target for exploration in the area, so a brief summary of the geology of Kumtor is appropriate.

Kumtor comprises a series of deposits trending ENE, hosted by black carbonaceous shales of the upper Neoproterozoic (Vendian) Jetymtau Formation, in the hanging wall of the Kumtor fault zone (KFZ). The Kumtor fault zone is a 0.5 to 1.5 km wide subsidiary structure to the Nikolaev Line that has been traced for 40 km along strike on the northern edge of the range front as shown in Figure 8. Soviet work has defined centres of mineralization for 10 km along the fault zone (Jenchureva et al, 2001). Work by Kentor's geologists has extended the KFZ at least 20 km to the northeast.

Figure 8: Generalised geology of the Kumtor area. Ore-bodies shown in yellow

Detailed work in the Kurntor mine has shown the deposit is hosted in the hanging wall of a 100 to 250 m wide splay of the KFZ, at the intersection with a NS trending cross structure. This splay of the KFZ dips at 30 to 50 degrees to the SE, placing Vendían shales over Cambrian to Ordovician carbonates. Deep Soviet drilling intersected boudins of mineralization and Cenozoic sediments in the fault zone, up to 500m below surface, indicating post mineral (Tertiary) reactivation of the structure. (Figure 9).

Figure 9: Sketch section through the Kumtor open pit, looking southwest.

Kumtor is a typical orogenic gold deposit, with economic gold mineralization confined within a zone of intense deformation that has been repeatedly reactivated through many periods of geological time. The source of the gold is controversial, although a majority of researchers (e.g. Jenchuraeva et al. 2001; Cole, 2001; Berger et al. 1994) believe that anomalously high gold was incorporated into the Jetymtau Formation during sedimentation, and then subsequently remobilized and concentrated during the series of tectonic episodes that occurred throughout the Phanerozoic.

Using this model, the conjunction of appropriate stratigraphy with regional scale deep-seated faults and shear zones is important in focusing exploration. The gold mineralization appears to have been dissolved in CO_s-rich fluids of deep crustal origin that circulated through the shales, then travelled up major high-angle reverse faults and deposited the gold in zones of local structurally enhanced permeability. The role of magmatism is less clear, although metasomatism in the thermal aureole of syntectonic. intrusives may have assisted the remobilization of the gold from the enriched carbonaceous black shales.

Intrusion-hosted Au

The northern Tien Shan is host to a number of significant porphyry and intrusion-hosted Au deposits, associated with the island arcs that characterized this region through the Palaeozoic (see "Geologic Setting" above). These include the Jerooy and Taldybulak deposits in the Kyrgyz Republic, the Amantaytau deposit in Uzbekistan with a JORC resource of 41.8Mt @ 3.6 g/t Au (Oxus Gold plc Annual Report 2003), and the Jilau deposit in Tailkistan with 65.3Mt @ 0.99 g/t Au (Avocet Mining plc Annual Report 2004).

This style of deposit is commonly found in orogenic beits at convergent plate boundaries, commonly linked to subduction-related magmatism. They also occur in association with the emplacement of high-level stocks during extensional tectonism related to strike-slip faulting and back-arc spreading following continent margin accretion (Pantelevev, 1995).

The deposits take the form of stockworks of quartz veinlets, quartz veins, closely spaced fractures and breccias containing pyrite and chalcopyrite with lesser molybdenite, bornite and magnetite. Often, large zones of economically bulk-mineable mineralization are found in or adjoining porphyritic intrusions and related breccia bodies. Disseminated sulphide minerals are present, generally in subordinate amounts. The mineralization is spatially, temporally and genetically associated with hydrothermal alteration of the host rock intrusions and wall. rocks.

Skarn Au

The Makmal deposit in the Kyrgyz Republic is a good example of this type. From commencement of production in 1986 through to 2000, Makmal produced 1 Moz of gold (Jenchuraeva et al, 2001). Typically, gold skams form in orogenic belts at convergent plate margins. They tend to be associated with syn to late island arc intrusions emplaced into calcareous sequences in arc or back-arc environments (Ray, 1998).

The gold mineralization is genetically associated with Ca-Fe-Mg silicates, such as clinopyroxene, gamet and epidote. Gold is often intimately associated with Bi or Au-tellurides, and commonly occurs as minute blebs (<40 microns) that lie within or on sulphide grains. The vast majority of Au skarns are hosted by calcareous rocks.

Epithermal Au

The Kochbulak mineralization (6Mt @ 13.4 a/t Au) in Uzbekistan, near the western border of the Kyrgyz Republic, is classed as an epithermal style deposit (Kovalenker et al, 1996). This style is rarely found in the Tien Shan.

Epithermal deposits occur in extensional and trans-tensional tectonic settings, commonly in volcano-plutonic continent-margins, oceanic arcs and back-arcs. Typically they are localized in zones where stratovolcanoes and other volcanic edifices are constructed above plutons.

High-sulphidation epithermal systems are characterized by veins, vuggy breccias and sulphide replacements, ranging from pods to massive lenses, that occur in volcanic sequences associated with high level hydrothermal systems marked by acid-leached, advanced argillic, siliceous alteration (Pantelevey, 1996).

Low-sulphidation epithermal deposits include quartz veins with pyrite, sphalerite and galena in structural zones and stockworks within alkalic intrusions, and/or disseminated pyritic zones in alkalic intrusions, diatremes, coeval volcanics and surrounding sediments. Argillic alteration, +/- silicification, carbonatization, and barite and fluorite. veins are common (Schroeter & Cameron, 1996).

Kochbulak contains elements of both high and low-sulphidation epithermal styles. The deposit is located within an andesite-dacite volcanic sequence intruded by sub-alkaline granodiorite and grano-svenite porphyry dikes. The mineralization originated and evolved during orogenic uplift associated with aerial volcanism and emplacement of porphyritic granitoids. The Kochbulak deposit contains a great diversity of ore-forming sulphides, sulphosalts, tellurides, and selenides, several of which were first found there (Kovalenker et al. 1996).

EXPLORATION STRATEGY

Global Ore was commissioned by Kentor to develop systems for exploring in the Kyrgyz Republic. A variety of innovative exploration techniques have been employed, as well as more traditional methods,

The Kyrayz Republic has been examined on a regional scale employing regional geological and metallogenic map cornollation, together with linearnent and alteration interpretations generated from images acquired by the ASTER. and LandSat TM satellites. Kentor's partner, KGE, supplied the entire Soviet-era database, including a vast array of geochernical sampling and geophysical measurements. Global Ore has used state-of-the art GIS techniques to display and interpret these data.

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ASTER Alteration Mapping

Global Ore sourced, on behalf of Kentor, ASTER imagery that had been acquired in 2002. Using a proprietary modified version of the mixture tuned matched filter analysis ("MTMF") within the remote sensing program ENVI (Environment for Visualisation of Images), Global Ore was able to identify within these images likely areas of occurrence of each of the following minerals:

Kaolinite Muscovite (Sericite) Pyrophyllite Alunite Chlorite Epidote Silica (amorphous and crystalline) Calcite Jadeite/albite

The MTMF mineral maps were interpreted to filter out false responses due to cloud, water, and shadow and to select those responses believed to be due to alteration and not lithological variations (Figure 10).

Figure 10: ASTER mineral mapping, Kumtor area

GIS Compilation

A GIS database of all available previous exploration geoscientific data is being compiled to aid the exploration process. These data include over 40 years of detailed geochernical sampling from the Soviet era, as well as surveys conducted by Teck Corporation and Santa Fe Gold. The database is vast. In the Ertash licence area alone, for example, 30,600 individual stream sediment samples have been identified, as well as 39,350 soil samples and 16,400 rock samples. Information was collected on the analytical techniques as well as the sample type, method, length etc. Statistical levelling of the data was undertaken, as variations can occur between batches of samples and different analytical and sampling techniques, particularly in soil and stream sediments. The objective was to remove these variations and create an internally compatible compilation of data useful for targeting on a regional scale within large datasets.

Geophysical Assessment

Global Ore acquired located data from several Soviet-era geophysical surveys in the vicinity of the Kumtor mine. The data was gridded by Global Ore to be compatible with GIS and image processing software. Basic processing to remove regional effects, and magnetic reduction to the pole, was carried out by Global Ore. These processed data were then supplied to Geophysical Services and Resources Pty Ltd ("GSR") for an opinion on the quality and usefulness of the data. GSR indicated that the geophysical work is of sufficient quality to justify further reprocessing, including inversion (3-dimensional) processing for target generation. This work is planned,

The geophysical data includes 1:50,000 scale gravity covering an area of 178 sq km on lines 1 km apart with readings at 200m apart along each line, as well as 1:10,000 scale gravity covering 5 sq km at Akbel. Ground magnetics and gamma spectrometry readings taken on lines 100m apart, with stations at 20m intervals along each line, covers a large area around Kumtor. Gradient array IP at 500m line spacing covers the 178 sq km area, with detailed IP on 100m line spacing over 14 sq km at Akbel. (Figure 11).

LEGEND Ground magnetics and gamma spectrometry Regional gravity Detailed gravity Akbel prospect

Complied by D G Jones from data supplied by Global Ore Discovery

20km

Figure 11: Geophysical surveys around Kumtor. Green lines: ground magnetics & gamma spectrometry, Blue block: regional gravity, Red block: detailed gravity Akbel prospect

Section 7 - Independent Geologist's Report

56

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MMI Geochemistry

Like conventional geochemistry, mobile metal ion (MMI) geochemistry is based on the theory that metal ions from deeply buried orebodies are mobilized in the weathering zone and migrate vertically to the surface, where they accumulate in the surface soil immediately overlying the orebody. The MMI technique surmises that, initially, the metal ions are weakly bonded to the soil particles. With time, the metal ions become strongly attached to the soil particles, and are subject to movement away from the initial accumulation zone by erosion. The objective of MMI analysis is to differentiate those ions that are still mobile from those that are more strongly bonded to the soil and therefore may have moved away from the source.

A proprietary process has been developed by a Perth-based company. MMI Technology, which uses special chemical techniques to extract into solution only the mobile metal ions from soil samples. The solution is then analysed by high-resolution ICP-MS, as the mobile metal ion content is generally very low and requires sensitive detection. At this stage only two laboratories, one in Toronto and one in Perth, have been licensed to use this technology.

"Response ratios" are calculated by dividing the MMI analysed value of each individual element in a sample and dividing it by the background level for the same element. The background level is the mean (average) value of the lowest quartile (25%) of the results recorded for the specific element in the suite of samples taken. Results less than the detection limit are included in the lowest quartile group by assuming a value of half the detection limit; e.g. If Au $< 0.01$ ppb use 0.005ppb.

Response ratios exceeding 20 times background are considered significant. A high response ratio is assumed to indicate that the sample was taken close to the buried orebody. Conversely, a low response ratio, regardless of the actual assay level, would indicate that the sample represents material that has been moved away from the source by surface erosion and transportation processes.

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Successful trials of MMI conducted in sub-arctic environments where glacial till cover was a major problem suggested to Kentor that the MMI technique could be applicable in the Kyrgyz Republic. Potentially, substantial cost savings could be achieved by combining geochemical and geophysical information to prioritize targets and reduce the amount of initial exploration drilling.

Kentor trialled MMI soil geochemical sampling within the Ertash licence in 2003 and has established it as a valid technique.

KENTOR TENEMENTS

Ertash and Related Licences

Prior to the break-up of the Soviet Union in 1991, exploration activities within the Kumtor-Ertash area were undertaken by the State owned Northern Kyrgyz Geological Expedition (NKGE). Discovery of the Kumtor deposit was made in the summer of 1978 while following up pyritic float samples collected from the frontal moraine of the Sarvtor Glacier that contained between 5-12 g/t Au. In the period from 1979 to 1983 prospecting studies of the area included soil sampling, surface trenching, drilling and development of an underground adit. The results of this work led to the definition of the Kumtor resource and the identification of the South West, Bordu (Sarvtor), Petrov (North East), and Akbel prospects, Work continued in the immediate area of Kumtor deposit, under the direction of the NKGE, until December 1992 when the government signed a JV agreement with Cameco to undertake a feasibility study on the gold resource. Camego's subsequent exploration activities have been focused within the 7.5 km radius of the mine termed the Kumtor Exclusion Zone (Thalenhorst & Farquharson, 2004).

Between 1995 and 1999, sections of the area now covered by the Ertash Tenernent were explored under joint ventures with western companies. Teck, under the Altyn-Too JV with the NKGE, explored the Akbel-Choloktor area. while Santa Fe Pacific and Kyrgyzaltyn explored the Beshmoinok and Kurgaktepchi part of the property.

Geology and Mineralization

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Section 7 - Independent Geologist's Report

In the Ertash area the Tien Shan is composed of a core of uplifted Precambrian metamorphics and granitoids, with NW verging imbricate nappes of Proterozoic and Palaeozoic volcano-sedimentary sequences (Nikonorov 1993). The northern boundary of the licence closely follows the Nikolaev Line.

Figure 12: Simplified geology of the Ertash and adjacent areas, showing prospects

Exploration by Kentor has highlighted a series of areas within the Ertash licence that are prospective for Kumtor. analogues. Weakly metamorphosed Neoproterozoic (Vendian) carbonaceous shales with interbeds of black cherts and grey marls have been traced by Kentor from the boundary of the Kumtor exclusion zone southwest to Akbel and Choloktor (Figure 13). Discontinuous tillite-like conglomerates with subordinate interbeds of grey clayey limestones occur within the shales. The thickness of the carbonaceous shales is up to 490m, while the tillite conglomerate unit is up to 160m (Baev, 1989). The Vendian rocks are folded into narrow isoclinal folds overturned to the NW. Well-developed NE striking foliation is generally steeply dipping (70°-80°) to the E.

At Akbel, a SW-trending fault, dipping 20°-25° SE, has thrust older Neoproterozoic (Riphean) schistose mvolites. rhyodacites and light-grey, yellowish-white and pale-greenish tuffs over the younger Vendian black shales. Rhyodacites occur at the middle part of the section and display flow features. The Riphean volcanics are bimodal in this area, with basalts and basaltic andesite flows interbedded with the rhyolites, rhyodacites and tuffs, possibly indicating prolonged fractional crystallization of a common primary melt. This sort of bimodal volcanism typically occurs in continental rift settings. The visible thickness of Riphean rocks is 480 m (Baev, 1989), and at least 1,000m of horizontal displacement has been measured along the fault, which is probably the continuation of the Kurntor Fault.

Figure 13: Kentor prospects in the vicinity of Kumtor Mine

Lower Carboniferous rocks outcrop in a small areas at northern-western part of the Akbel area, at the northern side of the Boordu stream. They are represented by coarse-bedded light limestones and red-coloured polymictic sandstones. The visible thickness of Carboniferous rocks is 120-150 m. They are separated from the Proterozoic rocks by the NE striking Kumtor fault.

Widely developed Quaternary glacial and colluvial soil sediments cover more than 70% of the Akbel area.

At Choloktor, a sequence of east-northeast striking sediments are folded about axial planes of similar orientation. The oldest rocks are black carbonaceous mudstones, sillstones and argillites totalling 400m in thickness, interpreted to be the eastward extension of the Akbel Vendian rocks. Within the Choloktor area they are primarily represented by erosionally resistant carbonaceous cherty mudstones. Weak to moderate iron-carbonate alteration is common, while areas of clay alteration appear to have been eroded by glacial activity.

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The Vendian rocks have been thrust over an asymmetrically folded Palaeozoic sequence of red to green shales and lithic tuffs to the north. These Cambrian-Ordovician sediments of the Shortor Formation consist of grey and dark-grey carbonaceous-clay limestones and dolomites. Small lenses of black carbonaceous shales are observed in limestones. They are the equivalents of the Berkut Formation in the Kumtor mine area.

Conformably overlying the Shortor Formation are Ordovician sediments of the Oljobai Formation, the thickest unit (approx. 800m, Baev, 1989) in the area. The basal section is composed of green-grey and red schistose siltstones with interbedded grey limestones and dolomites. The middle section is composed of alternating green and red argillites, red-coloured siltstones with ferruginous-clay cement possessing interbeds (to 3m) and lenses of brightly-coloured jasper. The upper section is composed of alternating green and red coloured fine-grained polymictic sandstones and siltstones. The age of this suite was determined on the basis of fossil conodonts.

Satellite imagery of the area displays numerous important lineaments in the area. The Choloktor block of sediments is separated from the 'Akbel-Kumtor block' to the east by the north-south Akbel fault. Two other northsouth faults are observed, one to the west of the Choloktor block and one passing through the middle of the block. Movement along the Akbel fault appears to be left lateral with possibly 4 km displacement. Several northwestsoutheast faults pass through both the Choloktor and Akbel-Kumtor blocks^t. Movement on these faults appear to be left lateral and they post date the Akbel fault.

Analysis by Kentor of previous Soviet and Santa Fe Gold stream sediment and rock chip sampling, supplemented by additional Kentor sampling, has defined a 40 km belt of anomalous gold distributed along a splay of the Atbashi-Invichek Fault zone. Recent mapping in the Kurgaktepchi prospect (see Fig. 12 above) has shown that the mineralization is bounded by shallow NW dipping thrust sheets, suggesting that this trend of mineralization is hosted in the structural mirror image to the Kumtor Fault Zone. The host for mineralization ranges from granitoids at Kurgaktepchi to Neoproterozoic metasediments and serpentinite bodies at Beshmoinok. Vendian carbonaceous shales outcrop over significant areas of the belt in the Kurgaktepchi Area.

Exploration

Between 1996 and 1999 the Altyn-Too joint venture (Teck Corporation and NKGE) explored the Akbel and Choloktor areas. Their surface mapping and sampling at Akbel found quartz-carbonate-pyrite+/-albite veining coincident with the main splay off the Kumtor fault. The veins occur within a zone of pervasive sericite-quartz-pyrite with minor chalcopyrite mineralisation. The type of alteration and mineralization is the same as at the Kumtor deposit. Rock chip sampling from this area obtained highly anomalous results up to 0.7 g/t Au. The intensity and size of the alteration zones was seen to increase with depth and to the northwest. Drilling of a small area adjacent to the Kumtor tenement boundary by the Altyn-Too joint venture during 1999 identified zones of silicification, albitization and carbonatization with a thickness from several cm to several metres hosted in carbonaceous shales. These zones were accompanied by pyrite mineralization, but no economic gold mineralization was found. Apparently, the holes were sited almost entirely on the basis of a strong IP response in the area, which was possibly caused by the pyritic carbonaceous shales.

In 2003, Kentor conducted MMI soil sampling of eight northwest oriented, irregularly spaced lines over a total length of 4 km along the interpreted extension of the Kumtor Fault Zone (see Fig. 14 below). Samples of the glacial moraine and alluvial cover were taken at 50m intervals along each line. The gold response ratios within a 600m long anomalous zone are coherent at 7 to 10 times background.

An additional 1,800 MMI soil samples were collected at Akbel in the 2004 field season. The MMI results at Akbel show a zone 2,000m wide by 3,000m long of elevated Au, W, Pd, Ag and Mo values (Figure 14), consistent with a buried deposit of the Kumtor style, and coincident with a topographic high that may represent a silicified zone beneath the glacial cover. An attempt was made to drill this zone using old Soviet rigs equipped with tricone bits, but the rigs were unable to cope with the high water flow and boulders in the glacial cover. Drilling has been deferred until more suitable drill rigs can be mobilized.

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Figure 14: Akbel MMI gold geochemistry

Compiled by D G Jones from data supplied by Global Ore Discovery.

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A program of reconnaissance level mapping. MMI soil and rock chip geochemical sampling was completed over the Choloktor prospect during the 2003 field season (see Figure 15 below). Work was focused in an area of low level gold soil anomalies previously defined by the Altyn-Too joint venture. The program was designed to test for potential concealed gold mineralization in a poorly exposed zone of strongly altered, pyritic-carbonaceous, Vendian and Cambro-Ordovician shales. The target area is located within an ENE trending structural zone, interpreted to be the sinistral offset of the Kumtor Fault Zone.

Kentor sampled eight irregular spaced NNW oriented MMI soil lines that define a 3.8 km long "grid" with long axis oriented ENE. Individual lines variety between 1.1 and 1.4 kms in length and were sampled on approximately 50 m intervals along each line (Figure 15). Rock chip and chip channel samples where collected where outcrop permitted, usually in drainages.

In the 2004 field season, the MMI soil grid at Choloktor was infilled and extended. The work highlighted two zones of high order, multipoint, coincident Au-Ag-Pd-W-Cu-Mo anomalies. The eastern zone has maximum dimensions

Figure 15: Choloktor MMI gold geochemistry

of 2,500m x 500m. The western zone is at least 1,800m long and 500m wide (see Figure 15). The anomalies are localized at the interpreted structural contact between Vendian carbonaceous shale and Ordovician sediments a similar setting to the Kumtor deposit. Response ratios for gold within the anomalies exceed 20 times background. The actual raw gold analyses are quite low, typically within the range 0.4 to 5 ppb Au, but because the background gold values are less than 0.1 ppb Au the response ratios using the MMI technique are accentuated. Kentor's rock chip sampling in the area of the soil grid has returned spotty weakly anomalous gold, with peak assays in the range 50 to 200 ppb. The surface mineralisation is insufficient to explain the coherence and magnitude of the Au-Ag-Pd-W-Cu-Mo MMI soil anomaly and therefore may represent leakage from a concealed mineralized source at depth.

