--------------------------------------------------------------------------------

SUMMARY REPORT ON THE
DX POLYMETALLIC PROPERTY

LINXI COUNTY, INNER MONGOLIA
PEOPLE’S REPUBLIC OF CHINA

May 25, 2005

Prepared for

MAKAELO LIMITED
(a subsidiary of Sterling Group Ventures, Inc. ,
a Nevada company based in Vancouver, B.C.)

VANCOUVER, CANADA

By

Ruben S. Verzosa, P.Eng.
23064 – 50th Avenue
Langley, B.C. V2Z 2R7

--------------------------------------------------------------------------------

i

TABLE OF CONTENTS    Page         SUMMARY    INTRODUCTION AND TERMS OF REFERENCE
1                  Terms of Reference 1                  Sources of Information
1                  Disclaimer 1 PROPERTY DESCRIPTION AND LOCATION 1            
     Property Location 1                  Property Description 2                
                       Joint Venture Agreement  2 Royalties and Liabilities 2  
  ACCESSIBILITY, CLIMATE AND PHYSIOGRAPHY, LOCAL  RESOURCES AND INFRASTRUCTURE 2
                 Access 2                  Local Resources and Infrastructure 3
Climate and Physiography 3     HISTORY 3 Gradient IP Survey 3                
 Geochemistry 4     GEOLOGICAL SETTING 4 Regional Geology 4                
 Local Geology 4     DEPOSIT TYPES AND MINERALISATION 5     EXPLORATION 5    
SAMPLING METHOD AND APPROACH 5     SAMPLE PREPARATION, ANALYSIS AND SECURITY 5  
  DATA VERIFICATION 5     ADJACENT PROPERTIES 6     MINERAL PROCESSING AND
METALLURGICAL TESTING 6     MINERAL RESOURCE AND MINERAL RESERVE ESTIMATE 6    
INTERPRETATION AND CONCLUSIONS 6

--------------------------------------------------------------------------------

ii

RECOMMENDATIONS 7 SELECTED REFERENCES 8 STATEMENT OF QUALIFICATIONS 9          
          LIST OF TABLES             Table 1: Concessions Comprising the DX
Property 2 Table 2: Polymetallic Resource of the Dajing and Xiaochengzi Mines 6
                    LIST OF FIGURES     After Page           Figure  1  
Location Map  1 Figure  2   Concession Map Showing Local Access and
Infrastructure  2 Figure  3   Regional Geochemical and Geophysical Anomalies  3
Figure  4 a   Gradient IP Covering Dajing Mine Area and DX Property  3 Figure  4
b   Gradient IP showing relative chargeability levels  3 Figure  5  
Interpretive Cross Section showing relative IP anomalies  4 Figure  6  
Distribution of stream sediment anomalies  4 Figure  7   Regional Geology  4
Figure  8   Local Geology  4           LIST OF APPENDICES             APPENDIX I
    Donggou and Xiaoxigou Permit Documents   

--------------------------------------------------------------------------------

SUMMARY

The DX Poymetallic Property, comprising two Exploration Licenses is located in
the Da Hinggan Mountain area of Inner Mongolia in the People’s Republic of
China. Aifeng Li, a Chinese national holds the mineral rights to the licenses,
which in March 2, 2005 have been optioned to Makaelo Limited. Under the option
agreement, Makaelo can earn 52% interest in a Sino-Foreign Joint Venture company
by expending 5.2 million Chinese Yuan in exploration. The property comprising 2
licenses, the Donggou and the Xiaoxigou covers an aggregate area of 51.61 square
kilometers. Access to the property is excellent, being only 25 km north of the
town of Linxi. The climate in the area and excellent access would allow for year
round operations

History

The history of the property is related to the exploration of the Dajing and
Xiaochengzi polymetallic mines when during the years 1957 to 1993, the Chinese
government carried out a multi-staged exploration program in the vicinity of the
two mines consisting initially of geological mapping at various scales and
mineral prospecting. The next stage of exploration and development work during
1978 to 1993 consisted of trenching, shaft sinking and related underground
operations and extensive surface diamond drilling reportedly amounting to more
than 170 bore holes. It was also during this period when detailed geological,
geophysical and geochemical investigations were conducted in the Dajing mine
vicinity including areas now covered by the Donggou and Xiaoxigou licenses. Most
of the geochemical surveys were reportedly stream sediment surveys while
geophysical surveys consisted of airborne magnetic and gravity surveys as well
as detailed Gradient IP surveys.

