XREF LIMITED — Interim / Quarterly Report 2012

Sep 25, 2012

==> picture [112 x 65] intentionally omitted <==

King Solomon Mines Limited

26 September 2012

PROGESS REPORT

Strong IP anomalies combined with high grade surface gold results generate exciting shallow depth drill targets at Naogaoshandu

Naogaoshandu Gold project (King Solomon 100%)

Background

Strongly gold-mineralised narrow quartz veins (generating numerous samples exceeding 10 g/t Au ), have previously been discovered by the company at several locations at Naogaoshandu, most particularly at the Three Eagles and South Ridge prospects. More recently, float samples and veining containing visible gold were discovered at the East Ridge prospect.

IP (Induced Polarisation) geophysical surveys have just been completed over Three Eagles and East Ridge prospects. The objective of an IP survey is to locate zones of significant sulphide accumulation (high chargeability) typically associated with precious or base metal deposits.

Three Eagles

The Three Eagles IP survey has identified a large, east-west trending, high-chargeability anomaly associated with a very strong zone of epithermal-style silicification and brecciation. The anomaly is open-ended and more than 1km long. It is approximately 200m wide and plunges gently eastward from approximately 100m below surface at the westernmost survey line. This silicification and brecciation was targeted by shallow RC drilling in 2008.

==> picture [418 x 45] intentionally omitted <==

==> picture [418 x 45] intentionally omitted <==

==> picture [418 x 45] intentionally omitted <==

==> picture [418 x 44] intentionally omitted <==

==> picture [418 x 45] intentionally omitted <==

==> picture [418 x 45] intentionally omitted <==

==> picture [418 x 44] intentionally omitted <==

Fig 1 Location of key Naogaoshandu gold targets

The section below shows the 2008 RC drill-holes fell just short of intersecting the I.P anomaly. Six of the holes nevertheless yielded fourteen 1m to 3m gold intercepts of better than 0.1g/t Au and including a best of 3m @ 1.6g/t Au. Several zones of stronger than usual sulphides were encountered along with arsenic anomalous (>100ppm As) zones of tens of metres magnitude.

==> picture [414 x 83] intentionally omitted <==

==> picture [414 x 82] intentionally omitted <==

Fig 2 IP chargeability section TE689800E showing high chargeability target (red) and location of earlier gold-anomalous drill-holes

This chargeability anomaly is interpreted to represent a substantial sulphide zone.

Key positive features associated with the anomaly include:

• presence of major structure in the order of kilometres strike extent,

• significant epithermal-style wall-rock gold and arsenic anomalism

• peripheral high-grade narrow gold veins.

The Three Eagles IP anomaly is seen as a large scale epithermal gold target associated with a large-scale structure which has not been tested by previous drilling.

East Ridge

The discovery of visible gold specimens in float at East Ridge (previously reported) led to discovery of high-grade narrow, discontinuous veins in situ (including a 20cm vein yielding 54g/t Au) and occasional sightings of visible gold in vein wall-rock.

The IP survey resulted in the discovery of a vertical chargeability anomaly very similar in nature to that of Three Eagles , although somewhat smaller and weaker. The open-ended anomaly trends northwest for at least 500m and is approximately 100m wide. It lies only 100m to 200m below surface and it's trend is concordant with that of the visible gold specimens (peripheral veins) at surface

The anomaly trends toward another as yet un-named zone of strongly gold-mineralised narrow veins, approximately 1.2km distant, which has yielded grab samples of 5.4g/t Au and 11.8g/t Au. The anomaly trend enhances the significance of this further target zone.

==> picture [412 x 79] intentionally omitted <==

==> picture [412 x 79] intentionally omitted <==

Fig 3 IP chargeability section ER5400E showing high chargeability target (red) and location of float and in-situ visible gold specimens

Summary

The presence of high-grade narrow veins at several Naogaoshandu locations without any sign of "feeder" or "source" zones has, up until now, been an enigma.

The IP anomalies at Three Eagles and East Ridge are seen as potential " feeder " or “source” zones and therefore are high priority drill targets.

The IP surveys will be presented in fuller detail in the next quarterly report.

Mud-house Gold Prospect

The Mud-house in-fill drilling program is proceeding on schedule. Ten holes have now been completed for 2,296m of an expected 5,000m program. A first set of results is expected to be available for the September quarterly report.

Stephen McPhail Managing Director

Enquiries may be directed to Stephen McPhail at phone 1800 061 569 (from Australia), +6421 897 667 (from elsewhere) or email stephen@kingsolomonmines.com .

The information on mineralisation contained in this announcement accurately reflects information compiled by A B Bell, BSc, F AusIMM(CP), Executive Director, a Competent Person (as defined by the Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves), who has relevant experience in relation to such mineralisation and has consented to the inclusion of such information in this announcement.

www.kingsolomonmines.com.au

King Solomon Mines Limited

ARBN 122 404 666

==> picture [393 x 274] intentionally omitted <==

Fig 4 Project location map