Using the MMi soil grid, 250 km of ground magnetics was completed at Akbel and surrounding area in 2004, with stations at 10m intervals. Regolith mapping of the area was also undertaken. Interpretation of the geophysics is in progress.

Geological mapping and rock sampling by Kentor at Kurgaktepchi (see Fig.12 above) has defined a large mineralized system developed over several kilometres. Gold is associated with tensional vein arrays in shoots and sheeted vein zones hosted in granodiorite.

The best result to date from rock chip sampling is 8m grading 6.42 g/t Au, including 4m at 12.1 g/t Au. Compilation of previous Soviet era soils geochemistry has highlighted an untested +500m long zone of anomalous gold in soils with values up to 500ppb, coincident with Vendian sediments and granodiorite to the south of the area.

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At Beshmoinok two main types of metasomatic alteration with associated gold mineralization have been identified through previous exploration. The first zone consists of silicification in thin thread-like quartz-carbonate-pvrifechalcopyrite-gold veinlets hosted in quartz-sericite shale of the Lower-Middle Carboniferous Jamanachki Formation. The zones are lens-like, tens of metres in length, and several metres thick. Grab samples taken from these mineralized zones assay up to 12g/t Au. Trench samples from quartz-carbonate-sulphide (pyritechalcopyrite) veins in listvenites grade 1.1g/t over 0.25m and 1.4g/t Au over 0.25m.

The second alteration type consists of zones of silicification, albitization and tourmalinization (secondary quartzite) containing gold-pyrite-arsenopyrite mineralization. One of the largest is situated in the right bank of the upper reaches of the Chonsai River. Surface mapping shows a lens shape 150 by 300m. The central part, which is the most intensely altered hydrothermal processes, is formed by quartz-albite-tourmaline metasomatite with pyrite and arsenopyrite. There is quartz sulphide vein mineralization in this zone with veins up to 0.5m thick. Gold mineralization can be traced for up to 48m. The highest gold grade identified was 4.7g/t Au over 0.5m occurring in a quartz-pyrite-arsenopyrite lens 0.5m thick and about 17m long.

Regional work at Ertash during the 2004 field season was airned at checking 54 anomalous catchments identified in the tenement from previous Soviet stream sediment sampling. About 70% of the anomalies were followed up with check and infill sampling. Assaying of these samples had only just begun as at the date of this report. Detailed analysis of results and targeting will be undertaken in 2005.

The Kensu licence is also an outcome of ASTER alteration processing, linearnent and regional geology analysis by Global Ore Discovery. Interpretation indicated that targets within the Kensu tenement are similar to the Kumtor deposit in that they have a similar strong alteration signature, are hosted in similar Vendian shales and occur along a splay or analogous parallel structure to the Kumtor Fault (Figure 16). The project area has never been systematically explored for gold. During the 2004 field season approximately one third of the tenernent was BLEG sampled: assays are awaited.

Karasai Valley, Ertash Project

Figure 16: Generalised geology of the Kensu area

Chon Kyzylsu, another tenement generated in 2003, was field evaluated this year however results of stream and rock geochemical sampling have downgraded its potential and the project no longer remains a priority for exploration.

Karasu

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Geology and Mineralization

Section 7 - Independent Geologist's Report

Karasu is situated within the Padshaatin tectonic zone of the Middle Tien Shan tectonic block. The prospect lies in a bend of a WNW trending regional high angle reverse fault known as the Ashutor Fault which is south of and parallel to the Talas-Fergana strike-slip fault. Locally, meta-volcanic rocks of the Lower-Middle Devonian Eifel Formation occupy the core of the anticline, cut by a series of faults. (Figure 17).

The Eifel Formation contains intercalations of lava, tuff, agglomerate and porphyry of andesite, basaltic-andesite and dacite-andesite composition, as well as various meta-sediments. Overlying the Eifel Formation on the northern limb of the anticline, limestone and dolomite with intercalations of sandstone of the Middle Devonian Zhivetky Formation dip gently northward. In the southern limb, limestone and sandstone of the Famen Formation dip southward at angles of 60° to 80°.

KENTOR GOL

Figure 17: Generalised geology of the Karasu area

Major faults terminate the meta-volcanic unit to the north and south. The northern fault separates the metavolcanic unit from the calcareous sediments. The fault dips to the north at an angle of 40°-65°. The southern fault dips steeply to the south at angles of 80° to 85° and is marked by a crushed zone up to 50m wide. Within the crushed zone are minor occurrences of oxidised breccia and associated copper mineralisation (malachite, azurite).

Kentor has secured title to ground surrounding the main Malatash vein occurrences (refer to Figure 17). Gold mineralization at Malatash is associated with quartz vein swarms developed at the contact of massive Devonian limestone and altered meta-andesite and meta-basalt of the Lower Devonian Eifel formation, which forms the core. of the regional anticline. The meta-volcanic package is regionally metamorphosed to green schist facies (chlorite, epidote, actinolite, and carbonate). In the zone of quartz veining the rocks are variably altered to quartz, sericite, chlorite and siderite. As the veins are approached they are enveloped by pervasive spotted Fe carbonate alteration.

The quartz is massive, amorphous and typically fractured with yellow-brown ferruginous staining. Free gold is associated with pyrite, hematite, and minor chalcopyrite and silver sulphosalts. Preliminary field observations suggest that the mineralized system is vertically zoned from gold-pyrite-chalcopyrite at lower elevations to goldhematite-pyrite $\pm$ chalcopyrite $\pm$ tetrahedrite higher up.

The form and structure of the mineralized zones is complicated, representing zones of intersecting steep and gently dipping groups of quartz veins and veinlets. In the area of intersection of veins are small shoots which are highly enriched in gold. Gold distribution is uneven within the zones of quartz veins as well as within the veins themselves.

A5

Two types of mineralization have been described by Soviet geologists; quartz-veins and stockwork zones. Goldbearing quartz veins tend to be small. Two principle vein zones are exposed over approximately one km of strike. They appear to dip north-easterly at 60° to 70°.

Exploration

Work by Soviet geologists during the 1980's identified high-grade values reporting to narrow quartz veins scattered over several kilometres in the Karasu area. The veins form in multi-directional clusters or swarms. A small 80 hectare tenement covers the main vein occurrence at Malatash. Kentor has no interest in this tenement. However, the veins extend into a 127 sq km Prospecting Licence held by Kentor surrounding the small tenement.

The Soviet sampling indicated that gold was specifically confined to quartz veins with values ranging from 2 to 300 $g/t$ Au (average 11.5 $g/t$ ). The elemental association of Au $\pm$ Cu-Ag-Te-Bi is typical of intrusion-hosted gold systems, e.g. Jeroov.

Soviet stream pan concentrate and mesh sampling in the district returned strongly anomalous gold values at Karasu and adiacent drainages, suggesting the possibility for additional hard rock sources elsewhere in Kentor's licence that could possibly be bulk mined and fed to a central mill.

Kvidoo

Geology and Mineralization

The Kyldoo Prospecting Licence is situated on the Talas-Fergana Fault within the Ak-Shyirak Range, 4 km west of the Makmal gold mine. The Makmal mine has produced 1 Moz of gold (Jenchuraeva et al, 2001). Fieldwork by Kentor has identified an eight kilometre long, semi-continuous recumbent anticline comprising seven domal structures.

The northern flanks of the anticline are composed of early Palaeozoic siliclastic and clastic sediments. The top of the Vendian target beds comprising tillite, carbonaceous shale and limestone are exposed along the crest of the anticline. The anticline is interpreted as a window through a large thrust fault which brought Late Palaeozoic carbonate and volcanic rocks of the Southern Tien Shan plate onto early Palaeozoic and Precambrian sediments of the Middle Tien Shan tectonic plate. Small dykes and stocks of Permian diorite and monzonite have been traced along the core of the anticline.

The prospect area has experienced strong dilation caused by trans-tension of the rotated segment of the Talas-Fergana Fault. As a result, all the rocks within the prospect area are intensely fractured and cut by a system of listric normal faults.

At Kyldoo, four gold occurrences have been identified aligned along a 4.5 km NNW mineralised trend. They have been named Morenny, Tropinny, Medovy, and Kansky. Two other minor gold occurrences occur further to the south. at Bosogo and Minjilki. All these areas were previously studied by Soviet expeditions. Kyldoo was selected by CJSC Kentor in 1997 as one of the best under-explored sites in the Middle Tien Shan on the basis of its similar geological/structural setting to the sediment-hosted Kumtor deposit.

Exploration

$-26$

Geological mapping by Kentor has confirmed a zone of intense alteration of Fe carbonate-albite-adularia-sericitechlorite-quartz focused towards the hinge of the Kyldoo anticline. Spotted pseudomorphs of iron oxide after pyrite and siderite-ankerite are widespread. At Tropinny and Medovy, the two principal prospects, sampling of old Soviet and new buildozer costeans returned strongly anomalous As-Sb-Mo-W associated with altered rocks. Weakly anomalous gold values in the range of 10 to 100 ppb are common in the tillite and carbonaceous shale within the core of the domes. It should be noted that while continuous sampling was completed by Kentor, assaying was carried out on a selective basis only.

87

The Soviet investigations appear to have concentrated on narrow gold-bearing vein and shear/fracture occurrences within sandstones of the Middle-Late Ordovician exposed on the northern limb of the Kyldoo Anticline. The veins are generally less than 100m in strike length and are characterised by the elemental association of Au-Sb-As. The average grade over 2-4m intervals is 3.5-4.0 g/t Au. Limited re-sampling by Kentor confirmed the Soviet results.

DATA VERIFICATION

Mapping

David Jones of Vidoro Pty Ltd spent a week in the Kyrgyz Republic in June 2004 to verify aspects of the Kentor database. This visit included a field traverse on foot across the exposed geology along the Akbel Valley, to compare the sequence there with the Kumtor mine sequence. Mr Jones is satisfied that the mapping showing the Kumtor Fault Zone and mine sequence extending into Kentor's licence is factual and correct.

Figure 18: Akbel Valley (elevation 3714m) near foot of Akbel Glacier, looking due west. CJSC Kentor contract geologists on Vendian outcrop in Kentor's Ertash licence; peak behind them is composed of Riphean metasandstones (summit 4263m) thrust over the Vendian by the Kumtor Fault Zone Photo taken by D G Jones on 9 June 2004

Extensive interviews were undertaken in the field and in Bishkek with geologists of the Kyrgyz Geophysical Expedition (KGE). It is clear that the standard of mapping and understanding of the geology of the Kyrgyz Republic is very high. The entire country has been mapped geologically in detail at 1:50,000 scale. The Soviet style of map presentation is somewhat different to that conventionally used in Australia, but once the mental adjustment is made, a wealth of information is available.

The Kyrgyz Republic was intensively explored during the Soviet era using conventional mapping, geochemical and geophysical methods appropriate at the time. The annual budget distributed by the SAGMR to the KGE, NKGE and SKGE was US\$100 million (Deputy Director Zubkov, pers.comm.), and including 30,000m of drilling per year. Some major discoveries were made, including Kumtor. In David Jones' opinion, the Kyrgyz Republic, like Australia, is a mature exploration environment insofar as traditional prospecting methods are concerned. The new generation of discoveries will likely be made under cover (like Ernest Henry, Cannington, Ridgeway etc in Australia) using innovative geochemistry like MMI, remote sensing like ASTER mapping, high-resolution geophysics, more accurate age-dating and unravelling of the stratigraphy, and so on.

Sampling

Geochemical sampling was invented by Soviet geoscientists in the 1950s, and adopted into Western exploration techniques in the 1960s (Hawkes and Webb, 1962). For decades, Soviet geochemistry led the world. It is surprising, therefore, that many of the North American companies that have attempted exploration in the Kyrgyz Republic since the early 1990s appear to have completely lonored the wealth of geochemical sample data collected during the Soviet era. Presumably they have based their decision on the present sorry state of the dilapidated State-owned laboratories and other facilities in the Kyrgyz Republic. Yet they were prepared to accept historical assays of drill core, analysed in the same laboratories.

Any organization suffering a sudden decline in budget to less than 1% of its former level, as happened to the SAGMR (US\$100M per annum to \$700,000 per annum), will obviously be forced to neglect large elements of its facilities. In the heyday of the SAGMR, in Vidoro's opinion, it is fair to assume that the standard of sample collection, preparation, and analysis was essentially as rigorous as that acceptable to Western explorers at the time. .
Discussions with the manager of KGE's laboratory at Sokoluk, on the western outskirts of Bishkek, showed his familiarity with modern acceptable analytical practice despite the run-down state of the facilities.

Hence the decision by Kentor to accept the Soviet sample data, subject to rigorous statistical levelling and review, is well-founded. The re-processing of these data has already yielded a wealth of information. As processing continues, no doubt additional new targets will be generated.

Kentor has implemented an integrated sample management system that captures all relevant geochemical. geological, laboratory and quality assurance data associated with previous and on-going sampling programs.

This systematic approach to data management is aimed at:

• a) standardizing integration of data compiled from multiple sources,
• b) allowing Kentor to maximize the technical value of the information if collects, and
• c) facilitating the due diligence process required for compliance reporting.

The system has 4 principal components:

Field data collection

• . Geological code system to describe the geological/mineralogical/geographic data that is compatible with a digital storage system
• Sample books (rock, soil, stream) with detachable pre-numbered sample tags to capture field descriptions and control sample origin
• Drilllogs

Quality assurance and assay tracking

• . Duplicate, replicate and laboratory control standards
• Sample dispatch form to track dispatched samples and monitor laboratory results

A9

Data Capture

• Standardized input formats for all geochemical, geological and laboratory meta-data (Access Sample Database)
• These are now available to all geoscientists on field computers and are 100% compatible with the $\bullet$ centralized GIS Database
• . The input format is auto validating to prevent the use of incorrect codes

Centralized data integration and database management

• Central database stored on one computer in Bishkek, with an individual responsible for requiar consolidation and maintenance of the data

Rock, soil and stream sediment samples collected by Kentor field teams were under Kentor's field management control at all times including supervision of shipping.

Figure 19: CJSC Kentor contract geologists collecting orientation stream sediment samples from Kumtor River in Kentor's Ertash Hoence, near Akhel, UTM coordinates 44T 0259045; 4634558 .
Photo taken by D G Jones on 9 June 2004

In 2003, rock and stream sediment samples were delivered directly to Alex Stewart (Assayers) Kyrgyzstan Ltd Laboratory, Kara-Balta for preparation and analysis. The quality system of the laboratory is certified to ISO 9002 by

Bureau Veritas Quality International (BVQI). The laboratory was visited by David Jones on 10 June 2004 and procedures discussed with Vladimir Schudro, Managing Director, and Dr Emil Churmukov, Quality Manager. The analytical sections were clean, neat and tidy, with positive pressure air conditioning installed throughout. The equipment was modern, some brand new, maintained to a very high standard. It included assay furnaces from DFC Ceramics of Colorado, a Thermo flame

atomiser and SOLAR spectrometer. The fire assay crucibles were sourced from Australia and the magnesia cupolas from India. The sample preparation facility was in a separate building some 300m from the analytical laboratories, again with modern equipment including a LabTechnic LM2 and a Firman pulveriser, and an Australian MixerMill 2000. The standard of cleanliness at each step in the preparation procedure was exemplary. A copy of the latest (April 2004) round robin survey of 115 laboratories world wide by GeoStats of Perth shows the Alex Stewart Kyrgyz laboratory as one of the best performers for gold FA50, Ag, Cu, Zn, Ni and Co, and average to below average on Pb and As.

prospectus 2005

During Kentor's 2003 field programme, a total of 642 rock samples were dry crushed (-5mm), with the entire sample (in most cases) pulverized >90% minus 75 micron (200 mesh). Some large samples >4 kg were crushed, split in half, and one half was then pulverized. Gold analysis was by fire assay (FA-AAS) using 30gm charge and 5ppb detection limit. All other elements were analysed by aqua regia digestion, ICP-AES multi-element analysis for 32 elements.

Stream sediment samples (total 71) were sieved to -4mm in the field and were analysed using the Extractable Gold Cyanide Procedure (BLEG) using 2000gm sample weight and detection limit of 0.5ppb Au. The stream sediment mesh samples (total 153) were dried and sieved to -80# or -200# in the laboratory (200gm) and were processed by aqua regia leach, ICP-AES multi-element analysis for 32 elements.

Soil samples were packaged in sealed containers and air freighted to ALS Chernex, Perth where the laboratory exercised their chain of custody protocol. A total of 491 MMI soils samples were prepared and analysed by ALS Chemex Labs, Perth, Western Australia, using the proprietary MMI Technique®. The elemental suite of Au, Ag, Ni, Co and Pd (MMI suite B) was selected. Detection limits for Au and Ag was 0.01 ppb.

A total of 29 standard and 12 duplicate samples were added to the rock chip samples at random intervals. Standards were created using assay pills containing a known aliquot of gold, added to a sample of unaltered rock material.

David Jones is of the opinion that sampling and security procedures met industry best practice standards. Sample preparation protocols were those normally used, and analytical techniques were appropriate for the sample types and compositions.

A review of the available quality control data undertaken on fire assay and stream samples by Mark Sheppard of Geochem Solutions (Sheppard, 2004) showed that no significant problems were identified in this data. However, the data provided was of limited size and therefore the results can only be considered as indicative and not statistically quantified. Kentor plans to maintain rigorous quality assurance programmes, and with time will accumulate adequate statistical data for sample reliability to be fully tested.

Results of laboratory repeats and standards to date are good with most assays at significant levels showing good repeatability and thus acceptable precision.

PROPOSED PROGRAMME AND BUDGET FOR 2005 AND 2006

Details of Kentor's budget allocations for 2005 and 2006 are tabulated in Sections 3.3 and 3.6 of the Prospectus and need not be repeated here. The following comments are based on those figures and the programme. proposed:

Ertash

It is logical that more than 60% of Kentor's exploration operating budget of A\$2,045,500 planned for 2005 should be dedicated to the Ertash licence, given the high prospectivity of the area. The focus will be very much on the Akbel and Choloktor prospects near the boundary with the Kumtor mine exclusion zone, where the intention is to define bedrock mineralisation under cover at Akbel and Choloktor, and identify other targets warranting additional follow-up within the district. Some 70% of the 2006 budget will be dedicated to Ertash, on the assumption that even more drilling will be required in order to follow up the 2005 programme.

Kensu

$70^{\circ}$

Surface gold geochemistry will be used to define targets; anomalous areas will be followed up with intensive prospecting, mapping, trenching, and possibly scout drill testing. This tenement is very much a conceptual play and a low-key programme emphasis is appropriate.

Karasu

The program includes geological, structural and alteration mapping as well as check sampling to duplicate the Soviet surface gold values. Systematic stream sediment (BLEG + -80#) geochemistry will be completed across the entire Karasu licence area. Karasu is a more advanced project than Kensu, and the allocation of almost \$100,000 over 2005 and 2006 is justified.

Kyldoo

Perseus undertook diamond core drilling of the two principal anticline targets at Tropinny and Medovy in mid-2004, as part of an agreement to earn 50% of the project. Four holes were completed for a total of 550m of drilling. Results were inconclusive. Kentor has allocated a small budget to re-evaluate the project before further work is undertaken under the existing Joint Venture arrangement.

Tien Shan Regional

The purpose of this work is to generate and secure a series of high quality gold and copper-gold projects for the Kentor portfolio, which exhibit the potential to produce world-class deposits. Initially, the extensive in house database will be interrogated for standout opportunities outlined by previous exploration efforts that can be rapidly secured and brought forward to drill stage. ASTER satellite image processing and integrated multilayered GIS framework studies will be used to focus regional exploration teams into prospective target areas in under-explored parts of the Tien Shan belt.

During 2004 this work highlighted a series of new opportunities, leading to the granting of three new tenements across the Talas area of the Kyrgyz Republic. Targets from these tenements will be rapidly screened with experienced local and western field teams.

CONCLUSIONS

David Jones considers that the tenement package assembled by Kentor in the Kyrgyz Republic has outstanding potential for the discovery, through the exploration programme proposed by Kentor, of significant new mineralization. The geological models that underly the proposed exploration programme are well understood by Kentor's technical staff. These models have demonstrated validity in that world class deposits such as Muruntau. and Kumtor have already been discovered in the Tien Shan. The selection of the prospecting licence areas by Kentor is soundly based on good geoscientific evidence. The large, extremely prospective Ertash licence is notably impressive.

Successful exploration has many elements; as well as a good geoscientific basis, it must be driven both from the top management of an organisation as well as the geologists in the field. Above all, successful explorers have demonstrated that dogged persistence is essential, for there are many surprises and even more disappointments along the way. Kentor is indeed fortunate that its Managing Director and geological consultants have many decades of experience in exploration, and have experienced all the highs and lows that exploration entails. If careful cost management is applied to Kentor's exploration, and Vidoro has no reason to doubt otherwise, then shareholders can be confident that their funds are being employed in the most efficient manner possible.

It is commendable that Kentor proposes that 30% of the 2005 exploration operating budget of \$2.04 million will be spent on drilling, while approximately 20% of the entire budget will be taken up by administration (see Table 2 below). Many large companies struggle to achieve this because of their high overheads, with wages and administration absorbing up to 70% of some budgets. The proportion allocated to drilling rises to 44% of operating budgets in 2006, which is outstanding, and a reflection of the efficiencies in the conduct of Kentor's programmes.