General Geology

The Dajing mine area and the DX Property lie in the southern part of the Da
Hinggan Mountain area in Inner Mongolia. A northeasterly Permian basin
containing a thick sedimentary succession of non-marine fine to medium
sandstone, shale, slates and other meta-sediments dominates the regional
geology. The basin is bounded on the southeast by Silurian gneiss and other
metamorphic rocks as well as Jurassic lavas and tuffs and on the northwest by
Jurassic to Upper Cretaceous acidic lavas and tuffs. Mesozoic granitic and
dioritic stocks and batholiths intrude the entire region. The dominant
structural trend is northeast to northwest. Locally, and in the general vicinity
of the property the structural trend is northeast dominantly characterized by a
synclinorium whose major axis traverses the Xiaoxigou license. Several tight
folds have formed more extensively on the west flank of the synclinorium
suggestive of a tectonic transport from the northwest. The Permian sedimentary
units hosts the hydrothermal vein deposits in the Dajing and Xiachengzi mines.
The veins carry complex ores mainly of chalcopyrite, iron-rich spahalerite,
galena, pyrite, arsenopyrite, cassiterite and macasite with minor tetrahedrite
and boulangerite. Gangue minerals are quartz, chlorite, sericite, dolomite and
calcite with minor toumaline and fluorite. Wall rock alteration consisting of
chloritization, silicification, sericitification and calcification is usually
limited to less than 2m into the host rock There are 130 discrete vein deposits
at the Dajing mine ranging in strike length between 100 to 1200m, down dip
extension of 200 to 700m and true widths from 0.12 m to greater than 15 m. Most
veins are between 0.50 to 1.50 m wide. The veins are sub-parallel and close
together with dips from 45° to 65° northwest and strikes from 290° to 325°.

--------------------------------------------------------------------------------

Conclusions and Recommendations

1.     
The Gradient IP survey conducted over the DX Property suggest the potential of
more extensive and larger polymetallic mineralisation than those existing at
Dajing and Xiaochengzi mine areas. Furthermore, independent mining operations on
the intervening ground between the Dajing and Xiaochengzi mines and the DX
    Property appear to demonstrate geological extensions of mineralisation
towards the DX Property.   2.      The DX Property is a property of merit. It
possess a high exploration potential and therefore warrants further work.   3. 
    Based on the results of the IP Survey on the DX Property, an initial
drilling program of 2500 meters spaced at 500 m is recommended as the next stage
of exploration.

--------------------------------------------------------------------------------

1

INTRODUCTION AND TERMS OF REFERENCE

On April 19, 2005, the author in the company of Dr. Liu Hongtao of the Beijing
Institute of Geology and Geophysics and Richard Shao and Raoul Tsakok, both of
Sterling Group Ventures, Inc. of Nevada, USA, visited the DX Property in Inner
Mongolia. The property comprising a total of 51.61 km2 in two adjacent
exploration licenses is owned by Aifeng Li, a Chinese national. In March 2,
2005, Makaelo Limited, a BVI Company and a subsidiary of Sterling Group entered
a Joint Venture Agreement with Aifeng Li to develop the DX Property. The
property is within 2 km of two operating mines, the Daijing and the Xiaochengzi
both producing copper, lead and zinc concentrates. In open lands between the DX
Property and the operating mines are located several independent small shafts
used to extract copper, lead and zinc ores for custom milling at the Daijing
concentrator.

The purpose of the author’s visit to the DX Property was to evaluate the
surrounding geology and the infrastructure in preparation for an independent
technical report that would, if warranted include recommendations for an
exploration program.