Kentor's proposed annual exploration operating expenditures of \$2.04 million and \$2.33 million respectively in the 2005 and 2006 calendar years are adequate to meet both their commitments and the minimal expenditures required to maintain their licences in good standing during that period.

prospectus 2005

Table 1: Commitments, Kentor Licences Commitment 2006 He. Commitment 2005 Name To be agreed with SAGMR To be acreed with Pehan (Kyldoo) $63 - 04$ SAGMR on renewal on renewal 200 km of traverse Ertash To be agreed with $11 - 03$ 1,500 metres of drilling. SAGMR on renewal 500 samples. 300 m³ trenches, US\$600,000 total expenditure 200 km of traverse. To be agreed with 250 samples. Kensu 218-03 500 m³ trenches. SAGMR on renewal 2 km² Geophysics US\$20,000 expenditure 100 km of traverse 150 samples, To be agreed with Karasu 03-04 500 m³ trenches SAGIMR on renewal 3 km² debiohysics US\$20,000 expenditure Uzunbulak 237-04 To be agreed with SAGMR To be agreed with SAGMR Barkol 238-04 To be agreed with SAGMR To be agreed with SAGMR Karabalta 239-04 To be agreed with SAGMR To be agreed with SAGMR

Table 2: Exploration Budget Summary in A\$000

	ASOOO 2005	A\$000 2006
Ertash	1,284	1.550
Kensu	$-31$	35
Karasu	42	52
Pchan (Kyldoo)	з	nil
Tien Shan Reconnaissance (incl. 3 new tenements)	657	698
Exploration Operations Sub-Total:	2,045	2,335
Kyrgyz Administration	108	-94
	487	461
Australian Management Sub-Total:	595	555

In David Jones' opinion, the programme of work proposed is manageable within the technical and financial resources currently available to Kentor. The balance of effort allocated to the individual properties is sensible, given the state of present knowledge as to the relative merit of each prospect.

73

ACKNOWLEDGEMENTS

This report would not have been possible without the active support and cooperation of the people listed below.
David Jones also expresses his gratitude for the kindness and hospitality shown to him by all the people he me

Kentor Gold Ltd	David Royle, Managing Director
	Hugh McKinnon, Resident Director, the Kyrgyz Republic Vasily Toropchin, Interpreter, the Kyrgyz Republic
Global Ore Discovery Pty Ltd
	Steve Nano, Principal
CJSC Kentor
	Orozbai Tohtonazarov, General Director Maksim Grubenko, Geologist
	Lubov Ivanovna, Accountant Aida Mamaralieva, Expediter/Interpreter
	Katya Koldomova, Draftsperson Kanykey Kurmankozhoeva, Administrative Assistant Ernest Kakaev, Driver
	Office of the Prime Minister of the Kyrgyz Republic Valentin Bogdetsky, Geological Advisor to the Prime Minister
	State Agency on Geology and Mineral Resources Vladimir Zubkov, Deputy Director
	Alex Stewart Assay & Environmental Laboratories Ltd Vladimir Shudro, Managing Director, the Kyrgyz Republic Dr Emil Churmukov, Quality Manager
Kyrgyz Geophysical Expedition	Anatoly Azarov, Laboratory Manager

REFERENCES

Abdrakhmatov. KY., and 15 others. 1996. Relatively recent construction of the Tien Shan inferred from GPS measurements of present-day crustal deformation rate: Nature, Vol. 384, pp. 450-453.

Bakirov, AB., & Maksumova, RA., 2001. Geology and Evolution of the Tien Shan Lithosphere, in Palaeozoic Geodynamics and Gold deposits in the Kyrgyz Tien Shan Excursion Guidebook (Eds. R Seltmann & R Jenchuraeva), pp 7-16. The Natural History Museum, London.

Berner, BR., 1986. Descriptive Model of Low-Sulphide Au-Quartz Veins (Model 36a), in Mineral Deposit Models (Eds. DP Cox & DA Singer). USGS Bulletin 1693.

Berger, BR., 1998. The Muruntau Gold Deposit, Tamdy Mountains, Uzbekistan in Porphyry and Hydrothermal Copper and Gold Deposits: A Global Perspective Shan Excursion Guidebook (Ed. TM Porter), pp 197-205. The Australian Mineral Foundation, Adelaíde.

Boudetsky, V. (editor), 2001. Mining Industry and Sustainable Development in The Kyrgyz Republic. Report to International Institute for Environment and Development, 95p.

Bullen, ME., Burbank, DW., Garver, Jl., & Abdrakhmatov, KY., 2001. Late Cenozoic Tectonic Evolution of the Northwestern Tien Shan: New Age Estimates for the Initiation of Mountain Building. GSA Bulletin, Vol.113 No.12, pp. 1544-1559.

Builen, ME., Burbank, DW., & Garver, Jl., 2003. Building the Northern Tien Shan: Integrated Thermal, Structural and Topographic Constraints, J. Geol, Vol.111, pp 149-165.

Burbank, DW., McLean, JK., Bullen, ME., Abdrakhmatov, KY., & Miller, MM., 1999. Partitioning of Intermontane Basins by Thrust-Related Folding, Tien Shan, The Kyrgyz Republic. Basin Research, Vol. 11, pp 75-92.

Busley, M., & Klerkx, J., 2003. Cenozolo Tectonics of Central Asia. Geophysical Research Abstracts, Vol.5. European. Geophysical Society.

Cameco Corporation, 2000. Kumtor Project Review. Unpub. Company report. 44 pages.

Cole, A., 2001. Gold Mineralization in the Southern Tien Shan. Central Asia: Tectonic Setting. Characteristics. Exploration Criteria, in Palaeozoic Geodynamics and Gold deposits in the Kyrgyz Tien Shan Excursion Guidebook (Eds. R Seltmann & R Jenchuraeva), pp 71-81. The Natural History Museum, London.

Goldfarb, RJ., Baker, T., Bube B., Groves B.I., Hart C.J.R., Robert F. & Gosselin P., in press, World distribution, productivity, character, and genesis of gold deposits in metamorphic terranes, 100th Anniversary Volume of Economic Geology.

Hawkes, HE., & Webb, JS., 1962. Geochemistry in Mineral Exploration. Harper & Row, New York, 415p. Houseman, G., & England, P., 1996. A Lithospheric Thickening Model for the Indo-Asian Collision, in Tectonic Evolution of Asia. Cambridge Univ. Press. pp 3-17.

Jenchuraeva, RJ., 2001. Palaeozoic Geodynamics, Magmatism, and Metallogeny of the Tien Shan, in Palaeozoic Geodynamics and Gold deposits in the Kyrgyz Tien Shan Excursion Guidebook (Eds. R Seltmann & R Jenchuraeya). pp 29-70. The Natural History Museum, London.

Jenchuraeva, RJ., Nikonorov, VV., & Litvinov, P., 2001. The Kumtor Gold Deposit, in Palaeozoic Geodynamics and Gold deposits in the Kyrgyz Tien Shan Excursion Guidebook (Eds. R Seltmann & R Jenchuraeva), pp 139-152. The Natural History Museum. London.

Jenchuraeva, RJ., & Oakes, B., 2001. The Jerooy Gold Deposit, in Palaeozoic Geodynamics and Gold deposits in the Kyrgyz Tien Shan Excursion Guidebook (Eds. R Seltmann & R Jenchuraeva), pp. 153-161. The Natural History Museum, London.

Jenchuraeva, RJ., Pak, NT., & Usmanov, IA., 2001. The Makmal Gold Deposit, in Palaeozoic Geodynamics and Gold deposits in the Kyrgyz Tien Shan Excursion Guidebook (Eds. R Seltmann & R Jenchuraeva), pp 82-96. The Natural History Museum, London.

Kay, B., Dakes, B., & Artliev, V., 1998. The Jerooy Gold Deposit, Kyrgyz Republic in Porphyry and Hydrothermal Copper and Gold Deposits: A Global Perspective Shan Excursion Guidebook (Ed. TM Porter), pp 191-196. The Australian Mineral Foundation, Adelaide.

Kiselev, VV., & Maksumova, RA., 2001. Geology of the Northern and Middle Tien Shan: Principal Outlines, in Palaeozolo Geodynamics and Gold deposits in the Kyrgyz Tien Shan Excursion Guidebook (Eds. R Seltmann & R. Jenchuraeva), pp 21-28. The Natural History Museum, London.

Krason, J., 1984. Muruntau: The World's Largest Gold-Producing Mine Complex. Min. Eng., Nov, pp 1559-1560. Maksumova, RA., Jenchuraeva, AV., & Berezansky, AV., 2001. Major Tectonic Units and Evolution of the Tien Shan Orogen, in Palaeozoic Geodynamics and Gold deposits in the Kyrgyz Tien Shan Excursion Guidebook (Eds. R Seltmann & R Jenchuraeva), pp 17-20. The Natural History Museum, London.

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Malyukova, NN., 2001. The Taldybulak Levoberezhny Gold Deposit, in Palaeozoic Geodynamics and Gold deposits in the Kyrgyz Tien Shan Excursion Guidebook (Eds. R Seltmann & R Jenchuraeva), pp 97-110. The Natural History Museum, London.

Mukhin, P., 1997. Potentials of the Muruntau-type Gold Mineralization in the Karakala Licence. Unpub. Report to Santa Fe Pacific Gold.

Neil, EA., & Houseman, GA., 1997. Geodynamics of the Tarim Basin. Tectonics, Vol. 16 No. 4, pp 571-584.

Newall, PS., 2002. Jerooy Gold Project: Audited Mining and Development Report. Report by Wardell Armstrong to Norox Mining Company.

Shenpard, M., 2004. Quality Assurance Report for Sampling and Analytical Results, Ertash Project. Unpub. Report to Kentor Gold NL, 13p.

Thalenhorst, H., & Farquharson, G., 2004. Technical Report on the Kumtor Gold Mine, Kyrgyz Republic. Independent Technical Review to Centerra Gold Inc., Toronto. 106p.

Toksoz, M., 2001. The Golden Road: The Importance of Gold Mining in the CIS and Eastern Europe. World Gold Council. 50p.

Wilde, AR., & Gilbert, D., 2000. Setting of the Giant Muruntau Gold Deposit: Implications for Ore Genesis, J. of the Virtual Explorer, Vol. 1, pp 3-8.

Yakubchuk, A., Seltmann, R., Shatov, V., & Cole, A., 2001. The Altaids: Tectonic Evolution. SEG Newsletter, No.46, pp $1 - 14.$

Yakubchuk, A.S., Cole, A., Seltmann, R. and Shatov, V.V., 2002. Tectonic Setting, Characteristics and Regional Exploration Criteria for Gold Mineralization in Central Eurasia: The Southern Tien Shan Province as a Key Example. SEG Special Publication 9, pp 177-201.

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GLOSSARY OF TECHNICAL TERMS

(This glossary comprises a general list of common technical terms that are typically used by geologists. For ease of reference, the list has not been edited to conform to actual usage in the body of this Report The inclusion of a technical term in this glossary does not mean that it appears in the body of this Report. No imputation should be drawn from this approach.)

Aeromagnetic survey Systematic measurement and collection, from an aircraft, of the earth's magnetic field at requiar intervals. alluvial deposit Amineral deposit consisting of recent surface sediments laid down by water. alteration. The change in the mineral composition of a rock, commonly due to hydrothermal activity. alteration zone Azone in which rock-forming minerals have been chemically changed. auter sampling Asampling technique utilizing a screw-like tool to obtain shallow samples. AustMM Australasian Institute of Mining and Metalluroy. hase-metal Anon-precious metal, usually referring to copper, lead and zinc. breccia A rock composed of angular rock fragments. BLEG Bulk Leach Extractable Gold a chemical analysis technique. bulk sample A large volume of soil or rock obtained for examination or analysis. Cainezoic An era of geological time from the end of the Mesozoic to the present. calcarenite A carbonate rock composed of sand-sized skeletal material or fragments of pre-existing limestone with particle size ranging between 0.06 and 2.0mm. calcrete Superficial gravels cemented by secondary calcium carbonate. Cambrian A period of geological time approximately from 506 Ma to 544 Ma. Carboniferous A period of geological time approximately from 295 Ma to 355 Ma. chalcopyrite Amineral of copper with the chemical formula CuFeS. clastic Rock composed principally of fragments derived from pre-existing rocks or minerals. complex An assemblage of rocks of various ages and origins intricately mixed together. conglomerate A sedimentary rock formed by the cementing together of water-rounded pebbles, distinct from a hrennia costean Atrench excavated in the surface for the purpose of geological investigation. craten A major part of the Earth's crust that has been stable and little deformed for a long time. Cretaceous A period of geological time approximately from 65 Ma to 135 Ma. crosscut Alevel driven across the main direction of underground mine workings. cut-off grade The lowest or highest assay value that is included in a resource estimate. cyanidation Dissolution of gold by cyanide as part of a process to recover gold from ore. dacite A fine-grained extrusive rock composed mainly of plagioclase, quartz and pyroxene or homblende or both. It is the extrusive equivalent of granodiorite. BBH Diamond Drill Hole. Devonian A period of geological time approximately from 355 Ma to 410 Ma. diamond drilling Rotary drilling technique using diamond set or impregnated bits, to cut a solid, continuous core sample of the rock. The core sample is retrieved to the surface, in a core barrel, by a wire line. dilution The proportion of material which is inadvertently included during mining operations, and which is generally of a significantly lower grade than the ore zone of interest. dip The angle at which any planar feature is inclined from the horizontal. dyke A tabular igneous intrusion that cuts across the bedding or other planar structures in the host rock. epithermal A term applied to mineral deposits formed under low temperature conditions (100-200°C). felsic Light coloured rocks containing an abundance of feldspars and quartz. fire assay An analytical technique involving heating a sample in a furnace to ensure complete extraction of all contained precious metal. foreland basin A basin formed within a continental setting, often adiacent to a mountain range. a. a/t gram, grams per tonne. Ga Billion vears ago. gabbro Acoarse-grained intrusive igneous rock composed chiefly of plagioclase feldspar and pyroxene. GIS - Geographic Information System. A system devised to present spatial data in a series of compatible and interactive layers... gossan Aferruginous deposit remaining after the oxidation of the original sulphide minerals in a vein or ore zone.

77.

granitoids A general term to describe coarse-grained, felsic intrusive plutonic rocks, resembling granite, Gravity survey Systematic measurement and collection of the earth's gravitational field at the surface at reqular intervals. Used to discern different rock types based on associated variations with differences in the distribution of densities, and hence rock types.

Greenschist A schistose metamorphic rock which owes its green colour and schistosity to abundant chlorite and lesser epidote and/or actinolite.

indicated resource A mineral resource sampled by drill holes, underground openings or other sampling procedures at locations too widely spaced to ensure continuity but close enough to give a reasonable indication of continuity, and where geoscientific data is known with a reasonable level of reliability.

inferred resource A mineral resource inferred from drill holes, geoscientific evidence, underground openings or other sampling procedures where the gaps in the data are such that continuity cannot be predicted with confidence, and where geoscientific data may not be known with a reasonable level of reliability.

intermediate laneous rocks whose composition is intermediate between felsic and mafic rocks.

intracontinental Situated entirely within a continental region. intracratonic Within a large, stable mass of the earth's crust.

IP survey induced Polarization survey - an electrical geophysical survey technique measuring the magnetic field spontaneously induced in a volume of rock by the application of an electric current. This technique is often used to identify disseminated sulphide deposits. Selection

island arc An arcuate chain of oceanic islands, with a deep trench on the convex side.

JORC Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia. The quidelines of the JORC Code (2004) are observed in the calculation and reporting of ore resources and ore reserves

Jurassic A period of geological time approximately from 135 Ma to 203 Ma.

LandSat imagery Reflective light data of the earth's surface collected by the LandSat satellite and commonly processed to enhance particular features. Includes the visible and invisible light spectrums.

lateritization An extreme form of weathering common in tropical climates, in which silica and other constituents are removed, leaving a rock characterised by a high proportion of alumina and/or iron oxide (laterite). lithic tuff Atuff containing fragments of previously formed non-pyroclastic rocks.

Ma Million vears ago.

matic A dark-coloured rock composed dominantly of magnesium, iron and calcium-rich rock-forming silicates, and for rocks in which these minerals are abundant.

maunetic anomalies Zones where the magnitude and orientation of the earth's magnetic field differs from adjacent areas.

magnetic survey Systematic collection of readings of the earth's magnetic field. The data are collected on the surface or from aircraft.

massive sulphides Rock containing abundant sulphides that constitutes close to 100% of the rock mass.

mesodermal Mineral deposits formed (precipitated) at moderate temperatures.

Mesozoic An era of geological time approximately from 65 Ma to 248 Ma.

metamorphosed Mineralogical, structural and textural adjustment due to changes from the environment in which rocks were originally deposited.

monzogranite A granular plutonic rock with a composition between monzonite and granite.

Neoproterozoic An era of geological time approximately from 544 Ma to 1000 Ma.

Brésvician An era of geological time approximately from 435 Ma to 500 Ma. orogenic Adjectival form of orogeny.

gregeny The process of formation of mountains, including thrusting, folding & faulting.

oxide Pertaining to weathered or oxidised rock.

pelite Asediment or sedimentary rock composed of the finest detritus (clay or mud-sized particles).

nercussion A method of drilling where the rock is broken into small chips by a hammering action. Permian An era of geological time approximately from 248 Ma to 295 Ma.

plunge The attitude of a line in a plane which is used to define the orientation of fold hinges, mineralised zones and other structures.

Perphyritic Descriptive of igneous rocks containing relatively large crystals set in a finer-grained groundmass.

ppb, ppm Parts per billion, parts per million (quantitative equivalent of g/t). pyrite A common iron sulphide mineral with the chemical formula $FeS₂$ .

RAB drilling Rotary Air Blast drilling - a method of rotary drilling in which sample is returned, using compressed air, to the surface in the annulus between drill-rod and the drill-hole. This is a relatively inexpensive but less accurate drilling technique than RC or diamond coring.

radiometric survey Systematic collection of radioactivity emitted by rocks at or near the earth's surface; usually collected by helicopter or fixed wind aircraft. RC drilling Reverse Circulation drilling - a method of rotary drilling in which the sample is returned to the surface, using compressed air, inside the inner-tube of the drill-rod. A more accurate drilling technique than simple. percussion drilling, the RC technique minimises contamination. retractory Descriptive of ore difficult to treat for recovery of valuable minerals. rhyslite Avolcanic rock composed chiefly of potassium feldspar and quartz. rift basin Alarge fault-bound depression, in-filled with volcanic and/or sedimentary material. Riphean A subdivision of the Neoproterozoic, around 650-850 Ma. sericite A white, fine-grained mica, usually formed as an alteration product of various silicates in metamorphic rocks and the wall rocks of ore deposits. shear zone Azone in which rocks have been deformed primarily in a ductile manner in response to applied stress. sheet wash A widely distributed, thin blanket of sediment deposited in a broad, poorly defined drainage. silicitied The alteration or replacement of primary minerals by silica. Silurian An era of geological time approximately from 410 Ma to 435 Ma. skarn Athermally metamorphosed impure limestone. soil sampling The collection of soil specimens for mineral analysis. stockwork A network of (usually) quartz veinlets produced during pervasive brittle fracture. stratabound Occurring within and parallel to the rock strata. but not necessarily deposited at the same time. stratiform Occurring within and parallel to the rock strata, and deposited at the same time. stream sampling The collection of stream sediments for mineral analysis. strike The direction or bearing of a geological structure on a level surface, perpendicular to the direction of dip. stringer Asmall, thin discontinuous or irregular veinlet. subduction The process where one slab of the Earth's crust descends beneath another. syntectonic Occurring or forming at the same time as deformation and metamorphism. 1. tpa Metric tonne, tonnes per annum. Tertiary Applied to the first period of the Cainozoic era, 1,8Ma to 65Ma. tholelitic A term applied to matic or ultramatic rocks composed predominantly of magnesium-rich feldspar and pyroxene minerals. tenalite A coarse grained plutonic rock similar to diorite in composition but containing quartz as 5% to 20% of the light coloured minerals. trench Along, narrow depression in the sea floor. Triassic Applied to the first period of the Mesozoic era, 203Ma to 248Ma. ultramafic Igneous rocks consisting essentially of ferro-magnesium minerals with trace quartz and feldspar. Vendian A subdivision of the Neoproterozoic, around 544-650 Ma. volcanoclastic A sedimentary clastic rock containing volcanic material.

investigating accountant's report

791

Chartered Accountants

563 Bourke Street Melbourne 3000 DX 30937 Stock Exchange Melbourne Telephone (03) 9615 8500 Facsimile (03) 9615 8700 Email: bdomel@bdomel.com.au www.bdo.com.au

31 January 2005

The Directors Kentor Gold Ltd Level 3 15 Queen Street MELBOURNE VIC 3000

Dear Sirs

INVESTIGATING ACCOUNTANT'S REPORT

1. INTRODUCTION

This report has been prepared at the request of the Directors of Kentor Gold Ltd ("Kentor" or "the Company") for inclusion in a Prospectus to be dated on or about 31 January 2005 ('the Prospectus'') relating to the proposed issue ("the Issue") by Kentor Gold of 12,000,000 shares to be issued at a price of 50 cents per share to raise \$6,000,000.

2. BASIS OF PREPARATION

This report has been prepared to provide investors with information on the historical results (Statements of Financial Performance), the Statement of Financial Position of Kentor Gold and the pro-forma Statement of Financial Position of Kentor Gold as noted in Appendix 2 and 3. 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 Corporations Act 2001.

This report does not address the rights attaching to the shares to be issued in accordance with the Prospectus, nor the risks associated with the investment. BDO has not been requested to consider the prospects for Kentor, the shares on offer and related pricing issues, nor the merits and risks associated with becoming a shareholder and accordingly, has not done so, and does not purport to do so. BDO 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 6 of the Prospectus.

BACKGROUND $\mathbf{R}$

The primary purpose of the Offer is to:

• (a) raise funds to explore the Company's mineral interest as described in the Prospectus; and
• (b) to enable the Company to seek admission to the official list of Australian Stock Exchange Limited $(^{\circ}$ ASX $^{\circ}$ ).

The Company is a natural resource company engaged in the acquisition, exploration and, if warranted, the development of mineral resource properties. Kentor's current properties are at the acquisition and exploration stage. All are located in the Kyrgyz Republic.

Kentor has been active in the Kyrgyz Republic since 1998 and currently operates through joint ownership of CJSC Kentor with the influential state organisation Kyrgyz Geophysical Expedition (a 20% equity partner) since late 1998. During this period, Kentor has applied for and been granted a number of exploration tenements, compiled an extensive database of Soviet era exploration records, and developed valuable commercial, governmental and political relationships.

We understand that the funds raised by the issue of shares under the Prospectus will be applied as follows:

• $(i)$ to fund exploration and evaluation of the Company's mineral interests;
• $(ii)$ to fund the administrative and corporate costs of the Company;
• to fund acquisition of further interests in mineral tenements; $(iii)$
• to fund the acquisition of incidental plant and equipment; and $(iv)$
• to meet the costs of the Issue, including legal and accounting fees, experts' and advisors' fees and $(v)$ costs of orinting, publication and distribution of the Prospectus.

Potential investors should read the Prospectus in full that includes an Independent Geologist's report and a Legal Report on tenements. We make no comments as to ownership or values of the tenement interests of Kentor Gold. Further details on significant contracts entered into by the Company are referred to in the Legal Report in Section 9 of the Prospectus and the Additional Information section 10.1 of the Prospectus.

SCOPE OF EXAMINATION $\Delta$

You have requested BDO to prepare an Independent Accountant's Report on:

• $(i)$ The statement of financial performance of Kentor for the years ended 30 June 2003 and 2004;
• $(ii)$ The statement of financial position of Kentor as at 30 June 2004; and
• $(iii)$ The pro forma consolidated statement of financial position of Kentor at 30 June 2004 adjusted to reflect the following pro forma adjustments as if they had occurred on 30 June 2004;-
• $\langle a \rangle$ The issue of 9,009,362 ordinary shares subsequent to 30 June 2004 at an issue price of 11 cents per share to raise \$991.030 before capital raising costs of \$59.462:
• (b) The consolidation of all ordinary shares on issue on the basis of 1 share for every 3 shares held;
• ${C}$ The issue of 12,000,000 shares at a price of 50 cents each pursuant to the Prospectus to raise aross proceeds of \$6,000,000;
• The expensing of capital raising costs against equity raised pursuant to the Prospectus ${d}$ estimated to be \$540,000; and
• The payment of exploration and development costs for the period July 2004 to November 2004 $\langle e \rangle$ of approximately \$606,000 and corporate overhead costs of \$181,000 including pre paid costs associated with this capital raising of \$17,000.

The financial statements of Kentor for the years ended 30 June 2003 and 2004 have been audited by MSI Ragg Weir. The audit poinion issued on the financial statements for both these years was qualified in both instances on the same matter relating to the carrying value of the amounts advanced to the controlled entity Closed Joint Stock Company Kentor ("CJSC Kentor") as loans and the carrying value of the investment in Closed Joint Stock Company Kentor. The following qualification paragraph has been extracted from the audit report issued on the financial statements for the year ended 30 June 2004.

"The operations of the subsidiary are funded by loans from the parent entity as indicated in Note 8 to the financial statements. As the subsidiary is in a net asset deficiency position this means that there is a diminution in the carrying value of the loans receivable from and investment in the subsidiary as stated in the parent company's accounts. The Company has recognised the diminution in value and written down the carrying amount of loans receivable by \$715,503. In our opinion a further writedown or provision of \$296,228 should have been recognised in the accounts of the Company. Had this been done the Company accounts would show a loss for the year of \$1,180,460, an accumulated loss of \$1,398,089 and non current receivables of \$666,652."

We have conducted a review of the historical financial information and the pro-forma financial information in accordance with Australian Auditing Standards AUS 902 'Review of Financial Reports' and conducted such enquiries and procedures, which we considered necessary for the purposes of this report. We made such enquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances including:

• A review of workpapers, accounting records and other documents;
• A review of the assumptions and adjustments used to complete the pro-forma statement of financial position;
• A comparison of consistency in application of the recognition and measurement principles in accounting standards and other mandatory professional reporting requirements in Australia and the accounting policies adopted by the Company as disclosed in Appendix 3 of this report; and
• Enquiry of directors, management and others.

The review procedures undertaken by BDO in our role as Investigating Accountants were substantially less in scope than that of an audit examination conducted in accordance with generally accepted auditing standards.

Our review was limited primarily to an examination of the historical financial information, the pro-forma financial information, analytical review procedures and discussions with senior management. A review of this nature provides less assurance than an audit and, accordingly, this Report does not express an audit opinion on the historical financial information or pro-forma financial information included in this Report or elsewhere in the Prospectus.

In relation to the information presented in this Report:

• $\mathcal{D}$ support by another person, corporation or an unrelated entity has not been assumed;
• ii) the amounts shown in respect of assets do not purport to be the amounts that would have been realised if the assets were sold at the date of this Report; and
• iii) the going concern basis of accounting has been adopted.

SUBSEQUENT EVENTS 5.

To the best of our knowledge and belief, and based on the work we have performed as described in the scope paragraphs above, there have been no material transactions or events subsequent to 30 June 2004, other than those included in our report, which would require comment on, or adjustment to, the financial information referred to in our report or that would cause such information included in this report to be misleading.

STATEMENTS 6.

In our opinion, the pro forma statement of financial position as set out in Appendix 2 presents fairly the pro-forma statement of financial position of Kentor as at 30 June 2004 in accordance with 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, as shown in the Statement of Financial Performance in Appendix 1 and the historical net asset position, as shown in the Statement of Financial Position in Appendix 2 except to state that nothing has come to our attention which would require further modification to the financial information in order for it to present fairly the results and net assets of the periods identified.

Based on the current information on Kentor, the adoption of the proposed International Financial Reports Standards ("IFRS") effective for balance dates commencing on or after 1 January 2005 should have no material effect on the reported results in the Statement of Financial Performance or the assets, liabilities and equity as reported in the Statement of Financial Position as disclosed in Appendix 1 and 2 respectively.

$\overline{z}$ DECLARATION

BDO does not have any pecuniary interests that could reasonably be regarded as being capable of affecting its ability to give an unbiased opinion in relation to this Report. BDO will receive a professional fee for the preparation of this Report.

The Partners of BDO do not hold nor have any interest in any ordinary shares of the Company.

Unless specifically referred to in this Report, or elsewhere in the Prospectus, BDO was not involved in the preparation of any other part of the Prospectus and did not cause the issue of any other part of the Prospectus Accordingly, BDO makes no representations or warranties as to the completeness of accuracy of the information contained in any other part of the Prospectus.

BDO has consented to the inclusion of this Report in the Prospectus in the form and context in which it appears. The inclusion of this Report should not be taken as an endorsement of the Company or a recommendation by BDO of any participation in the Company by an intending subscriber.

Yours faithfully BDO

CMJBRYAN Partner

APPENDIX 1

CONSOLIDATED STATEMENTS OF FINANCIAL PERFORMANCE

	Atoiheon dag erder	Zurien zerkez ENDER
	30 JUNE 2003	30 JUNE 2004
	£	S
Revenues from ordinary activities	16.974	2.905
Other expenses from ordinary activities	(40,051)	(964,030)
Gain/(Loss) on translation of foreign subsidiary	(157, 737)	329.509
Net Loss before tax	(180, 814)	(631, 616)
Income tax attributable to net loss.	0	0
Net Profit/(Loss) after tax	(180, 814)	(631.616)
Total changes in equity other than those resulting
from transactions with owners as owners	(180,814)	(631, 616)

APPENDIX 2

CONSOLIDATED STATEMENTS OF FINANCIAL PERFORMANCE

	Nois	Albinar Yəarəndəd	Expedient ADDIESS YEAR ENDED
		30 JUNE 2004 \$	30 JUNE 2004 \$
Current Assets
Cash assets	3	677,941	6,282,509
Receivables	4	46,722	63,722
Total Current Assets		724,663	6,346,231
Non Current Assets
Other financial assets	5	382,477	988,477
Property, plant and equipment		96,133	96,133
Intangible assets		5,552	5,552
Total Non Current Assets		484,162	1,090,162
Total Assets		1,208,825	7,492,855
Current Liabilities
Payables		33,557	33,557
Total Current Liabilities		33,557	33,557
Total Liabilities		33,557	33,557
Net assets		1,175,268	7,402,836
Equity
Contributed equity	6	2,640,629	9,032,197
Accumulated losses	$\overline{7}$	(1,398,090)	(1,562,090)
Outside equity interests		(67, 271)	(67, 271)
Total equity		1,175,268	7,402,836

АРРЕНЛИХ 3

NOTES TO THE CONSOLIDATED STATEMENTS OF FINANCIAL PERFORMANCE AND STATEMENTS OF FINANCIAL POSITION

Statement of Significant Accounting Policies $\mathbf{L}$

Basis of Accounting $(a)$

The audited Statements of Financial Performance and Position have been prepared in accordance with applicable accounting standards, the Corporations Act 2001 and mandatory professional reporting requirements in Australia and we have made disclosures as considered necessary. They have also been prepared on the basis of historical cost and do not take into account changing monetary values. The accounting policies have been consistently applied unless otherwise stated.

$(b)$ Principals of Consolidation

The consolidated accounts of the consolidated entity include the financial statements of the company being the parent entity and its controlled entity ("the Consolidated Entity").

All inter company balances and transactions between entities in the economic entity, including any unrealised profits or losses have been eliminated on consolidation.

Where controlled entities have entered or left the economic entity during the year, their operating results have been included from the date control was obtained or until the date control ceased.

Outside equity interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

$(c)$ Incometax

The economic entity adopts the liability method of tax effect accounting whereby the income tax expense is based on the profit from ordinary activities adjusted for any permanent differences.

Timing differences, which arise due to the different accounting periods in which items of revenue and expenses are included in the determination of accounting profit and taxable income, are brought to account as either a provision for deferred income tax or as future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become payable.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond any reasonable doubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty of realisation of the benefit.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

NOTES TO THE CONSOLIDATED STATEMENTS OF FINANCIAL PERFORMANCE AND STATEMENTS OF FINANCIAL POSITION

$\ddagger$ Statement of Significant Accounting Policies (Cont.)

$(d)$ Property, plant and equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation

Plant and equipment

Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount of those assets. The recoverable amount is assessed on the basis of expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have not been discounted to present values in determining recoverable amounts.

Depreciation

The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, are depreciated on a straight line basis over their estimated useful lives to the economic entity commencing from the time the asset is held ready for use. Properties held for investment purposes are not subject to a depreciation charge.

(e) Exploration and development expenditure

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not reached a stage which permits reasonable assessment of the existence of economically recoverable reserves

Accumulated costs in relation to an abandoned area are written off in full against profits in the year in which the decision to abandon the area is made.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

(f) Foreign Currency Transactions and Balances

Foreign currency transactions during the year are converted to Australian currency at the rates of exchange applicable at the dates of the transactions. Amounts receivable and payable in foreign currencies at balance date are converted at the rates of exchange ruling at that date.

The gains and losses from conversion of assets and liabilities, whether realised or unrealised, are included in profit from ordinary activities as they arise. The assets and liabilities of the overseas controlled entities, which are integrated, are translated in accordance with AASB 1012 Foreign Currency Translation, and the operating results are translated using the average exchange rate for the year. Gains and losses arising on translation are taken directly to the profit and loss statement.

NOTES TO THE CONSOLIDATED STATEMENTS OF FINANCIAL PERFORMANCE AND STATEMENTS OF FINANCIAL POSITION

Actual and Proposed Transactions to Arrive at Pro Forma Consolidated Statement of Financial Position $\mathbf{z}$ .

The actual and proposed transactions adjusting the 30 June 2004 audited Statement of Financial Position of Kentor in the pro forma Consolidated Statement of Financial Position of Kentor are as follows:-

• The issue of 9,009,362 ordinary shares subsequent to 30 June 2004 at an issue price of 11 cents $(a)$ per share to raise \$991,030 with capital raising costs of \$59,462;
• $(b)$ The consolidation of all ordinary share on issue on the basis of 1 share for every 3 shares held;
• $\langle \circ \rangle$ The issue of 12,000,000 shares at a price of 50 cents each pursuant to the Prospectus to raise gross proceeds of \$6,000,000;
• $(d)$ The expensing of capital raising costs against equity estimated to be \$540,000;
• $(e)$ The payment of exploration and development costs for the period July 2004 to November 2004 of approximately \$606,000 and corporate overhead costs of \$181,000 including costs associated with this capital raising of \$17,000.

a de la caractería de la caractería de la caractería de la caractería de la caractería de la caractería de la c aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa		AUDINED YEAR ENDED	F(0) Eorium Audheb) MEAR ENDED
		30 JUNE 2004 \$	30 JUNE 2004 S
Cash assets
The movements in cash at bank are as follows:
Balance as at 30 June 2004		677,941	677,941
Shares issued subsequent to balance date	(a)		931,568
Shares issued pursuant to the Prospectus	$\langle c \rangle$		6,000,000
Capital raising costs	(d)		(540,000)
Operating costs	(e)		(787,000)
		677,941	6,282,509

$\mathbf 3$

			Aldried ME G ENDED	espan La C Keliva Auditse YS. ENDED
			30 JUNE 2004	30 JUNE 2004
4.	Receivables Sundry amounts receivable		£	\$
	Balance as at 30 June 2004		46,722	46,722
	Prepaid capital raising costs	(e)		17,000
			46,722	63,722
5.	Other financial assets Costs capitalised in respect of areas of interest in exploration and evaluation phases
	Balance as at 30 June 2004 Exploration and evaluation expenditure incurred during the period July		368.226	368,226
	to November 2004	(e)		606,000
			368,226	974,226
	Investment in Action Hydrocarbons Limited		14,251	14,251
			382,477	988,477
6.	Contributed Equity (a) Share capital
	57,443,974 shares at 30 June 2004 9,009,362 shares issued subsequent to balance		2.640.629	2,640,629
	date 12,000,000 shares issued pursuant to the	(a)		931,568
	Prospectus	${C}$		6,000,000
	Less Share issue costs	(d)		(540,000)
			2,640,629	9,032,197
	(b) Number of shares on issue		Number of shares
	Balance at 30 June 2004		57,443,974	57,443,974
	Shares issued subsequent to balance date			9,009,362
			57,443,974	66,453,336
	1 for 3 share consolidation (approved at a general meeting of members 25 October 2004) NB: Consolidation is effected by division of individual shareholdings. Fractions are rounded up, resulting in this number instead of 22,151,112 calculated by dividing 66,453,336 by 3.)	(b)		22,151,132
	Shares issued pursuant to the Prospectus			12,000,000
	Total number of shares on issue			34,151,132

$\overline{I}$ .

ataa aanaanaa		AUDRESS Medial ENDEL	Exte EOEMA Alla Hand MELLER ENDED
		30 JUNE 2004 £	30 JUNE 2004 S
Accumulated Losses
Balance at 30 June 2004 Corporate administration costs incurred in the period		(1,398,090)	(1,398,090)
July to November 2004	(e)	÷	(144,000)
		(1,398,090)	(1, 542, 090)

8. Contingent Liabilities and Commitments

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 elsewhere in the Prospectus. Investors should read the Legal Report and the Independent Geologist's Report for further possible contingencies and commitments

9. Exploration commitments

For details on proposed exploration commitments on mineral tenements, refer to the Independent Geologist's Report in the Prospectus.

section 9

legal report

RAWLING $\mathbf{R}$ C O M P A N Υ

SOIICITORS

31 January 2005

The Directors Kentor Gold Ltd Level 3. 15 Queen Street MELBOURNE VIC. 3000

Dear Sirs

LEGAL REPORT ON TENEMENTS

This Report has been prepared at the request of the Directors of Kentor Gold Ltd ACN 082 658 080 ("Kentor" or the "Company") for inclusion in a Prospectus to be dated on or about 31 January 2005 relating to the offer by Kentor of 12 million shares for subscription at an issue price of \$0.50 per share to raise \$6,000,000.

Rawling & Company has consented to the inclusion of this Report in the Prospectus in the form and context in which it is included and at the date of this Report has not withdrawn its consent.

This Report sets out in Schedule 1 (the Tenement Schedule) the results of searches of exploration licences over various mineral tenements ("Tenements") located in the Kyrgyz Republic in which the Company has an interest through its subsidiary CJSC Kentor and through its interest as a shareholder in CJSC Kyldoo. The searches were conducted by lawyers engaged by us in the Kyrgyz Republic.

We have also set out in Schedule 2 of this Report (the Legislation Schedule) a brief summary of the laws relating to exploration and mining in the Kyrgyz Republic and other relevant laws. This Report does not purport to set out all aspects of those laws as they apply to exploration and mining in the Kyrgyz Republic and does not purport to be an exhaustive review of all the laws that may apply to the Company, its subsidiaries and their property and operations in the Kyrgyz Republic.

1. TENEMENT SEARCHES

1.1 Licensing Overview

Exploration and mining in the Kyrgyz Republic are regulated pursuant to the Kyrgyz Republic Law 'on Underground Mineral Resources" dated 2 July 1997, as amended (the "Mining Act"). There are two forms of licence relevant for the purposes of this Report: (i) the Licence for Geological Study of Underground Mineral Resources (equivalent to the type of tenement known in Australia as an exploration licence); and (ii) the Licence for Development of Mineral Deposits (equivalent to the type of tenement known in Australia as a mining lease or licence). The Legislation Schedule elaborates on the provisions of the Mining Act. The Mining Act is administered by the State Agency for Geology and Mineral Resources (the "State Agency") under the Government of the Kyrgyz Republic.

The type of licence held by CJSC Kentor and CJSC Kyldoo is a Licence for Geological Study of Underground Mineral Resources. The grant of this type of licence involves two documents, the Licence which establishes the principal particulars of the grant, and the Licence Agreement which sets out licence conditions, including the work program.

The Licence is granted following definition of the required licence area by the Licence holder, both by map and survey co-ordinates. The key particulars of the Licence are:

• · Full name, number and code of the Licence holder:
• . Name of the subject area of the Licence:
• . Type of minerals covered by the Licence:
• Administrative location of the subject area:
• Date of expiry of the initial term of the Licence:
• If a renewal Licence, the date of expiry of the renewed term;
• . Name of the responsible officer of the State Agency.

At the same time as the grant of the Licence, the Licence holder enters into a Licence Agreement with the State Agency, which forms an integral part of the Licence. Failure to have a valid and current Licence Agreement annuls the Licence. During the term of the Licence, the Licence holder will typically enter into a series of Licence Agreements as it proceeds with its exploration program. For example, prior to the latest renewal of its Ertash ficence (Licence No. Au-11-03). CJSC Kentor was operating under its 4th Licence Agreement, dated 11 May 2004. With the renewal of the Ertash Licence, the State Agency and CJSC Kentor signed a new Licence Agreement No. 5 dated 13 December 2004.

The first Licence Agreement is of a preliminary nature, allowing the Licence holder to define the proposed work program and obtain any required third party consents. The obligations under a Licence Agreement No. 1 are summarised as follows:

• 1. Provision of a description of the relevant project.
• 1. Obtaining the usual endorsements of Government technical, environmental and mineral resources preservation authorities.
• 1. Landowner consent (if applicable).
• 1. Provision of a business licence.

Licence Agreement No. 1 has a term determined by the State Agency and the Licence holder as being sufficient to allow the parties to reach agreement on the work program and to obtain necessary approvals from other State agencies. If the conditions of the Agreement are not satisfied, the Licence is annulled pursuant to the Mining Act.

Following satisfaction of the obligations in Licence Agreement No. 1, Licence Agreement No. 2 is entered into between the State Agency and the Licence holder. Licence Agreement No. 2 sets out the conditions of the Licence applicable to the exploration program and includes the work program. Its contents typically include:

• 1. A general description of the project as provided by the Licence holder.
• 1. Area of the geological allotment and coordinates of its corner points.
• 1. Work program for the forthcoming year(s), including:
• · Prospecting traverses, expressed in kilometres;
• · Drilling, expressed in metres:
• Trenches and notches, expressed in cubic metres;
• Sample collection, in various forms, expressed as a number;
• Expenditure obligation (amount of investment), expressed in US dollars.
• 1. Area relinguishment (surrender) for the forthcoming year(s), expressed as a percentage.
• 1. An obligation to report geological information to the State Agency during the Licence term.
• 1. Other conditions, such as a rehabilitation obligation and an obligation to provide exploration reports on completion of the Licence holder's activities.
• 1. Force Majeure provisions, usually by cross-reference to Article 3 of the Mining Act.
• 1. Licence holder's information.
• 1. Date of expiry of the Licence Agreement.