Sources of Information

This summary report is largely based on Chinese government geological and
geophysical exploration data acquired through the assistance of Dr. Liu Hongtao
of the Institute of Geology and Geophysics of the Chinese Academy of Science in
Beijing. Other sources of information are published information in the public
domain particularly in reference to the geology of northern China. The author
spent one day on the DX Property and immediate vicinity studying the geology of
the area and its relevant infrastructure with the help of Dr. Liu Hongtao.

Disclaimer

The author made extensive use of written and verbal technical information
provided by Dr. Liu Hongtao in the preparation of this report all of which he
considers reliable. While some of the maps showed great detail only a few
modifications were made mainly due to time constraints. Further more, he takes
the English translation of the JV agreement between Makaelo Limited and Aifeng
Li on a ‘per se’ basis.

PROPERTY DESCRIPTION AND LOCATION

Property Location

The DX Property is located near the central part of Inner Mongolia, PRC. It is
within Linxi County and some 25 km north-northeast of the town of Linxi, which
is about 375air kilometres north-northeast of Beijing. The property is
approximately centered at North Latitude 43° 47’ and East Longitude 118° 12’,
(see Figure 1).

--------------------------------------------------------------------------------

[exhibit10-4x7x1.jpg]

Figure 1. Location Map

 

--------------------------------------------------------------------------------

2

Property Description

The DX Property consists of two contiguous Exploration Licenses, the Donggou
covering 29.52 km2 and the Xiaoxigou covering 22.09 km2. The configuration of
the property is shown in Figure 2 and the licenses are listed in Table 1.

Table 1: Exploration Licenses Comprising the DX Property

License No.  Name of License  Licensee  Expiry Date  Area    1500000411738 
 Donggou  Aifeng Li  November  19,  2005  29.52  km2  1500000411739   Xiaoxigou 
Aifeng Li  November  19,  2005  22.09  km2                Total     51.61  km2 

Certificates of government approval on the two licenses are appended with this
report.

Joint Venture Agreement

On March 2, 2005, Makaelo Limited and Aifeng Li entered a Joint Venture
agreement for the formation of a Sino-foreign Cooperative Company. In the
agreement, Aifeng Li contributes the Donggou and Xiaoxigou licenses and all
technical data with a deemed value of 4.8 million Chinese Yuan to earn a 48%
interest in the Cooperative Company and Makaelo Limited contributes 5.2 million
Chinese Yuan in exploration expenditures to earn a 52% interest in the
Cooperative Company. Makaelo’s contribution shall be in instalments over three
years with a minimum instalment of 2 million Chinese Yuan within the first year.
Aifeng Li’s interest in the Cooperative Company can be diluted to 10% for
failure to contribute his share of additional funds for succeeding work
programs.

Royalties and Liabilities

There are no known royalties or environmental liabilities at this time.

ACCESSIBILITY, CLIMATE AND PHYSIOGRAPHY, LOCAL RESOURCES AND INFRASTRUCTURE

Access

The DX Property is accessible from the nearby Dajing mine through a network of
all-weather gravel roads and trails. The Dajing copper mine is 25 km by paved
road from the town of Linxi, which in turn is accessible by 227 km of paved road
from Chifeng City. Chifeng with a population of 254,000 is the largest city in
eastern Inner Mongloia. It can be reached from Beijing in four hours driving
over 337 km of paved road. The city is also served by turboprop air service from
Beijing and other major destinations in China.

--------------------------------------------------------------------------------

[exhibit10-4x9x1.jpg]
Figure 2. Concession Map Showing Local Access and Infrastructure

--------------------------------------------------------------------------------

3

Local Resources and Infrastructure

Linxi County is generally supported by an agricultural economy with the Dajing
and Xiaochengzi mines as the only mining industry in the immediate vicinity. The
town of Linxi with a population of 101,000 can supply basic goods and services
for an exploration program although major supplies would have to be sourced from
Chifeng City, the nearest commercial centre. The nearest and most important
infrastructure to the DX Property is the present facilities used by the nearby
Dajing Mine. These include electrical power source of 50kva, apartments and
houses and a hotel that serves mine employees and transients. A railway runs
westward just south of the town of Linxi.