Each subsequent Licence Agreement may contain one or more variations of the items listed in points 1 to 9 above.

1.2 Tenements

The Tenement Schedule contains particulars of the tenements which have been identified to us by the officers of the Company. For the purpose of this Report, we have not undertaken searches of tenements other than those identified to us by officers of the Company.

Details of the Tenements are taken from our review of the relevant tenement documents. We have verified on or immediately prior to the date of this Report with lawyers in the Kyrgyz Republic engaged by us, that the Tenements are appropriately registered with the State Agency.

1.3 Land Access

We have been informed by the Company that none of the Tenements Au-11-03 (Ertash), Au-218-03 (Kensu), Au-219-03 (Chonkyzylsu), Au-30-04 (Karasu) and Au-63-04 (Kyldoo) are located on private land and that the Company is in the process of determining the ownership status of the land within the newly granted Tenements Au-237-04 (Uzumbulak), Au-238-04 (Barkol) and Au-239-04 (Karabalta). As all the Tenements are still at an exploration stage, we have not confirmed this information with lawvers in the Kyrgyz Republic engaged by us. To the extent that private land should occur within the Tenements, the Mining Act provides an access process,

1.4 Conclusion

Our searches reveal that as at the date of this Report, CJSC Kentor and CJSC Kyldoo are the licensed holders of the Tenements respectively set out against their names in paragraph 1 of the Tenement Schedule. As a result of those searches, and subject to the statements set out in this Report, we are satisfied that the information and particulars included in this Report in relation to the Tenements, including the Tenement Schedule, are an accurate statement of the status of the Tenements as at the date when the searches were conducted.

2. MATERIAL CONTRACTS RELATED TO KYRGYZ REPUBLIC TENEMENTS

The Company (or one of its subsidiaries) is a party to the following material contracts ("Material Contracts") provided to us and summarised at Section 10.1 of the Prospectus which relate to mining tenements in the Kyrgyz Republic:

• (a) Pchanskaya Joint Venture Agreement made between the Company, CJSC Kentor and Afminex Limited ACN 065 212 679 and dated 11 October 2003 (see Section 10.1.4 of the Prospectus); and
• (b) Amendment to Pchanskaya Joint Venture Agreement and Kyldoo Option made between the Company, CJSC Kentor and Afminex Limited ACN 065 212 679, Perseus Mining Ltd ACN 106 808 986 and the Canadian company Lalo Ventures Ltd. dated 3 April 2004 (see section 10.1.4 of the Prospectus).

We have reviewed these contracts and we are satisfied that these Material Contracts are accurately summarised in Section 10.1.4 of the Prospectus. We are further satisfied that none of the Tenements is subject to any unusual conditions of a material nature in these Agreements.

We express no opinion in relation to the information presented on other contracts relevant to the Company set out in Section 10.1 of the Prospectus.

3. SCOPE OF INVESTIGATION

For the purposes of this Report, our independent enquiries have been limited to:

• (a) engaging lawyers in the Kyrgyz Republic to:
• (i) review publicly available records;
• (ii) advise on the law relating to underground mineral resources in the Kyrgyz Republic;
• (b) reviewing a copy of the Law "on Underground Mineral Resources" dated 2 July 1997 as amended, made publicly available by the Kyrgyz Geological Survey;
• (c) verifying the translations of tenement documents provided by the Company by obtaining spot audit translations from a Melbourne-based translation service; and
• (d) reviewing copies of the stated Material Contracts relating to tenements in the Kyrgyz Republic.

4. SCOPE OF OPINION

This Report relates only to the laws in force in the Kyrgyz Republic which relate to the grant, operation and tenure of tenements for geological study and development of mineral deposits and is strictly limited to the matters it deals with and does not extend, by implication or otherwise, to any other matter.

5. ASSIMPTIONS

We have assumed that the information contained in files of the Agency relating to granted tenements and the resultant searches are correct, complete and up-to- date in all respects. No survey was conducted to verify the accuracy of area details expressed in the Tenement Schedule.

For the purpose of giving this Report, we have assumed:

• (a) that the information provided to us by the Company and any of its directors, officers, employees, agents or representatives is accurate, complete, correct and up to date as at the applicable search date;
• (b) that the information provided to us by the lawyers we engaged is correct and up to date as at the applicable search date;
• (c) that all of the Tenements have been validly granted and (where applicable) renewed by the State Agency and that the State Agency has been validly appointed and has acted within the scope of its powers. authorities and discretions in respect of the Tenements and in registering, authorising, approving or granting and permission or consent in relation to any dealing or proposed dealing affecting the Tenements:
• (d) the authenticity of all signatures, seals and dates;
• (e) the completeness, and conformity to originals, of all copies of documents submitted to us:
• (f) that where a document has been submitted to us translated into English, that the translation is correct, subject that we have verified certain documents by obtaining spot audit translations from a Melbournebased translation service; and
• (g) that each of the Material Contracts specified in Section 2 is within the capacity and powers of, and has been validly authorised, sealed, executed and delivered by and is binding on, all of the parties to it; that it continues in full force and effect; and that all conditions, covenants and obligations contained in it have been complied with or otherwise discharged or will be duly complied with, discharged or satisfied where the contract is executory.

In making these assumptions, we have assumed that each matter the subject of those assumptions is true, correct and complete in every particular. By making an assumption in this Report, we do not imply that we have made any enquiry to verify that assumption. No assumption specified is limited by reference to any other assumption.

6. QUALIFICATIONS

This Report is subject to the following qualifications:

• (a) we have only made the enquiries described in Section 3 above;
• (b) the nature and enforcement of obligations under a Material Contract may be affected by the discretion of courts to grant or withhold relief by way of injunction, specific performance or other equitable remedy, by statute of limitation, by estoppel and similar principles, by laws concerning insolvency, bankruptcy, liquidation, receivership, administration or reorganisation, and by other laws affecting creditors' rights generally, which may vary from country to country:
• (c) all areas are approximate;
• (d) to the extent that any opinion or conclusion is subject to any subsequent amendment, variation or termination of the Material Contract of which we have not, as at the date of this Report, been advised;

• (e) there may be equitable or other interests in existence affecting the Tenements which for various reasons are not discoverable by search or enquiry but which may be enforceable against a holder of any interest in the Tenements:

• (f) we do not express any opinion as to, and made no investigation of, the laws of any jurisdiction applying to the right of the Company or its subsidiaries to carry on business in any place;

• (g) we do not express any opinion as to, and have made no investigation of, the laws of any jurisdiction other than Victoria and the Commonwealth of Australia other than as set out at this Report; and
• (h) further approvals may be required before activities can be carried out in relation to a particular Tenement, and we express no opinion as to whether the Company's activities are likely to require such approval or, if they do, whether approvals will be forthcoming.

$\emptyset\emptyset$

Yours faithfully RAWLING & CÓMPANY

SCHEDHLE 1

TENEMENT SCHEDULE

1. LICENCES HELD BY CJSC KENTOR & CJSC KYLDOO

The following Licences for geological study of underground mineral resources ("UMB") have been issued by the State Agency for Geology and Mineral Resources under the Government of the Kyrgyz Republic.

Tenement Mumber تحسن وتمحمت والمتاريخ الصمر المسالسة	Halder mmummumm	Licensed Name & Area of Subject of Licence	Area kail	L'umun Seneticia interest	iegem Minerale	Trom Dele
$A1 - 1 - 03$ (Errash)	CJSC Kentor	Ertash Area, Issykul Oblast Djetvoguz Region	1.790	$80%$ (1)	Gold and other metals	31/12/05
Au-218-03 (Kensu)	CJSC Kentor	Kensu Area, Issykul Oblast, Tyup Region	168.4	$80%$ (1)	$\text{God}(3)$	10/11/05
$A + 219 - 03$ (Chonkyzylsu)	CJSC Kentor	Chonkyzylsu Areay Issykul Oblast Dietyoguz Region	490.9	80% (1)	Cold (3)	10/11/05 ${A}$
Au-30-04 (Karasu)	C. ISC Kentor	Karasu Area. Jalabad Oblast Aksy Region	71	$80%$ (1)	$\text{God}(3)$	20/02/06
$A + 63 - 04$ (Kensu)	GJSC Kyldoo	Pchan Area: Jalalabad Oblast, Toguztoro Pegion	149	40% (2)	Gold siver, comper, lead and zinc	010405
Au-237-04 (Uzunbulak)	CJSC Kentor	Uzunbulak Area. Talas Oblast, Manas Region	108	$80%$ (1)	Gold and other metals	17/12/06 (5)
$A_1 = 238 - 04$ (Barkol)	C.ISO Kentor	Barkol Area. Talas Oblast, Talas Region	271	$60%$ (1)	Gold and other metals	17/12/06 (5)
Au-239-04 (Karabalta)	CJSC Kentor	Karabalta Area, Chu Oblast, Pantilov Region	627	80% (1)	Gold and other metals	17/12/06 (5)

NOTES

• (1) CJSC Kentor owns 100% of these licences. CJSC Kentor is an 80% owned subsidiary of Kentor Gold Ltd.
• (2) Each of CJSC Kentor (in which Kentor Gold has an 80% interest) and Perseus Mining Ltd ("Perseus") has an entitlement to a 50% interest in CJSC Kyldoo. Perseus has completed all steps necessary to earn a 50% interest. Only the formal grant of shares in CJSC Kyldoo is outstanding. The process for the issue of these shares should be completed by 16 February 2005. Perseus has the right to appoint 2 of the 3 directors of CJSC Kyldoo and exercises management control under the Pchanskaya Joint Venture Agreement (as amended) - see Section 2 of this Report and discussion on Material Contracts at Section 10.1.4 of the Prospectus.
• (3) The Company has informed us that the geological presentation of gold found in these areas (i.e., as porphyry gold) means that it is not necessary to cover additional minerals. The Company has however indicated that it will seek an amendment to the licences to cover additional minerals, in case of any unexpected discovery.
• (4) The Company has informed us that it has commenced the process for relinquishment of Licence No. Au-219-03 in the Chonkyzylsu area, and that full relinquishment is expected by end March 2005.
• (5) While Licences Au-237-04, Au-238-04 and AU-239-04 expire on 17 December 2006, they are all subject to annulment if CJSC Kentor does not satisfy obligations under the corresponding Licence Agreement No. 1 by 31 March 2005.
• (6) The references in this column to Areas, Oblasts and Regions are to political designations and may not accord precisely with geographic references elsewhere in the Prospectus.

2. LICENCE AGREEMENTS

Each Licence includes an accompanying Licence Agreement (see Section 1.1 of this Report).

The Licence Agreements are reviewed and renegotiated from time to time to accord with the current exploration program of the Licence holder. See Section 1.1 of this Report for a description of the Licence Agreement process.

The current Licence Agreements for the Licences listed in paragraph 1 of this Schedule 1 are:

Unsate Max LULUI LULUI LA REGIONAL CON LUI LULUI LULUI LULUI LULUI LULUI LULUI LULUI LULUI LULUI LULUI LULUI LULUI LULUI كبرازاراتك	DADA	Linansya Agreemaan	Date of Current License Agreement
Au 11-03	Enashi	ು	13/12/04
$A + 218 - 03$	Kensul	З	13/12/04
$A_1 > 19.03$	Chonkyzylsu	2	31103104
$A + 30 - 04$	Karasu	3	13/12/04
$A + 63 - 04$	Pohan (Kyldoo)	3111	01/04/04
Au-237-04	Dzunbulak		17/12/04
Au-238-04	Barkoll		17/12/04
Au-239-04	Karabalta		17/12/04

In the case of Licences Nos. Au-237-04 (Uzunbulak), Au-238-04 (Barkol) and Au-239-04 (Karabalta), the Licence Agreements are in the "Licence Agreement No. 1" form described in see Section 1.1 of this Report. The Company has informed us that:

• it will proceed with satisfaction of the licence conditions in the normal course of operations and expects to satisfy the conditions by the due date of 31 March 2005;
• none of the land affected by these Licences is private land; and
• in accordance with past practice, CJSC Kentor will engage Kyrgyz Geophysical Expedition to carry out the exploration program and will rely on Kyrgyz Geophysical Expedition's business licence.

In the case of Licences Nos. Au-11-03 (Ertash), Au-218-03 (Kensu), Au-219-03 (Chonkyzylsu), Au-30-04 (Karasu), and Au-63-04 Pchan (Kyldoo), the Licence Agreements are in the "Licence Agreement No 2" form described in Section 1.1 of this Report. Details of current work commitments for these Licences are set out in Table 2. Section 3.3 of the Prospectus and are not detailed in this Report.

3. LAND ACCESS

State Land

We have been informed by the Company that all of the Tenements Au-11-03 (Ertash), Au-218-03 (Kensu), Au-219-03 (Chonkyzylsu), Au-30-04 (Karasu) and Au-63-04 (Kyldoo) are located on State land and that the Company is in the process of determining the ownership status of the land within the newly granted Tenements Au-237-04 (Uzunbulak), Au-238-04 (Barkol) and Au-239-04 (Karabalta).

Requisite Government approval for exploration on State land occurs in the Licence grant and Licence Agreement No. 1 phase described in Section 1.1 of this Report.

Private Land

To the extent that private land occurs within the Tenements, the Mining Act provides an access process.

State Reserves. National Parks and Biosphere Territories

Both the Ertash and Kyldoo licences are partially within the boundaries of a State Reserve. The Kyrgyz Law "on Specially Profected Natural Areas" dated 28 May 1994 states in Article 9 that geological exploration and mining areprohibited on the territory of State Reserves. Further, any activity changing the hydro-geological regime of the Reserve is prohibited. These restrictions are repeated for State National Parks in Article 13.

In 2003, CJSC Kentor applied for permission to conduct geological exploration including trenching, sampling and geophysics on the Ertash licence area. The Ministry of Ecology and Emergency Situations of the Kyrgyz Republic approved "detailed exploration on the Ertash tenement in 2003-2005 provided that all requirements of the State Forestry Service of the Kyrgyz Republic for this project are complied with". The State Forestry Service issued permits to conduct exploration within the Ertash licence area except for the territory of the Sarychat-Ertash State Reserve. The only prospect discovered so far by CJSC Kentor within the Ertash licence that lies within this State Reserve is Kurgaktepchi. The State Forestry Service has allowed exploratory traverses in the Kurgaktepchi area of this Reserve to enable CJSC Kentor to obtain a concept of the regional geology. Further permission would be required prior to more intrusive exploration.

In 2003, permission to drill on the Kyldoo prospect within the boundaries of the Saimaluu Tash State Reserve was sought. Permission was required from the State Forestry Service, the Ministry of Ecology and Emergency Situations, and the Director of the Saimaluu Tash State Reserve. All permits were approved and certificates issued. Roads and drill pads were constructed, and drilling commenced in 2004.

There is no quarantee that CJSC Kentor and CJSC Kyldoo will be able to continue to operate in this fashion. The Company has informed us that no permit application has been refused to date and that there is no reason to believe that the situation will change. Kentor's experience is that Kyrgyz Government agencies are pragmatic when it comes to matters of national economic significance. We have not verified this information,

SCHEDULE 2

LEGISLATION SCHEDULE

(NB: The official language of the Kyrgyz Republic is Russian. We have relied upon a translation provided to us by the Company, verified (in the case of the Law "on Underground Mineral Resources") by a translation appearing on the official Kyrgyz Government website of the Kyrgyz Geological Survey at www.kgs.bishkek.gov.kg. Note also that the website document translates from the Russian as Law "on Subsoil" instead of the more accurate Law "on Underground Mineral Resources^®).

1. KYRGYZ REPUBLIC LAW ON UNDERGROUND MINERAL RESOURCES

The Schedule contains a brief description of relevant provisions of the Kyrqyz Republic Law "on Underground" Mineral Resources' and other relevant legislation.

1.1 Primary Legislation

The primary legislation regulating exploration and mining in the Kyrovz Republic is the Law "on Underground Mineral Resources" dated 2 July 1997, as amended (the "Mining Act"). Underground mineral resources in the Kyrgyz Republic are in state ownership. The right to the use of underground mineral resources is granted by licensing under the Mining Act, which provides for the conditions of granting, operation, renewal and termination of licences and payment of royalties and taxes. The Mining Act is administered by the State Agency for Geology and Mineral Resources (the "State Agency"), under the responsible Minister of the Government of the Kyrgyz Republic.

1.2 Licence categories

The Mining Act provides for two categories of licence relevant to the Company, the licence for geological study of underground mineral resources and the licence for development of mineral deposits. The basic characteristics of these 2 licence types are as follows:

In this Report, we call a licence for geological study of underground mineral resources, an "exploration licence" and a licence for development of mineral deposits, a "mining licence".

1.3 Licence for Geological Study of Underground Mineral Resources

The State Agency grants a licence for geological study of underground mineral resources (an "exploration licence") on the application of an individual or other legal person. The grant may be as a result of a tender process or direct negotiation. All of CJSC Kentor's licences have been granted by direct negotiation.

An exploration licence gives its holder the exclusive right to conduct exploration within the licensed area, although the licensed area for prospecting certain types of minerals may also be subject to licences issued to other licence holders to prospect for other types of minerals. The licence holder must relinquish part of the licence area within the period established in the licence agreement.

Every exploration licence is subject to standard conditions. The holder must carry out an approved exploration program. Other conditions include expending not less than the minimum amount of expenditure specified in the

licence in carrying out exploration, carrying out surveys, providing for the control of impact on the environment, and undertaking rehabilitation of disturbed surface areas. A security deposit must be lodged if required by the State Agency. The State Agency may impose other conditions on an exploration licence.

As provided under the Mining Act (Government Decree No. 499, dated 5 July 2004), the State Agency has established a maximum size for a licence area of 1000 km² and a minimum amount of annual exploration expenditure of US\$500/km² for broad scale prospecting (1:25,000 scale) and US\$1000/km² for detailed prospecting (1:10,000 scale). This decision occurred after the grant of the Ertash licence, which exceeds the maximum size. The Company has informed us that it is likely the Ertash licence will be broken down into 2 or more smaller licences in the future. The Company considers that this would be beneficial, to allow future farm-in arrangements or investment in separate areas within the Ertash licence area.

If a mineral deposit is discovered, the licence holder has an exclusive right to obtain a mining licence.

The licence holder may assign the rights provided by licence to other persons with the consent of the State Agency, provided that the conditions of the licence are satisfied.

Section 1.1 of this Report elaborates on the process for grant and administration of an exploration licence.

1.4 Licence for Development of Mineral Deposits

The holder of an exploration licence has the exclusive right to the grant of a mining licence upon discovery of a mineral deposit. A mining licence gives the licence holder the exclusive right, within the boundaries of the licence, for exploration, deposit preparation and stripping, minerals recovery and processing, and refining, sale and export of recovered minerals. The licence holder may recover common minerals and use underground waters within the boundaries of the licensed area provided the required licences are obtained.

The licence holder is required to:

• · lodge reports with the Government;
• · maintain safe working practices;
• rehabilitate workings;
• provide financial quarantees, if required:
• monitor the status and movement of accompanying minerals;
• preserve explored mining workings and boreholes; and
• . make timely and accurate payments for the use of underground mineral resources.

The initial term of a mining licence must not be longer than 20 years. Extension is possible, and the term of an extension will be dependent on likely extent of depletion of the mineral deposit.

A licence holder may assign the rights provided by the licence to another person with the consent of the State Agency, provided that the conditions of the licence are met. No provision is made for partial interests and their assignment. The Company expects that any future farm-in or joint venture arrangements would be made at the shareholder level, as in the case of CJSC Kentor and CJSC Kyldoo.

1.5 Relations with landowners

The Mining Act regulates the relationship between licence holders and holders of land use rights. Licence holders:

• . must make agreements with holders of land rights to use their land:
• . may make agreements with holders of land use rights to use other natural resources necessary for the mining operation; and
• may be required to allow passage over the licence to holders of the adjacent mining tenement or land.

If agreement cannot be reached with the land rights owners, then the Company may seek access by juridicial decision.

1.6 Repatriation of capital

The Mining Act guarantees foreign investors in underground mineral resources the right to repatriate all or part of

their capital and profits in the form of foreign currency, and to export product recovered from processing raw minerals, subject to the Government of the Kyrgyz Republic having a priority right to buy precious metals and other mineral resources produced in the Kyrgyz Republic.

2. OTHER APPLICABLE LAWS

2.1 Resolution "on Payments for the Developments and Reproduction of the Mineral Base, Financing the Exploration Workers and the Mining Industry of the Kyrgyz Republic" dated 11 May 1993

By this resolution, the Government of the Kyrgyz Republic resolved that all enterprises undertaking mining operations must make royalty payments to the Government in accordance with approved rates. The rate for precious metals, including gold, is 5% of the product value.

2.2 The Law of the Kyrgyz Republic" on Agreements on Sharing of Production resulting from Development of Mineral Resources" dated 10 April 2002 (the "Production Sharing Agreements Law")

The Production Sharing Agreements Law establishes rules for the administration of production-sharing agreements relating to domestic and foreign investment in prospecting and development of mineral deposits focated in the Kyrgyz Republic. It also governs the relationships arising in the course of concluding, executing and terminating production sharing agreements and specifies the legal framework for such agreements. In accordance with the Production Sharing Agreements Law, a proportion of product produced is owned by the Kyrgyz Republic. We are advised by the lawyers engaged by us in the Kyrgyz Republic that, in practice, such production sharing agreements are not used.

2.3 "Land Code" dated 2.lune 1999

The Land Code regulates land relationships in the Kyrgyz Republic, and the grant, registration procedure and termination of rights to land. The Land Code also promotes the rational use and protection of land.

2.4 Law "on Specially Protected Natural Areas" dated 28 May 1994

Specially protected natural areas are areas for which a special regime of protection and usage is established. A specially protected natural area may have the status of state reserve (including biosphere), national park, state sanctuary, state natural monument, botanical garden, dendrological park, zoological park, natural territory for health-improving purposes. Any economic and other activity which conflicts with the purpose of a reserve or disturbs the natural development of the setting is prohibited. Paragraph 3 of the Tenement Schedule discusses the effect of operating within such reserves on CJSC Kentor's tenements.

2.5 Laws "on Environment Protection" dated 16 June 1999 and "On Atmospheric Air Protection" dated 12 June 1999

The Law "on Environment Protection" provides a system of regulation for protection of the environment. A licence holder under the Mining Act must:

• maintain approved technology in its operations;
• . ensure the reliable and effective operation of cleaning units, plant and control devices and the disinfection and disposal of waste: and
• implement environmentally safe technologies and production standards and provide for the protection and rational usage of natural resources.

In addition to the Law "on Environment Protection", the Law "on Atmospheric Air Protection" regulates air use and protection. For example, excessive emission of air pollutants is prohibited. Exploration and mining activities must be carried out with appropriate measures for protection of the atmosphere.

2.6 Law "on Investments in the Kyrgyz Republic" dated 27 March 2003

The Law "on Investments in the Kyrovz Republic" contains more general protection to foreign investors investing in the Kyrgyz Republic, expanding upon the protections in the Mining Act and including guarantees of export and repatriation of investments, property and information outside the Kyrqyz Republic.

additional information

10.1 Summary of Material Contracts

Set out below is a summary of the contracts to which the Company is a party that may be material in terms of the Offer or otherwise may be relevant to a potential investor in the Company. The main provisions of these contracts are summarised in Sections 10.1.1 to 10.1.5. These summaries do not purport to be complete and are qualified in their entirety by reference to the text of the contracts themselves.

In addition, a summary is provided at Section 10.1.6 of the completed 2004 contract for geological exploration work with the Kyrgyz Geophysical Expedition. Although this contract has been completed for the 2004 field season, the Company expects it to be the basis for future exploration work by CJSC Kentor in the Kyrgyz Republic.

10.1.1 CJSC Kentor - Charter & Shareholders Agreement

CJSC Kentor is a closed joint stock company incorporated pursuant to the "Law on Business Partnerships and Companies" of the Kyrgyz Republic, adopted 5 June 1996. CJSC Kentor's constituent structural documents governing its operation are its Charter, equivalent to the constitution of an Australian company, and a Shareholders Agreement between the Company and the 20% shareholder Kyrgyz Geophysical Expedition.

Charter

Under the Charter of CJSC Kentor, the following provisions are notable:

• a) The liability of shareholders is limited to the extent of the liability on their respective share in the charter fund of the Company (equivalent to paid up capital on shares).
• b) Each share carries the right to one vote. A simple majority vote is required to pass an ordinary resolution. Resolutions on certain important matters (change to Charter, issue of shares, decision on property having a value of 20% or more of the company's assets, approval of annual reports and financial statements, election and early removal of General Director) require a 2/3rds majority vote.
• c) The shares of CJSC Kentor may be sold by a shareholder with the prior consent of other shareholders and the Company to a person or legal entity which fully assumes all the selling shareholder's obligations under the Charter and other company documents and which has the financial and technical capability to fulfil the shareholder's obligations under the charter and other company documents. A sale is subject to a right of first refusal in favour of other shareholders.
• d) The General Meeting appoints a Revision Committee (effectively a board of directors) to establish control over the financial and everyday activity of the Company. The current Revision Committee is Hugh McKinnon (representing Kentor) and Anatoly Azarov (representing KGE).
• e) The General Meeting also appoints a General Director, who is the executive officer of the Company and has authority to carry out the current management of the Company's activities. The General Director is not a member of the Revision Committee. The current General Director of CJSC Kentor is Orozbai Tohtonazarov.
• The Company must appoint an auditor. $\mathsf{f}$
• g) The cash flow generated by CJSC Kentor will be applied in the following order:
• $\bullet$ to pay taxes
• to pay operating expenses
• to pay capital expenditures, to fund reserves established by CJSC Kentor to pay for future capital expenditures and/or future operating expenses and to fund any other reserves deemed necessary or advisable by the Revision Commitee
• to repay loans (including accrued interest thereon and all other charges with respect thereto) owing by CJSC Kentor to any financing institution

Dividends may then be paid on a pari passu basis with respect to common shares.

h) The shareholders must resolve any deadlock by arbitration.

Shareholder agreement

By a Shareholders Agreement dated 14 December 2004 between Kentor and KGE, the parties agreed as follows:

• a) KGE is to use its best efforts to assist CJSC Kentor with all licenses and approvals in connection with its activities as well as the sale and export of mineral resources and the import, export and movement of goods. materials, equipment and personnel.
• $h$ Kentor's obligations under the Agreement are subject to satisfaction of certain conditions, including no material adverse change in circumstances in the Kyrgyz Republic.
• A non-competition provision requires each party not to compete with CJSC Kentor within the Licence areas. $\Omega$
• d) KGE has the right to act as CJSC Kentor's primary contractor if the terms and quality of its services meet international standard and are otherwise acceptable to CJSC Kentor, as determined in a general meeting of shareholders.
• e) Kentor is to provide to CJSC Kentor an unsecured demand loan of up to US\$500,000 for working capital: may provide further credit on terms and conditions satisfactory to Kentor, after which funding in accordance with proportionate shareholding is required; and must make reasonable efforts for procurement of further funding upon approval of a bankable feasibility study.
• The unsecured demand loan is repayable on demand with interest and any other amounts which CJSC Kentor ${ }$ owes to Kentor in respect of such loan, after CJSC Kentor has paid all operating expenses, taxes, funding of capital expenditure and reserves. and moneys owing to any financing institution. (Pursuant to this provision, the loan is effectively a subordinated loan although not described as such in the Agreement.)
• Kentor is entitled to form a management company to exploit any commercially feasible deposit discovered in a) the Licence areas.
• The agreement has a term of 50 years, subject to usual early termination provisions and that if mining $h$ operations are continuing, the Agreement will continue until completion of mining operations.
• In the event of Kentor deciding not to make any further investment in CJSC Kentor and advising KGE of its i) decision or in the event of liquidation for any other reasons, all exploration licences shall be allocated to KGE. KGE must compensate Kentor for the fair market value of information in the development of licensable areas subsequently used by KGE to develop a licence area with a third party.
• ì) Normal default provisions and confidentiality obligations apply. Dispute resolution is to occur by arbitration.

10.1.2 Employment Agreements

David Rovle

By an employment agreement dated 6 December 2004, the Company and David Royle have agreed the terms of his employment, including inter alia:

• a) Rovle is engaged to provide services in the capacity of Managing Director commencing on 1 January 2004 for a period of 24 months, renewable by mutual agreement in the October prior to expiry of the agreement, for a further period or periods of 12 months at an annual salary of \$140,000 with annual increases.
• b) A restraint on Royle undertaking employment in the Kyrgyz Republic for a period of 6 months after termination.
• c) An obligation on Royle to maintain confidentiality in respect of proprietary information obtained during employment.
• d) The grant of 1,366,667 options to a company associated with Royle in 3 tranches:
• 546.667 options exercisable at \$0.625. GY.
• 410,000 ontions exercisable at \$0.75; and (ii)
• $(iii)$ 410,000 options exercisable at \$0.875.

The options are not transferable and may be exercised at any time during employment and for 30 days after cessation of employment, after which they lapse. They will not be quoted.

e) The Company will consider further bonuses based on the contribution of Royle to Company milestones and the then circumstances of the Company.

Huah McKinnon

By an employment agreement dated 1 December 2004, the Company and Hugh McKinnon agreed the terms of his employment, including inter alia:

• McKinnon is engaged to provide services in the Kyrgyz Republic in the capacity of Executive Director and a) Country Manager for a term ending on 31 December 2006, renewable by mutual agreement in the March prior to expiry of the agreement for a further period or periods of 12 months at an annual salary of \$100,000 with annual review. His place of employment is the Kyrgyz Republic.
• b) A restraint on McKinnon undertaking employment in the Kyrovz Republic for a period of 6 months after termination.
• c) An obligation on McKinnon to maintain confidentiality in respect of proprietary information obtained during employment.
• The grant of 900,000 options in 3 tranches: ď).
• $(i)$ 300,000 options exercisable at \$0.625;
• (ii) 300,000 options exercisable at \$0.75; and
• (iii) 300,000 options exercisable at \$0.875.

The options are not transferable and may be exercised at any time during employment and for 30 days after cessation of employment, after which they lapse. They will not be quoted.

10.1.3 Global Ore Discovery Pty Ltd Consultancy Agreement

By a consultancy agreement dated 16 December 2004 (renewed from a prior agreement for the 2004 exploration season), the Company and Global Ore Discovery Pty Ltd agreed on the terms of a consultancy by Global Ore to the Company including interalia that:

• a) Global Ore as an independent contractor is to provide specialised geological, generative and analytical services to the Company for a period of 12 months expiring on 31 December 2005, renewable on an annual basis by mutual agreement at fees in accordance with industry standards.
• b) All data and intellectual property developed during the consultancy remains the property of the Company.
• c) Global Ore is obliged to maintain confidentiality in respect of proprietary information obtained during the consultancy.
• d) Global Ore is obliged to make Stephen Nano and Daryl Nunn available for not less than 100 days per annum between June and October as requested by Kentor and to give priority to the Company's work.
• e) Kentor is to pay for at least 100 days of service by Nano and Nunn, whether or not those services are called upon by Kentor.
• A restraint on Global Ore from undertaking engagement: Đ.
• (i) in the Kyrayz Republic during the term of the Agreement: and
• (ii) within 5km from the tenements held or covered by applications made by Kentor or proposed to be made by Kentor and known to the Consultant, for a period of 6 months after termination.
• g) Bonus incentives by the grant of options at the renewal of each 12 month period of consultancy totalling 533,334 options in 2 tranches:
• (i) 266,667 options exercisable at \$0.75 on or before 1 July 2008 (now issued); and

(ii) 266,667 options to be granted upon signing of the third 12 months Consultancy Agreement, exercisable at \$0.875 on or before 1 July 2009

(Note that 333,333 options exercisable at \$0.625 on or before 1 July 2007 were issued on signing the first consultancy agreement dated 21 May 2004, for the 2004 exploration season.)

10.1.4 Kyldoo Joint Venture Aareement with Perseus

By an agreement dated 11 October 2003. Afminex Ltd ("Afminex") agreed to undertake a 4 hole drilling program and other works in order to earn a 50 % interest in CJSC Kyldoo. With CJSC Kentor's consent, Afminex assigned its interest to Perseus Mining Ltd ("Perseus") on 3 April 2004. The key obligations under the agreement (with Perseus as the relevant party in lieu of Afminex) included inter alia that:

• a) Within 3 months of the completion of the drilling program. Perseus could elect to increase its interest to 80% by expending a further US\$400,000 by 30 September 2005.
• b) For the purpose of determining future dilution and equity positions, each party will be deemed to have incurred expenditure of US\$120,000 upon the 50% interest being earned.
• c) While Perseus continues to contribute to expenditure and to present 6-monthly budgets that are sufficient to comply with licence obligations, it is entitled to remain the manager of the project.
• d) Perseus must ensure that the licence is maintained and kept in good standing.
• e) Perseus may assign part or all of its interest in CJSC Kyldoo to another party who agrees to fund expenditure on the project, without CJSC Kentor's approval. Otherwise, each party has a right of first refusal over the other party's interest in the event a party wishes to assign its interest.
• While Perseus continues to contribute to expenditure, it is entitled to appoint 2 directors, with CJSC Kentor Ð having the right to appoint 1 director. If Perseus ceases to contribute to expenditure, CJSC Kentor is entitled to appoint 2 directors, with Perseus having the right to appoint 1 director. The right to appoint a director ceases if a party's interest in CJSC Kyldoo falls below 5%.
• g) A technical committee of 4 persons, appointed in accordance with equity interests, must meet 6 monthly to oversee management of the project. If Perseus is contributing to expenditure, it may appoint the chairman. If not, CJSC Kentor must appoint the chairman. The chairman has a casting vote. The committee must approve the 6 monthly budgets in March and September each year.
• h) Within 14 days of approval of a budget, a party may elect not to contribute to expenditure. A dilution provision applies on the basis of accumulated contribution to expenditure. If CJSC Kentor elects not to contribute to expenditure. Perseus must contribute to expenditure or withdraw from CJSC Kyldoo by transferring the initial 50% interest in CJSC Kyldoo earned by it (but not any subsequent shares earned by dilution of another party) to CJSC Kentor for a consideration of US\$1.00.
• Perseus may elect to withdraw from CJSC Kyldoo by written notice, and in that case it must transfer the initial $\ddot{i}$ 50% interest in CJSC Kyldoo earned by it (but not any subsequent shares earned by dilution of another party) to CJSC Kentor for a consideration of US\$1.00.
• Dispute resolution is to occur by arbitration. $|$
• CJSC Kentor may elect at any time to convert its interest to a royalty on gold produced in the licence area. The k). royalty rate varies between 1.5% and 2.5% depending upon the current price of gold. Perseus has a preemptive right in the event that CJSC Kentor desires to assign the royalty.

On 12 October 2004, Perseus advised that it had completed the program reguired to earn 50% but would not elect to increase this interest by sole funding additional expenditure, CJSC Kyldoo is in the process of issuing a 50% shareholding interest to Perseus. This process is due to be completed by 15 February 2005.

10.1.5 Underwriting Agreement

The Offer is fully underwritten by the Underwriter pursuant to an underwriting agreement dated 31 January 2005 between the Company and the Underwriter.

Commission, Fees and Expenses

Under the agreement, subject to completion of the Offer, the Company has agreed to pay to the Underwriter:

• an underwriting fee equal to 5.0% of the total Application Moneys payable for all of the Shares in the Offer; and
• a management fee equal to 1,0% of the total Application Moneys payable for all of the Shares in the Offer.

If the Underwriting Agreement is terminated due to certain termination events, the Company must pay the Underwriter a termination fee of \$150.000 plus GST. These events are listed in paragraphs (d) to (l) (inclusive) and (n) to (u) under the heading Termination Events below.

In addition to these fees, the Company agreed to pay the Underwriter for certain agreed costs and expenses incurred by the Underwriter in relation to the Offer.

Termination Events

The Underwriter may terminate the underwriting agreement upon the occurrence of certain specified events. Those events are:

• a) (ASX Indices fall) Either the ASX All Ordinaries Share Price Index, the S&P/ASX 200 Share Price Index or the ASX Gold Index is, for any three consecutive Business Days, from the date of this Prospectus until the date the Company issues Shares under this Prospectus, at a level which is 90% or less than the level at the close of trading on the date of the agreement.
• b) (Gold price) Either the Australian dollar spot price of gold per ounce or the United States of America dollar spot price of gold per ounce falls below 90% of the relevant spot prices on the date of the agreement.
• c) (Change in Law) Any of the following occurs which does or is likely to prohibit, restrict or regulate the Offer or materially reduces the level or likely level of valid Applications:
• the introduction of legislation into the parliament of the Commonwealth of Australia or of any State or (i) Territory of Australia or the Kyrgyz Republic;
• (ii) the public announcement of prospective legislation or policy by the Federal Government or the Government of any State or Territory of Australia or the Kyrgyz Republic; or
• (iii) the adoption by ASIC or its delegates or the Reserve Bank of Australia of any requlations or policy.
• (Breach of significant contracts) A significant or material contract referred to in the Prospectus is, without the d) prior written consent of the Underwriter:
• (i) breached by the Company or a related body corporate;
• (ii) terminated (whether by breach or otherwise);
• (iii) altered or amended in any way; or
• (iv) found to be void or voidable.
• e) (Authorisation) Any accreditation, consent, authorisation, registration, filing, lodgement, permit franchise, agreement, notarisation, certificate, permission, licence, approval, direction, declaration, authority or exemption from, by or with a government, semi-government, judicial, municipal or public entity or authority necessary to effect the Company's activities as set out in the Prospectus is not or becomes not in full force or effect.
• $f$ (Listing)
• (i) ASX makes an official statement to any person, or indicates to the Company or the Underwriter that: (a) the Company will not be admitted to the official list of ASX; or (b) a decision to admit the Company to the Official List and to grant quotation of the Shares will not be made.
• (ii) A decision by ASX to admit the Company to the Official List and to grant quotation of the Shares is not made before the Closing Date.
• (iii) The notification given by the Share Registrar on the day before the Closing Date indicates that condition 7 of Listing Rule 1.1 in relation to the holders of ordinary shares will not be satisfied.
• (Default) The Company is in default of any of the terms and conditions of the agreement or breaches any g) warranty or covenant given or made by it under the agreement and that default or breach is either incapable of remedy or is not remedied within five business days after it occurs.
• (Fails to Comply) The Company or any related body corporate fails to comply with any of the following: hì.
• (i) a clause of its constitution;
• (ii) a statute;
• (iii) any policy or guideline of ASIC or any other requirement, order or request made by or on behalf of ASIC or any governmental agency; or
• (iv) any agreement entered into by it.

• (Capital Structure) The Company or a related body corporate alters its capital structure without the prior written i) consent of the Underwriter.
• (Constitution Altered) The constitution or any other constituent document of the Company or a related body $\mathbf{R}$ corporate is amended without the prior written consent of the Underwriter, which consent must not be unreasonably withheld.
• k) (Financial Assistance) The Company or a related body corporate seeks the approval of Shareholders under section 260B of the Corporations Act, without the prior written consent of the Underwriter.
• (Business) The Company or a related body corporate: ${$
• (i) disposes, or agrees to dispose, of the whole, or a substantial part, of its business or property: or
• (ii) ceases or threatens to cease to carry on business,

in either case without the prior written consent of the Underwriter.

• m) (Hostilities) There is an outbreak of hostilities (whether or not war has been declared) not presently existing, or a major escalation in existing hostilities occurs, involving any one or more of the following:
• (i) Australia:
• (ii) the Kyrgyz Republic, Russia, Kazakhstan, Uzbekistan or Tajikistan;
• (iii) the United States of America;
• (iv) the Peoples Republic of China;
• (v) the United Kinadom:
• (vi) Japan:
• (vii) Israel;
• (viii)}ndonesia; or
• (ix) any member country of the Organisation of Petrofeum Exporting Countries.

or any diplomatic, military, commercial or political establishment of any of those countries anywhere else in the world

• n) (Financial Position) A materially adverse change, or development involving a prospective materially adverse change, occurs in the financial or trading position of the Company or a related body corporate.
• o) (Prospectus) Without limiting any other provision:
• (i) there is a material omission from the Prospectus;
• (ii) the Prospectus contains a misleading or deceptive statement;
• (iii) a statement in the Prospectus becomes misleading or deceptive:
• (iv) a forecast in the Prospectus becomes incapable of being met or unlikely to be met in the projected time:
• (v) the Prospectus does not comply with section 710(1) of the Corporations Act, the Listing Rules or any other applicable laws or regulations; or
• (vi) a matter referred to in section 719 of the Corporations Act occurs in respect of the Prospectus.
• p) (Corporations Act) Without limiting any other provision:
• (i) ASIC applies for an order under section 1324B of the Corporations Act in relation to the Prospectus and the application is not dismissed or withdrawn before the Closing Date;
• (ii) a person gives a notice under section 730 of the Corporations Act in relation to the Prospectus;
• (iii) ASIC gives notice of intention to hold a hearing in relation to the Prospectus under section 739(2) of the Corporations Act or makes an interim order under section 739(3) of the Corporations Act; or
• (iv) any person (other than the Underwriter) who consented to being named in the Prospectus withdraws that consent.

• g) (Supplementary Prospectus) The Underwriter reasonably forms the view that a supplementary or replacement document must be lodged with ASIC under section 719 of the Corporations Act and the Company does not lodge a supplementary or replacement document in the form, with the content and within the time reasonably required by the Underwriter.

• $\vert t \rangle$ (indictable Offence) A director or a related body corporate is charged with an indictable offence relating to a financial or corporate matter.

• (Insolvency Event) An insolvency event occurs with respect to the Company or a related body corporate. s)
• (Listing Rules) The Company commits a material breach of the Listing Rules. $|1\rangle$
• u) (Charge) The Company or a related body corporate charges or agrees to charge, the whole, or a substantial part of its business or property.

The Underwriter may only terminate the agreement in reliance on occurrences specified in paragraphs (q) to (s) inclusive if the Underwriter determines reasonably and in good faith that the event: (a) has or would have a material adverse effect on the Offer; or (b) has created or would create a liability for the Underwriter under the Corporations Act.