Climate and Physiography

The climate in the DX Property is semi-arid and temperate with temperatures
during typical months ranging from –30° to –10° Celsius in January and 16° to
27° Celsius in July. The year round average is 10° to 16° Celsius. Light snow
and strong winds may occur from November to March but essentially, exploration
work can be carried out year round. The topography is generally of the rolling
type with a few deep ravines. Elevations range up to 1000 metres with relative
elevations from 20 to 80 metres. The soil cover on the property partly consists
of eolian deposits, which explains the general scarcity of vegetation being
limited to thin grass and sparse scrub. Water is limited to deep wells and
irrigation pumps.

HISTORY

The DX Property is very sparse of rock exposures. Consequently, only geophysical
and limited geochemical surveys were initially carried out on the property.
Exploration work in the general area is related to the early exploration and
development of the nearby Dajing and Xiaochengzi mine. During intermittent
periods from 1957 to 1993, the Chinese government carried out a multi-staged
exploration program in the vicinity of the two mines consisting initially of
geological mapping at various scales and mineral prospecting. The next stage of
exploration and development work during 1978 to 1993 consisted of trenching,
shaft sinking and related underground operations and extensive surface diamond
drilling reportedly amounting to more than 170 bore holes. It was also during
this period when detailed geological, geophysical and geochemical investigations
were conducted in the Dajing mine vicinity including areas now covered by the
Donggou and Xiaoxigou licenses. Most of the geochemical surveys were reportedly
stream sediment surveys while geophysical surveys consisted of airborne magnetic
and gravity surveys as well as detailed Gradient IP surveys. A compilation map
of the geochemical and geophysical surveys provided by the Chinese is shown in
Figure 3.

Gradient IP Survey

Extensive Gradient IP surveys were conducted in the vicinity of the Dajing Mine
and west of the mine area, which include ground now covered by the Xiaoxigou and
Donggou licenses (See Figure 4a and 4b). No details of the IP surveys regarding
space intervals and configurations are available. However, the maps demonstrate
that Gradient IP responses are relatively far more intense in the Xiaoxigou
license than those obtained in the Dajing Mine where large tonnages of
polymetallic ores have been reported. An interpretive cross section relating the
IP anomaly at the Donggou and Xiaoxigou licenses with the Xiaochengzi and Dajing
mine areas is shown in Figure 5.

--------------------------------------------------------------------------------

[exhibit10-4x11x1.jpg]
Figure 3. Regional Geochemical and Geophysical Anomalies

--------------------------------------------------------------------------------

[exhibit10-4x12x1.jpg]

Figure 4a. Gradient IP Covering Dajing Mine Area and DX Property

[exhibit10-4x12x2.jpg]
Figure 4b Gradient IP showing relative chargeability levels

--------------------------------------------------------------------------------

4

Geochemistry

Geochemical surveys were limited to stream sediment sampling the results of
which are shown in Figure 6. The elements analyzed in the survey were for Zinc,
Arsenic, Manganese, Lead and Tin. The methodologies of sample analysis and the
determination of anomalous values were not made available. From the map, it may
appear that anomalous areas enclosed by manganese, arsenic and to a lesser
degree zinc may be common to both the Dajing mine and the DX Property. This
observation should consider the fact that the Dajing mine area has far more rock
exposures and surface mineral occurrences that would be a primary factor in the
dispersal of trace elements in the area.

GEOLOGICAL SETTING

Regional Geology

The Dajing mine area and the DX Property lie in the southern part of the Da
Hinggan Mountain area in Inner Mongolia. The Tin polymetallic character of
Dajing is unique in northern China and has attracted the interest of Chinese and
foreign academe. Latest studies on Dajing has concluded that the tin and
copper-bearing vein systems resulted from pulses of hydrothermal activity
related to Mesozoic intrusives as opposed to syngenetic mineralisation within
the Permian sedimentary succession. The regional geology is presented in Figure
7. The Permian succession forms a northeasterly basin bounded on the southeast
by Silurian gneiss and other metamorphic rocks as well as Jurassic lavas and
tuffs and on the northwest by Jurassic to Upper Cretaceous acidic lavas and
tuffs. Mesozoic granitic and dioritic stocks and batholiths intrude the entire
region. The dominant structural trend is northeast to northwest. Regional faults
trend northeast to east.

Local Geology

The Dajing and DX Property is underlain by a thick sedimentary succession of
non-marine fine to medium sandstone, siltstone, carbonaceous shales and some
metamorphosed sedimentary units all of which comprise the Permian Linxi
Formation (see Figure 8). Northeast and northwest trending dykes abound in the
area. To the north and northwest of the property are two intrusive bodies of
granite porphyry and a Jurassic diorite stock. The local structural trend is
northeast dominantly characterized by a synclinorium whose major axis traverses
the Xiaoxigou license. Several tight folds have formed more extensively on the
west flank of the synclinorium suggestive of a tectonic transport from the
northwest.

--------------------------------------------------------------------------------

[exhibit10-4x14x1.jpg]
Figure 5. Interpretive Cross Section showing relative IP anomalies

--------------------------------------------------------------------------------

[exhibit10-4x15x1.jpg]

--------------------------------------------------------------------------------

[exhibit10-4x16x1.jpg]

--------------------------------------------------------------------------------

[exhibit10-4x17x1.jpg]

--------------------------------------------------------------------------------

5

DEPOSIT TYPES AND MINERALISATION

The only works carried out on the DX Property were stream sediment sampling and
Geophysics as outlined above. The only outcrop observed by the author was a
small patch (4m x10m) of silicified and gossanous sediments with no visible
sulphide. As previously mentioned, there are at least ten independent miners
extracting complex ore on open ground between the Dajing mine and the DX
licenses demonstrating geological extensions of Dajing mineralisation towards
the DX Property. Based on this premise and on the results of Gradient IP surveys
on the DX Property, it is reasonable to expect hydrothermal vein type deposits
containing complex ores similar to those of Dajing mainly of chalcopyrite,
iron-rich spahalerite, galena, pyrite, arsenopyrite, cassiterite and macasite
with minor tetrahedrite and boulangerite. Gangue minerals are quartz, chlorite,
sericite, dolomite and calcite with minor toumaline and fluorite. Wall rock
alteration consisting of chloritization, silicification, sericitification and
calcification is usually limited to less than 2m into the host rock There are
130 discrete vein deposits at the Dajing mine ranging in strike length between
100 to 1200m, down dip extension of 200 to 700m and true widths from 0.12 m to
greater than 15 m. Most veins are between 0.50 to 1.50 m wide. The veins are
sub-parallel and close together with dips from 45° to 65° northwest and strikes
from 290° to 325°.

EXPLORATION

No drilling has been done on the DX Property although according to Dr. Liu
Hongtao (verbal communication), 22 drill holes were completed in the area
between the Dajing mine and the DX Property by independent local workers within
the last three years. The results of the drilling were not made available.

SAMPLING METHOD AND APPROACH

This item is not applicable to the current stage of work on the DX Property.

SAMPLE PREPARATION, ANALYSIS AND SECURITY

This item is not applicable to the current stage of work on the DX Property.

DATA VERIFICATION

The author visited the DX Property on April 19, 2005 with the purpose of
acquiring geological information aspects relating to infrastructure. Technical
data including geological, geophysical and geochemical surveys were examined and
discussed with Dr. Liu Hongtao in Beijing.

--------------------------------------------------------------------------------

6

ADJACENT PROPERTIES

The Dajing and Xiaochenzi mines have been conducting underground mining since
1986. Technical data on mining and ore processing are not available. However,
the current resource of both mines gathered from China Geological Report is
shown in Table 2. The methodologies used in the resource estimate were not made
available.