Warranties

The agreement contains certain warranties by the Company relating to matters such as conduct by the Company and information provided by the Company in relation to the Prospectus and the Offer.

10.1.6 Contract for Geological Exploration Work with Kyrgyz Geophysical Expedition

By a contract dated 22 May 2004, CJSC Kentor engaged KGE to provide geological exploration work within its tenements at Ertash, Chonkyzylsu and Kensu for the 2004 field season. While this contract has been satisfied and completed by performance, the Company expects that a similar contract will be entered into in future years. Key features of the 2004 contract were:

• a) KGE was obliged to execute the work plan specified by CJSC Kentor.
• b) KGE was obliged to provide 4 teams working simultaneously.
• c) Cost of the executed work was determined on a "team per month" basis, depending on the geological situation, climatic conditions and topographic features.
• d) KGE was obliged to provide timely and quality geological exploration work, (including geological mapping, sampling, trenching and drilling) and transfer of operational material to CJSC Kentor.
• e) All information received during the exploration is the property of CJSC Kentor.
• Term of the contract was from May 15 to October 15, 2004. f)

Exploration Team - Talas Valley

10.2 Rights Attaching to Shares

There is only one class of share on issue in the Company, fully paid ordinary shares. The rights attaching to Shares in the Company are:

• $a)$ set out in the constitution of the Company, a copy of which is available for inspection at the registered office of the Company during normal business hours; and
• b) regulated by the Corporations Act, the Listing Rules of ASX, the ASTC Settlement Rules and the general law.

The principal rights attaching to the Shares are summarised below. This summary is not intended to be exhaustive or to constitute a definitive statement of the rights and liabilities of the Company's Shareholders.

Meetings and Notice

Each Shareholder is entitled to receive notice of and to attend general meetings for the Company and to receive all notices, accounts and other documents required to be sent to Shareholders under the constitution of the Company, the Corporations Act or the Listing Rules.

Votina

Every Shareholder present in person or by proxy, attorney or representative at a meeting of Shareholders has one vote on a vote taken by a show of hands, and, on a poli every Shareholder who is present in person or by proxy. attorney or representative has one yote for every fully paid Share held by him or her, and a proportionate yote for every partly paid Share, registered in that Shareholder's name on the Company's share register.

A poll may be demanded by the chairman of the meeting, by any five Shareholders present in person or by proxy, attorney or representative, or by any one or more Shareholders who are together entitled to not less than 5% of the total voting rights of, or paid up value of, the Shares of all those Shareholders having the right to vote at that meeting.

Dividends

Dividends are payable out of the Company's profits and are declared by the Directors. There is no current proposal to pay a dividend.

Transfer of Shares

Holders of Shares may transfer them by a proper transfer affected in accordance with any computerised or electronic system established by the Listing Rules or the Corporations Act, including a transfer that may be affected pursuant to the ASTC Settlement Rules, or in a form approved by the Board.

Creation and Issue of Further Shares

The directors may (subject to the restrictions on the allotment of Shares imposed by the Constitution, the Listing Rules and the Corporations Act) allot, grant options in respect of, or otherwise dispose of further Shares on such terms and conditions as they see fit.

Variation of Rights

The rights, privileges and restrictions attaching to ordinary Shares can be altered with the approval of a resolution passed at a separate general meeting of the holders of ordinary Shares by a three quarters majority of those holders who, being entitled to do so, vote at the meeting or, with the written consent of the holders of at least three quarters of the ordinary Shares on issue.

Winding Up

Subject to any future special or preferential rights attaching to any class or classes of Shares (currently there are none), members will be entitled, in the event of the winding up of the Company, to share in any surplus assets of the Company in proportion to the Shares held by them, less any amounts which remain unpaid on those Shares at the time of distribution.

Liabilities

The Shares offered under this Prospectus are fully paid ordinary Shares. There is no liability on a holder of these Shares to contribute any further amount to the Company.

10.3 Existing Shareholders

At the date of this Prospectus, the twenty largest existing Shareholders of the Company are contained in Table 8.

Table 8: Twenty largest Kentor Existing Shareholders

the contract of the contract of the contract of and the contract of the contract of the contract of the contract of the contract of Shareholder Shareholder	Number of Shares
Graham Tuckwell	2 225,673
Exploration CP 2000 Limited Partnership	2.126.167
Hugh McKinnon	2.064.627
Poplette Hordings (VIC) Pty Ltd	1,900,000
Natalia Tihomirova	898 028
Professor Michael Gross	783.334
Co-opr8 Investments PLC	688.854
Sand Cort Investments Pty Ltd.	534,162
Bronwyn Burgess	534.162
Torrington Investments Pty Ltd	518,729
lan Desborough Ennis & Gwenda Louise Ennis < Ennis Superannuation Fund>	500,000
Edwina Margaret Pribyl	482 117
Westpac Custodian Nominees Ltd Fund ID H61W	454,546
Australian Investors Pty Ltd	454.546
Macquarie Bank Limited	454 334
lan Ennis & Company Pty Ltd	401,709
Dalenier Enterprises Pty Ltd	361.470
Minadeo Pty Ltd < Bain Family Trust> Zouch Resources Pty Ltd < D Z Royle Trust >	366,106 323,951
Kathmandu Investments Pty Ltd	333,334
Total Shares held by largest 20 Existing Shareholders	16,435,849
Total issued Existing Shares	22,151,132
Percentage of Shares held by largest 20 Existing Shareholders	74.2%

Some of these Shares will constitute Restricted Securities for the purpose of the Listing Rules (see Sections 2.8 and 10.5).

10.4 Options

Kentor has issued 10,186,225 options. Of this number, 7,919,558 options have been issued to seed investors, employees and contractors on the following terms:

• 500,000 options exercisable at \$0.21 on or before 1 April 2005
• • 466,668 options exercisable at \$0.21 on or before 1 August 2005
• $\bullet$ 66,667 options exercisable at \$0.21 on or before 1 April 2006
• 1,232,887 options exercisable at \$0.30 on or before 1 April 2006
• $\bullet$ 386,668 options exercisable at \$0.30 on or before 1 July 2006
• • 4,666,668 options exercisable at \$0.45 on or before 1 March 2007
• 333,333 options exercisable at \$0.625 on or before 1 July 2007
• $\bullet$ 266,667 options exercisable at \$0.75 on or before 1 July 2008

In addition, 2,266,667 executive options have been issued to executives David Royle and Hugh McKinnon as follows:

Exercise Price	Rovie	McKinnon
Exercisable at \$0.625	546.667	300,000
Exercisable at \$0.75	410.000	300,000
Exercisable at \$0.875	410.000	300,000
Total	1.366.667	900,000

These executive options are not transferable and are exercisable at any time during the employment of the executive and for 30 days after he ceases employment, after which they lapse.

The Company also has an obligation to Global Ore, in the event of renewal of its contract for 2006, to issue 266,667 options at an exercise price of \$0.875.

The key terms of the existing options are:

• The Shares issued as a result of the exercise of any option will rank pari passu in all respects with previously issued fully paid Shares of the Company;
• Options are exercisable by completing and lodging the required notice of exercise form and payment of the exercise price with the Company on or before the expiry date.
• Option holders will be permitted to participate in all new issues or bonus issues on the prior exercise of the options only. Option holders will be given 10 business days prior to the record date to exercise their options.
• In the event of reconstruction (including consolidation, subdivision, reduction or return) of issued capital of the Company, the number of options and the exercise price of options shall be reconstructed in the same proportion as the issued capital of the Company is reconstructed and in a manner which will not result in any additional benefits being conferred on the option holders which are not conferred on Shareholders of the Company, but in all other respects the terms for the exercise of the options shall remain unchanged.
• The rights attaching to the options shall be changed, amended or varied from time to time to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation by the Company.
• An option holder will be sent all reports and accounts given to Shareholders and may attend but may not participate in a general meeting of Shareholders, unless also a Shareholder.

No voting rights or dividend rights attach to the options. The options will not be listed on the ASX. Some of the options will constitute Restricted Securities for the purpose of the Listing Rules (see Sections 2.8 and 10.5). If those options are exercised before the end of the restriction period. the Shares issued upon exercise of those options will also be Restricted Securities, for the balance of the restriction period.

Karasu Prospect area

10.5 Escrow Provisions and Shares available for trading on ASX

The ASX may determine, at its sole discretion, that all or part of the Company's existing securities on issue at the date of this Prospectus should be classified as Restricted Securities and therefore subject to escrow, as set out in the Listing Rules, for a period of up to 24 months from the date of quotation of the Company's securities on ASX.

While the determination by ASX will not be available until shortly before listing, the Company expects that the number of Shares to be escrowed and their likely escrow periods will be as set out in table 9.

Table 9: Likely Restricted Shares and Shares available for trading on ASX

THE REPORT OF STATISTICS MARKET وتحديث ويرودون والمستحل والمستحدث والمستحل المستحل والمستحل والمستحل والمستحل والمستحل المستحل والمستحل المستحل المستحل المستحل	An of Marcs	% of Shares on Completion of Overs	PEICHE USE Antonio de la contrada de la contrada de la contrada de la contrada de la contrada de la contrada de la contrad
Restricted Shares held by Directors, Related Parties and Promoters	5617067		24 months from admission to ASX
Restricted Shares issued in last 12 months to non-associated parties	2 473 491		1.4 M April 2005 Balance Aug/Sep 2005
Total Restricted Shares	8,290,558	24.3
"Free Float" - existing Shares available for trading upon admission to ASX	13860.574
Shares issued pursuant to this Prospectus	12.000.000
Total Shares available for trading upon Company's admission to ASX	25,860,574	75. T
Total Issued Capital	34.151.132	100.0

Of the 10,186,225 options on issue, the Company expects that:

• 2.65 million (with exercise prices ranging from \$0.21 to \$0.30) will be escrowed for 2 years, which is beyond their exercise date;
• 1.67 million (with an exercise price of \$0.45) will be escrowed for 2 years, and will be released from escrow on or about the same date as their last exercise date:
• $\bullet$ 3 million (with an exercise price of \$0.45) may be partially escrowed but only for a short period after listing;
• the balance are employee and contractor incentive options and are exercisable at prices in excess of the IPO price.

10.6 Directors' Interests and Benefits

Other than set out below or elsewhere in this Prospectus, no Director and no firm in which a Director is or was at the relevant time, a partner, has or has had in the two years before lodgement of this Prospectus with ASIC, any interest in:

• a) the promotion or formation of the Company:
• b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion, or the Offer of Shares under this Prospectus:
• c) the Offer of Shares under this Prospectus and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any Director:
• d) to induce him to become, or to qualify him as, a director; or
• e) for services rendered by him in connection with the promotion or formation of the Company or the Offer of Shares under this Prospectus.

As at the date of this Prospectus, the Directors' interests in the existing Shares and options of the Company are contained in Table 10.

1980 - Andrew Maria Barat, mars and de fer Name of Director	Numberom Ordinary Shares	Nature of Interest in Ordinary Shares
John Barr David Royle Andrew Daley Hugh McKinnon	30.000 333951 381.470 2064627	Beneficial Beneficial Beneficial Direct
Name of Director a se suppremen	Number of Options over Ordinary Shares	Nature of Interest in unitans
John Barr
David Royle Exercisable at \$0.21 on or before 1 April 2005 (1) Exercisable at \$0.30 on or betore 1 April 2006 (1) Exercisable at \$0.625 (2). Exercisable at \$0.75 (2) Exercisable at \$0.875 (2) Andrew Daley	500000 500 000 546,667 410,000 410.000	Benericial Beneficial Beneficial Beneficial Beneficial
Exercisable at \$0.45 on or before 1 March 2007	97,050	Beneficial
Exercisable at \$0.45 on or before 1 March 2007 (3)	1 666 667	Partial indirect beneticial
Hugh McKinnon
Exercisable at \$0.21 on or before 1 August 2005	133.334	Direct
Exercisable at \$0.625 (2)	300.000	Direct
Exercisable at \$0.75 (2)	300.000 300.000	Direct Direct
Exercisable at \$0.875 (2)

Table 10: Directors' Interests in Existing Shares and Options

• (1) Options granted in lieu of payment for consulting work undertaken by David Royle prior to his appointment as Managing Director.
• (2) Executive options. These options are not transferable and are exercisable at any time during the employment of the executive and for 30 days after he ceases employment, after which they lapse.
• (3) Investor Resources Limited, of which Andrew Daley is a director, has provided financial advisory services in connection with the Offer. In respect of this work, Investor Resources Limited will receive 1,000,000 options over Shares of the Company with an exercise price of \$0.45 expiring on 1 March 2007. In March 2004, Investor Resources Limited also received 666,667 options over Shares of the Company with an exercise price of \$0.45 expiring on 1 March 2007 for other financial advisory services.

Director's Indemnity, Insurance and Access Deed

The Company has entered into a Director's Indemnity, Insurance and Access Deed with each Director. Under the deed, each Director is given the right to continue to be indemnified by the Company, to the extent permitted by law, for liabilities arising as a result of the Director acting as an officer of the Company or of a related body corporate of the Company. The indemnity is subject to the restrictions prescribed in the Corporations Act. Subject to the terms of the deed, it also gives each Director a right to access Board papers and requires the Company to maintain insurance cover for the Directors.

10.7 Interests of Experts and Advisers

Other than as set out below, or elsewhere in this Prospectus, 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 this Prospectus, promoter or stockbroker to the Company, has, or had within two years before lodgement of this Prospectus with ASIC, any interest in:

a) the formation or promotion of the Company;

• b) any property acquired or proposed to be acquired by the Company in connection with its formation or promotion, or in connection with the Offer of Shares under this Prospectus; or
• c) the Offer of Shares under this Prospectus.

and 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 for services rendered by him in connection with the formation or promotion of the Company or the Offer of Shares under this Prospectus.

Investor Resources Limited has provided financial advisory services prior to and in connection with this Prospectus. For these services, the Company issued 1,666,667 options to subscribe for fully paid shares exercisable at \$0.45 on or before 1 March 2007. Employees of Investor Resources Limited, or their associates, own 5.16 million Shares and 2.57 million options at the date of this Prospectus. Graham Tuckwell, the largest existing Shareholder (see Section 10.3), is the managing Director of Investor Resources Limited. None of the employees of Investor Resources Limited is an associate of any other employee of Investor Resources Limited for the purposes of sections 10 to 17 of the Corporations Act.

Melbourne Capital Limited has been appointed Co-Manager to the Offer and will receive sub-underwriting fees from the Underwriter in connection with this role. In addition, Melbourne Capital has previously received fees totalling \$30,956 for capital raising services provided to the Company.

Vidoro Pty Ltd has prepared the Independent Geologist's Report included in this Prospectus. In respect of this work, the Company will pay approximately \$25,000.

Rawling and Company has acted as legal advisors to the Offer and has been involved in undertaking due diligence enquires for the preparation of the Prospectus, preparing a Legal Report and providing legal advice to the Company in relation to the Offer. In respect of this work, the Company will pay approximately \$60,000.

BDO has acted as Investigating Accountant and has prepared an Investigating Accountant's Report on the Historical and Proforma financial information included in this Prospectus. In respect of this work, the Company will pay approximately \$12,000.

10.8 Decuments Available for Inspection

Copies of the following documents are available for inspection during normal office hours, free of charge at the Company's registered office, for a period of 13 months from the date of this Prospectus:

• $\bullet$ Constitution of the Company;
• Material contracts; and
• Consents referred to in this Prospectus.

10.9 Consents

The following persons have each consented to the inclusion of the following statements and the statements identified in this Prospectus as being based on statements made by those persons in the form and context in which they are included, and have not withdrawn that consent before lodgement of this Prospectus with ASIC:

• · Vidoro Pty Ltd Independent Geologist's Report
• Rawling & Company Legal Report
• · BDO Investigating Accountant's Report

To the maximum extent permitted by law, each of the persons referred to above expressly disclaims and takes no responsibility for any part of this Prospectus other than the statements referred to above and the statements identified in this Prospectus as being based on statements made by those persons.

The following persons have consented to being named in this Prospectus but have not made any statements that are included in this Prospectus or any statements identified in this Prospectus as being based on any statements made by those persons, and have not withdrawn their consent before lodgement of this Prospectus with ASIC:

• · MSI Ragg Weir Auditor
• · Tolhurst Noall Limited Lead Manager & Underwriter

• Melbourne Capital Limited Co-Manager to the Offer
• ASX Perpetual Registrars Limited Share Registry
• Investor Besources Limited Financial Adviser
• · Global Ore Discovery Pty Ltd Exploration consultant

To the maximum extent permitted by law, each of the persons referred to above expressly disclaims and takes no responsibility for any part of this Prospectus other than the references to their name. Tolhurst Noall Limited has given, and at the time of lodgement of the Prospectus has not withdrawn, its consent to be named in the Prospectus as Lead Manager and Underwriter in the corporate directory and elsewhere in the form and context in which it is named in this Prospectus. Tolhurst Noall Limited did not authorise or cause the issue of this Prospectus, nor was it involved in the preparation of any part of the Prospectus, and makes no express or implied representation or warranty in relation to the Company, this Prospectus or the Offer.

10.10 Litination and Administrative Actions

As at the date of this Prospectus, neither the Company nor its subsidiaries are involved in any litigation, administrative actions or arbitration proceedings.

10.11 Expenses of the Offer

The total expenses of the Offer and associated costs payable by the Company referred to in this Prospectus are exclusive of GST which may be payable on that amount. The total expenses of the Offer and associated costs payable by the Company are estimated to be approximately \$540,000. These are made up as follows:

		Total
	& due dilígence
g)	Incidental costs relating to underwriting		12
Ð	ASX, ASIC Fees		44
e)	Printing and Promotional Expenses		27
d)	Independent Geologists Fees		25
C)	Legal Fees		60
b)	Investigating Accountant's Fees		12
aì	Underwriters Fee		360
			A\$000

10.12 Statement of Exploration Results & Gold Deposits

10.12.1 Exploration Results

Information in this report that relates to a statement of exploration results of the Company is based on information compiled by David Z. Royle, BSc (Hons) (Geology). Mr Royle is Managing Director of Kentor Gold Ltd and has sufficient experience relevant to the style of mineralisation and type of deposits under consideration and to the activity undertaken. He is qualified as a competent person as defined in the 2004 Edition of the "Australasian Code for Reporting of Mineral Resources and Ore Reserves" (or "JORC Code").

10.12.2 Gold Deposits in Tien Shan Belt

References to gold deposits in the Tien Shan belt in sections of this Prospectus (other than the Independent Geologist's Report in Section 7) include references to the scale of endowment (resources plus past production) of the deposits, measured in Moz or millions of ounces of gold. To the extent that these references include resources, the Company has not verified whether they comply with the JORC Code and they have not been prepared for inclusion in this Prospectus by a competent person (as defined in the JORC Code). See the Independent Geologist's Report at Section 7 of this Prospectus, particularly the section headed "Major Deposit Types In The Kyrgyz Republic" at page 51, for references to the source and basis of these resource estimates.

10.13 Directors' Statement

The Directors report that as at the date of this Prospectus, in their opinion and after due inquiry:

• they are not aware of any circumstances that are not disclosed in this Prospectus that would materially affect the assets and liabilities, the financial position or prospects of Kentor; and
• . they have reasonable grounds to believe that there are no misleading or deceptive statements and that there are no material omissions from this Prospectus.

The Directors have authorised and caused the issue of this Prospectus and accept responsibility for the information contained in it. Each of the Directors has consented to the lodgement of this Prospectus with ASIC and its issue and has not withdrawn that consent before lodgement.