Table 2: Polymetallic Resource of the Dajing and Xiaochengzi Mines

    Dajing  Xiaochengzi Price,
US$/lb US $ % of
value   Grade    lbs Lbs Copper  2   %  440,000,000  57,200,000  1.46 
725,912,000  27.94  Silver  150   g/t  90,032,154  10,610,932  6.70 
674,308,682  25.96  Tin  0.70   %  132,000,000  5,000,002  3.65  500,050,008 
19.25  Zinc  > 2.5   %  792,000,000  39,820,000  0.59  490,773,800  18.89  Lead 
> 2.5   %  440,000,000  19,800,000  0.45  206,910,000  7.96     2,597,954,490   

Source: China Geological Report

MINERAL PROCESSING AND METALLURGICAL TESTING

This item is not relevant to the present stage of work on the DX Property.
However, future studies on this subject will take into account the current
mineral processing methods at the nearby Dajing Mine.

MINERAL RESOURCE AND MINERAL RESERVE ESTIMATE

This item is not applicable to the current stage of work on the DX Property.
However, Table 2 above presents a relative order of magnitude of the potential
resource of the DX Property.

INTERPRETATION AND CONCLUSIONS

1.      The Gradient IP survey conducted over the Dajing and Xiaochengzi mine
areas show first and second order responses from documented large polymetallic
deposits underneath. By comparison, the much larger IP responses on the DX    
Property suggest the potential of more extensive and larger polymetallic
mineralisation than those existing at Dajing and Xiaochengzi.   2.      The
geological extension of the polymetallic mineralisation towards the DX Property
is evidenced by independent mining operations on the intervening ground between
the Dajing and Xiaochengzi mines and the DX Property.   3.      The DX Property
is a property of merit that possesses a high exploration potential.

--------------------------------------------------------------------------------

7

RECOMMENDATIONS

1.      Based on the results of the IP Survey on the DX Property, an initial
drilling program of 2500 metres spaced at 500 m is recommended as the next stage
of exploration.   2.      Notwithstanding the reportedly thick eolian deposit on
the property, a soil orientation survey using a soil auger is highly
recommended.  

--------------------------------------------------------------------------------

8

SELECTED REFERENCES

Bureau of Geology and Mineral Resources of Yunan Province, 1990, Regional
Geology of Yunnan Province, Geological Publishing House – Beijing, English
summary, pp658-727.

Cunningham, Charles G. et al, Newly Discovered Sedimentary Rock-Hosted
Disseminated Gold Deposits in the People’s Republic of China, Economic Geology,
vol. 83, 1988, pp 1462-1467.

Fan, Pow-Foon, Geologic Setting of Selected Copper Deposits of China, Economic
Geology, Vol. 79, 1984, pp.1785-1795.

Selected Abstracts on the Tin Polymetallic mineralisation zone in the southern
Da Hinggan Mountains area in Inner Mongolia.

Internet – Market Profile and infrastructures of Inner Mongolia Autonomous
Region.

--------------------------------------------------------------------------------

9

STATEMENT OF QUALIFICATIONS

I, Ruben S. Verzosa, hereby state that:

 * I am an independent Consulting Geologist with office and residence at 23064 –
   50th Avenue, Langley, BC V2Z 2R7.
   
 * I graduated with a Bachelor of Science degree in Geology from the University
   of the Philippines and I have more than 35 years experience in the mineral
   exploration and mining industry.
   
 * I have been a member in good standing of the Association of Professional
   Engineers of British Columbia since 1970.
   
 * I am the author of the report “Summary Report on the DX Polymetallic
   Property”
   
 * I spent one day on April 19, 2005 on the property.
   
 * I have no interest, direct or indirect in the DX Property and neither do I
   have any affiliation whatsoever under any form or arrangement with Makaelo
   Limited and neither do I expect to have any future affiliation whatsoever
   under any form or arrangement with the company.
   
 * I am not aware of any material fact or material change that is not reflected
   in the report, the omission of which would make the report misleading.
   
 * I consent to the report being used by Makaelo Limited for disclosure
   purposes.

Dated in Vancouver, British Columbia on this day May 25, 2005.

[exhibit10-4x22x1.jpg]

--------------------------------------------------------------------------------

APPENDIX I

[exhibit10-4x23x1.jpg]

--------------------------------------------------------------------------------

[exhibit10-4x24x1.jpg]

--------------------------------------------------------------------------------