Dated 31 January 2005

John Mary

Signed for and on behalf of Kentor Gold Ltd By John Barr, AM Chairman

glossary

Application	an application for the allotment of Shares by the lodgement of a duly completed Application Form accompanied by the Application Moneys
Application Form	on application form attached to or accompanying this Prospectus
Application Moneys	the issue price of \$0.50 per Share multiplied by the number of Shares for which application is made
ASIC	the Australian Securities & Investments Commission
ASTC Settlement Rules	the settlement rules of ASX Settlement and Transfer Corporation Pty Limited ACN 008 504 532
ASTER	an imaging instrument that is flying on the TERRA satellite launched in December 1999. as part of NASA's Earth Observing System
Au, Ag, As, Cu, Mo, Pd, W.	Elemental symbols for gold, silver, arsenic, copper, molybdenum, palladium, & tungsten respectively - when combined, such as As-W, they signify a geochemical association of the elements listed - the use of the $\pm$ symbol (eg Cu-Au $\pm$ Mo-W) indicates that the elements listed after it may be present or absent in the association
ASX	Australian Stock Exchange Ltd ACN 008 624 691
ASX Principles of Good Corporate Governance	the ASX's Principles of Good Corporate Governance and Best Practice Recommendations
BLEG	an abbreviation for Bulk Leach Extractable Gold, a chemical analysis technique utilising cyanide to extract gold
Centerra	Centerra Gold, Inc., a Canadian company listed on the Toronto Stock Exchange (TSE) code: CG)
CHESS	the Clearing House Electronic Subregister System operated by the ASX
Closing Date	means 4 March 2005 as varied (if applicable) by the company in consultation with the underwriter
CJSC Kentor	Closed Joint Stock Company Kentor, a Kyrgyz Republic company and 80% owned subsidiary of Kentor
CJSC Kyldoo	Closed Joint Stock Company Kyldoo, a Kyrgyz Republic company and 50% owned by CJSC Kentor upon completion of the share issue to Perseus referred to in Section 10.1.4
Company	Kentor Gold Ltd ACN 082 658 080
Corporations Act	the Corporations Act 2001 (C'th)
Directors	the directors of the Company
Exposure Period	the period of 7 days after the date of lodgement of this Prospectus or such extended period as ASIC may require not exceeding 14 days
GIS	a geographic information system, devised to present spatial data in a series of compatible and interactive layers
Global Ore	Global Ore Discovery Pty Ltd ACN 105 383 211
JORC Code	The 2004 Edition of the "Australasian Code for Reporting of Mineral Resources and Ore Reserves" published by the Joint Ore Reserves Committee of the Australian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia and being Appendix 5A of the Listing Rules
KGE	Kyrgyz Geophysical Expedition
Kentor	Kentor Gold Ltd ACN 082 658 080

Kumtor Fault Zone	is a 0.5 to 1.5 km wide geological structure that has been traced for 60 km along strike on the northern edge of the Tien Shan mountain range front
Listing Rules	The listing rules of the ASX as amended from time to time
MMI or MMI geochemistry	mobile metal ion geochemistry, a process based on the theory that metal ions from deeply buried orebodies are mobilized in the weathering zone and migrate vertically to the surface, where they accumulate in the surface soil immediately overlying the orebody - see Section 7 for elaboration
Moz*	million ounces in relation to a nominated established gold deposit, limited as set out in Section 10.12.2
Offer	the public offering of 12,000,000 Shares at \$0.50 per Share pursuant to this Prospectus
Official List	means the official list of entities that the ASX has admitted and not removed
Opening Date	means 8 February 2005, as varied (if applicable) by the Company in consultation with the Underwriter
Perseus	Perseus Mining Ltd ACN 106 808 986, an Australian company listed on the Australian Stock Exchange
Restricted Securities	securities of the Company restricted as required by the ASX - see Sections 2.8 and 10.5
Share Registry	ASX Perpetual Registrars Limited ACN 083 214 537
Shares	fully paid ordinary shares in the Company
Shareholder	a holder of Shares
State Agency	The State Agency for Geology and Mineral Resources of the Kyrgyz Republic
Underwriter	Tolhurst Noall Limited ACN 003 237 536

References to "\$" are to Australian dollars, unless it is expressly noted to the contrary.

Dollar amounts in the Prospectus are exclusive of GST, unless otherwise specified.

References to other geological terms used in this Prospectus can be found in the glossary accompanying the Independent Geologist's Report in Section 7, at pages 76 to 78.

						Adviser Code
		Application Form
		at A\$ 0.50		B A\$
Applicant
Title.
Sumame
Unit Number/Level
E X
				Company	Partnership.	Trust	Super Fund
							FOR THE PIRE CITY OF THE THE THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME TH
		- BSB .
	Joint Applicant #2 Title First Applicant :	Surname/Company Name First Name First Name Street Number Suburb/City or Town TFN/ABN/Exemption Code. Cheque or Bankdraft Number	Number of shares applied for the control of PLEASE COMPLETE ADDRESS DETAILS "Kentor Gold Share Offer" and crossed "Not Negotiable".	Offer price per share (minimum 4,000 shares, thereafter in multiples of 1,000 shares) - الوافقان والمحتفين والمتحد ولتنف Designated account e.g. (or Joint Applicant #3) Street Name Joint Applicant #2. TFN/ABN type - if NOT an individual, please mark the appropriate box en Amerikaans, ministrasjonstrukter Level 4, 333 Collins Street, Melbourne Victoria, 3000	Middle Name PO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable) وأرابهم والأراب وواقعته والمحافظ والأوال بالمعاقب المراقبة والمراقب والمحافرة Email address (only for purpose of electronic communication of shareholder information) station of the المتحجج والمتحدث والمحافظ والمحاور والمتحدث والمحاف	PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names) Middle Name State CHESS HIN (if you want to add this holding to a specific CHESS holder, write the number here) The name or address on CHESS must exactly match Telephone Number where you can be contacted during business hours. [1] Contact Name (PRINT) - Account Number	This Application Form must not be handed to another person unless attached to or accompanied by the Prospectus dated 31 January 2005 and a person who gives another person access to this application form must at the same time and by the same means give the other person access to the Prospectus. Kentor will send you a free paper copy of the Prospectus if you have received an electronic Prospectus and you ask for a paper copy before the Prospectus expires on 28 February 2006. I/We lodge full application money Postcode the name you have given here on this Application Form. Joint Applicant #3 Cheque or bankdraft should be drawn on an Australian branch of an Australian bank in Australian currency and made payable to. LODGEMENT INSTRUCTIONS You must return your application so it is received before 5.00pm on 4 March 2005 to: ASX Perpetual Registrars Limited, GPO Box 2785, Melbourne Victoria 3001, or ASX Perpetual Registrars Limited,

.∦ ţ

$\frac{1}{2}$

Your Guide to the Application Forms

Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced
The shares to which this Application Form relates are Kentor Gold Ltd (Kentor) shares. Further details about the shares are contained in the Prospectus dated 31 January 2005 issued by Kentor. The Prospectus will expire on 28 February 2006. While the Prospectus is current, Kentor will send paper copies of the Prospectus, any supplementary document and the Application Form, free of charge on request.
The Australian Securities & Investments Commission requires that a person who provides access to an electronic application form must provide access by the same means and at the same time, to the relevant Prospectus. This Application Form is included in the Prospectus.
The Prospectus contains Important Information about investing in the shares. You should read the Prospectus before applying for shares.
Please enter your telephone number(s), area code and contact name G in case we need to contact you in relation to your application. н Please complete cheque details and make it payable to Kentor Gold. Share Offer as follows: Make your cheques payable to Kentor Gold Share Offer in Australian. • dollars and cross it "Not Negotiable". Your cheque must be drawn on a branch of an Australian Bank. The amount should agree with the amount shown in Section B. Sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result in your application being rejected. Pin (do not staple) your cheque(s) to the Application Form where indicated.
ASX Perpetual Registrars Limited advise that once you become a shareholder in Kentor, Chapter 2C of the Corporations Act 2001 requires information about you (including your name, address and details of the shares you hold) to be included in Kentor public register. This information must continue to be included in Kentor's public register if you cease to be a shareholder. These statutory obligations are not altered by the Privacy Amendment (Private Sector) Act 2000. Information is collected to administer your share holding and if some or all of the information is not collected then it might not be possible to administer your share holding. Our privacy policy is available on our website (www.asxperpetual.com.au).

CORRECT FORMS OF REGISTRABLE NAMES

Note that ONLY legal entities are allowed to hold shares. Applications must be in the name(s) of natural persons or companies. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms below.

Type of Investor	Correct Form of Registration	Incorrect Form of Registration
Individual Use given names in full, not initials	Mrs Katherine Clare Edwards	K C Edwards
Company Use Company's full title, not abbreviations	Liz Biz Pty Ltd	Liz Big P/L or Liz Biz Co.
Joint Holdings Use full and complete names	Mr Peter Paul Tranche & Ms Mary Orlando Tranche	Peter Paul & Mary Tranche
Trusts Use the trustee(s) personal name(s)	Mrs Alessandra Herbert Smith	Alessandra Smith Family Trust
Deceased Estates Use the executor(s) personal name(s)	Ms Sophia Garnet Post & Mr Alexander Traverse Post	Estate of late Hatold Post - Of Harold Post Deceased
Minor (a person under the age of 18 years) Use the name of a responsible adult with an appropriate. designation	Mrs Sally Hamilton	Master Henry Hamilton.
Partnerships Use the partners' personal names.	Mr Frederick Samuel Smith & Mr Samuel Lawrence Smith	Fred Smith & Son
Long Names	Mr Hugh Adrian John Smith-Jones	Mr Hugh A J Smith Jones
Clubs / Unincorporated Bodies / Business Name Use office bearer(s) personal name(s)	Mr Alistair Edward Lilley	Vintage Wine Club
Superannuation Funds Use the name of the trustee of the fund	XYZ Pty Ltd	XXYZ Pty Ltd Superannuation Fund

Put the name(s) of any joint applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application.

						Adviser Code
		Application Form
		at A\$ 0.50		B A\$
Applicant
Title.
Sumame
Unit Number/Level
E X
				Company	Partnership.	Trust	Super Fund
							FOR THE PIRE CITY OF THE THE THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME THE TIME TH
		- BSB .
	Joint Applicant #2 Title First Applicant :	Surname/Company Name First Name First Name Street Number Suburb/City or Town TFN/ABN/Exemption Code. Cheque or Bankdraft Number	Number of shares applied for the control of PLEASE COMPLETE ADDRESS DETAILS "Kentor Gold Share Offer" and crossed "Not Negotiable".	Offer price per share (minimum 4,000 shares, thereafter in multiples of 1,000 shares) - الوافقان والمحتفين والمتحد ولتنف Designated account e.g. (or Joint Applicant #3) Street Name Joint Applicant #2. TFN/ABN type - if NOT an individual, please mark the appropriate box en Amerikaans, ministrasjonstrukter Level 4, 333 Collins Street, Melbourne Victoria, 3000	Middle Name PO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable) وأرابهم والأراب وواقعته والمحافظ والأوال بالمعاقب المراقبة والمراقب والمحافرة Email address (only for purpose of electronic communication of shareholder information) station of the المتحجج والمتحدث والمحافظ والمحاور والمتحدث والمحاف	PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names) Middle Name State CHESS HIN (if you want to add this holding to a specific CHESS holder, write the number here) The name or address on CHESS must exactly match Telephone Number where you can be contacted during business hours. [1] Contact Name (PRINT) - Account Number	This Application Form must not be handed to another person unless attached to or accompanied by the Prospectus dated 31 January 2005 and a person who gives another person access to this application form must at the same time and by the same means give the other person access to the Prospectus. Kentor will send you a free paper copy of the Prospectus if you have received an electronic Prospectus and you ask for a paper copy before the Prospectus expires on 28 February 2006. I/We lodge full application money Postcode the name you have given here on this Application Form. Joint Applicant #3 Cheque or bankdraft should be drawn on an Australian branch of an Australian bank in Australian currency and made payable to. LODGEMENT INSTRUCTIONS You must return your application so it is received before 5.00pm on 4 March 2005 to: ASX Perpetual Registrars Limited, GPO Box 2785, Melbourne Victoria 3001, or ASX Perpetual Registrars Limited,

.∦ ţ

$\frac{1}{2}$

Your Guide to the Application Forms

Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced
The shares to which this Application Form relates are Kentor Gold Ltd (Kentor) shares. Further details about the shares are contained in the Prospectus dated 31 January 2005 issued by Kentor. The Prospectus will expire on 28 February 2006. While the Prospectus is current, Kentor will send paper copies of the Prospectus, any supplementary document and the Application Form, free of charge on request.
The Australian Securities & Investments Commission requires that a person who provides access to an electronic application form must provide access by the same means and at the same time, to the relevant Prospectus. This Application Form is included in the Prospectus.
The Prospectus contains Important Information about investing in the shares. You should read the Prospectus before applying for shares.
Please enter your telephone number(s), area code and contact name G in case we need to contact you in relation to your application. н Please complete cheque details and make it payable to Kentor Gold. Share Offer as follows: Make your cheques payable to Kentor Gold Share Offer in Australian. • dollars and cross it "Not Negotiable". Your cheque must be drawn on a branch of an Australian Bank. The amount should agree with the amount shown in Section B. Sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result in your application being rejected. Pin (do not staple) your cheque(s) to the Application Form where indicated.
ASX Perpetual Registrars Limited advise that once you become a shareholder in Kentor, Chapter 2C of the Corporations Act 2001 requires information about you (including your name, address and details of the shares you hold) to be included in Kentor public register. This information must continue to be included in Kentor's public register if you cease to be a shareholder. These statutory obligations are not altered by the Privacy Amendment (Private Sector) Act 2000. Information is collected to administer your share holding and if some or all of the information is not collected then it might not be possible to administer your share holding. Our privacy policy is available on our website (www.asxperpetual.com.au).

CORRECT FORMS OF REGISTRABLE NAMES

Note that ONLY legal entities are allowed to hold shares. Applications must be in the name(s) of natural persons or companies. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms below.

Type of Investor	Correct Form of Registration	Incorrect Form of Registration
Individual Use given names in full, not initials	Mrs Katherine Clare Edwards	K C Edwards
Company Use Company's full title, not abbreviations	Liz Biz Pty Ltd	Liz Big P/L or Liz Biz Co.
Joint Holdings Use full and complete names	Mr Peter Paul Tranche & Ms Mary Orlando Tranche	Peter Paul & Mary Tranche
Trusts Use the trustee(s) personal name(s)	Mrs Alessandra Herbert Smith	Alessandra Smith Family Trust
Deceased Estates Use the executor(s) personal name(s)	Ms Sophia Garnet Post & Mr Alexander Traverse Post	Estate of late Hatold Post - Of Harold Post Deceased
Minor (a person under the age of 18 years) Use the name of a responsible adult with an appropriate. designation	Mrs Sally Hamilton	Master Henry Hamilton.
Partnerships Use the partners' personal names.	Mr Frederick Samuel Smith & Mr Samuel Lawrence Smith	Fred Smith & Son
Long Names	Mr Hugh Adrian John Smith-Jones	Mr Hugh A J Smith Jones
Clubs / Unincorporated Bodies / Business Name Use office bearer(s) personal name(s)	Mr Alistair Edward Lilley	Vintage Wine Club
Superannuation Funds Use the name of the trustee of the fund	XYZ Pty Ltd	XXYZ Pty Ltd Superannuation Fund

Put the name(s) of any joint applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application.

	j (do nosstaple)		Application Form				Adviser Code
			This Application Form must not be handed to another person unless attached to or accompanied by the Prospectus dated 31 January 2005 and a person who gives another person access to this application form must at the same time and by the same means give the other person access to the Prospectus. Kentor will send you a free paper copy of the Prospectus if you have received an electronic Prospectus and you ask for a paper copy before the Prospectus expires on 28 February 2006.
	Number of shares applied for the control of		Offer price per share			I/We lodge full application money
			at A\$ 0.50		B As
	(minimum 4,000 shares, thereafter in multiples of 1,000 shares) -		PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names)
	Applicant
	Surname/Company Name
	First Name Title.			Middle Name
	Joint Applicant #2 Sumame
	First Name Title.				Middle Name
	Designated account e.g. (or Joint Applicant #3)
	PLEASE COMPLETE ADDRESS DETAILS
D			PO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable)
	Unit Number/Level	Street Number	Street Name.
	Suburb/City or Town			Al Provincia Anglia		State -	Postcode.
			Email address (only for purpose of electronic communication of shareholder information)
			CHESS HIN (if you want to add this holding to a specific CHESS holder, write the number here)			The name or address on CHESS must exactly match
	E X					the name you have given here on this Application Form.
	TFN/ABN/Exemption Code.
F	First Applicant		Joint Applicant #2			Joint Applicant #3
			TFN/ABN type - if NOT an individual, please mark the appropriate box		Company	Partnership.	Trust	Super Fund
			Telephone Number where you can be contacted during business hours. "Contact Name (PRINT)
G
			Cheque or bankdraft should be drawn on an Australian branch of an Australian bank in Australian currency and made payable to.
	"Kentor Gold Share Offer" and crossed "Not Negotiable".
H	Cheque or Bankdraft Number and Cheque or		BSB.			Account Number

KGL IPO001

Base

Your Guide to the Application Forms

to each section of the form.	Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced
the Prospectus, any supplementary document and the Application Form, free of charge on request.	The shares to which this Application Form relates are Kentor Gold Ltd (Kentor) shares. Further details about the shares are contained in the Prospectus dated 31 January 2005 issued by Kentor. The Prospectus will expire on 28 February 2006. While the Prospectus is current, Kentor will send paper copies of
The Australian Securities & Investments Commission requires that a person who provides access to an electronic application form must provide access by the same means and at the same time, to the relevant Prospectus. This Application Form is included in the Prospectus.
The Prospectus contains Important Information about investing in the shares. You should read the Prospectus before applying for shares.
Insert the number of shares you wish to apply for. The Application must be for a minimum of 4,000 and thereafter in multiples of 1,000 shares. You may be issued all of the shares applied for, or a lesser number. Insert the relevant amount of application moneys. To calculate your application moneys, multiply the number of shares applied for by the issue price. Amounts should be in Australian dollars. Please make sure the amount of your cheque(s) equals this amount. C Write the full name you wish to appear on the register of shares. This must be either your own name or the name of a company. Up to three joint applicants may register. The table below shows the correct registrable title. Please enter your postal address for all correspondence. All communications to you from Kentor and Share Registry will be mailed to the person(s) and address as shown. For joint applicants only one	Please enter your telephone number(s), area code and contact name G In case we need to contact you in relation to your application. н Please complete cheque details and make it payable to Kentor Gold. Share Offer as follows: *. Make your cheques payable to Kentor Gold Share Offer in Australian dollars and cross it "Not Negotiable". Your cheque must be drawn on a branch of an Australian Bank. . The amount should agree with the amount shown in Section B. Sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result in your application being rejected. Pin (do not staple) your cheque(s) to the Application Form where indicated.
address can be entered. If you are already a CHESS participant or sponsored by a CHESS participant, write your Holder Identification Number (HIN) here. Enter your Tax File Number (TFN) or exemption category. Business enterprises may alternatively quote their Australian Business Number (ABN). Where applicable, please enter the TFN or ABN for each joint applicant. Collection of TFN(s) and ABN(s) is authorised by taxation laws. Quotation of TFN(s) and ABN(s) is not compulsory and will not affect your application. However, if these are not provided, Kentor will be required to deduct tax at the highest marginal rate of tax (including	ASX Perpetual Registrars Limited advise that once you become a shareholder in Kentor, Chapter 2C of the Corporations Act 2001 requires information about you (including your name, address and details of the shares you hold) to be included in Kentor public register. This information must continue to be included in Kentor's public register if you cease to be a shareholder. These statutory obligations are not altered by the Privacy Amendment (Private Sector) Act 2000. Information is collected to administer your share holding and if some or all of the information is not collected then it might not be possible to administer your share holding. Our privacy policy is available on our
the Medicare Levy) from income payments.	website (www.asxperpetual.com.au).

CORRECT FORMS OF REGISTRABLE NAMES

Note that ONLY legal entities are allowed to hold shares. Applications must be in the name(s) of natural persons or companies. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms below.

Type of Investor	Correct Form of Registration	Incorrect Form of Registration
Individual Use given names in full, not initials	Mrs Katherine Clare Edwards	K C Edwards
Company Use Company's full title, not abbreviations	Liz Biz Pty Ltd	Liz Biz P/L or Liz Biz Co.
Joint Holdings Use full and complete names	Mr Peter Paul Tranche & Ms Mary Orlando Tranche	Peter Paul & Mary Tranche
Trusts Use the trustee(s) personal name(s)	Mrs Alessandra Herbert Smith	Alessandra Smith Family Trust
Deceased Estates Use the executor(s) personal name(s)	Ms Sophia Garnet Post & Mr Alexander Traverse Post	Estate of late Hatold Post - Of Harold Post Deceased
Minor (a person under the age of 18 years) Use the name of a responsible adult with an appropriate. designation	Mrs Sally Hamilton	Master Henry Hamilton.
Partnerships Use the partners' personal names	Mr Frederick Samuel Smith & Mr Samuel Lawrence Smith	Fred Smith & Son
Long Names	Mr Hugh Adrian John Smith-Jones	Mr Hugh A J Smith Jones
Clubs / Unincorporated Bodies / Business Name Use office bearer(s) personal name(s)	Mr Alistair Edward Lilley	Vintage Wine Club
Superannuation Funds Use the name of the trustee of the fund	XYZ Pty Ltd	XXYZ Pty Ltd Superannuation Fund

Put the name(s) of any joint applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application.

KENTOR GOLD LTD

corporate directory

registered office

Kentor Gold Ltd

$1$ evel $3 -$ 15 Queen Street Melbourne VIC 3000

TELEPHONE 03 9621 1344 FACSIMILE 03 9621 1544 Website www.kentorgold.com.au

lead manager and underwriter

Tolburst Noall Limited Level 29 35 Collins Street Melbourne VIC 3000

co-manager to the offer

Melbourne Capital Limited Level 14 31 Queen Street Melbourne VIC 3000

share registry

ASX Perpetual Registrars Limited Level 4 333 Collins Street Melbourne VIC 3000

financial adviser

Investor Resources Limited Level 3 15 Queen Street Melbourne VIC 3000

legal adviser

Rawling & Company BDO House 563 Bourke Street Melbourne VIC 3000

investigating accountant

BDO 563 Bourke Street Melbourne VIC 3000

independent geologist

Vidoro Pty Ltd 2 The Nook Underwood QLD 4119

auditor

MSI Rago Weir Level $2²$ 50 Burwood Road Hawthorn VIC 3122

DIOSDECTLS MARDIC

board of directors

CHAIRMAN John Barr, AM

MANAGING DIRECTOR David Royle

EXECUTIVE DIRECTOR Hugh McKinnon

NON-EXECUTIVE DIRECTOR Andrew Daley

company secretary

Christopher Bain

KENTOR GOLD LTD