**SUMMARY EXPLORATION ACTIVITIES REPORT ON THE****HUIDONG GOLD PROPERTY****HUIDONG COUNTY, SICHUAN PROVINCE****PEOPLE’S REPUBLIC OF CHINA****30 June 2007****Prepared for****MAGNUS INTERNATIONAL RESOURCES INC.****VANCOUVER, BRITISH COLUMBIA, CANADA****By****Steven R McMullan, P.Geo.****Suite 104, Private Bag 00324,****Gaborone, Botswana****and****Ruben S. Verzosa, P.Eng.****23064 – 50th Avenue****Langley, B.C.  V2Z 2R7**

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**TABLE OF CONTENTS**
|                                                                                                        | **Page** |
|--------------------------------------------------------------------------------------------------------|----------|
|                                                                                              |          |
| SUMMARY                                                                                                | v        |
|                                                                                              |          |
| 1. INTRODUCTION AND TERMS OF REFERENCE                                                                 | 1        |
|           Terms of Reference                         | 1        |
|           Sources of Information                     | 1        |
|           Reliance on Other Experts                  | 1        |
|           Disclaimer                                 | 2        |
|                                                                                              |          |
| 2. PROPERTY DESCRIPTION AND LOCATION                                                                   | 2        |
|           Mapping Parameters                         | 2        |
|           Property Location                          | 2        |
|           Property Description                       | 2        |
|           Joint Venture Agreement                    | 3        |
|           Royalties and Liabilities                  | 3        |
|                                                                                              |          |
| 3. ACCESSIBILITY, CLIMATE AND PHYSIOGRAPHY, LOCAL RESOURCES						AND INFRASTRUCTURE                    | 4        |
|           Access                                     | 4        |
|           Local Resources and Infrastructure         | 4        |
|           Climate and Physiography                   | 4        |
|                                                                                              |          |
| 4. HISTORY                                                                                             | 5        |
|           Regional Geological Mapping                | 5        |
|           Exploration by Chinese Agencies            | 5        |
|           Modern Exploration                         | 5        |
|           Historical and Active Artisanal Mining     | 6        |
|                                                                                              |          |
| 5. GEOLOGICAL SETTING                                                                                  | 6        |
|           Regional Geology and Tectonics             | 6        |
|           Property Geology                           | 7        |
|           Structure                                  | 8        |
|           Mineralization                             | 8        |
|                                                                                              |          |
| 6. DEPOSIT TYPES                                                                                       | 9        |
|           Boka Deposit Exploration Model             | 9        |
|           Other Factors for Consideration at Huidong | 10       |
|           Exploration Methodology                    | 10       |
|                                                                                              |          |
| 7. MINERALISATION                                                                                      | 10       |
|           Mineral Prospects within the License Area  | 10       |
|                                                                                              |          |
| 8. SAMPLING METHOD AND APPROACH                                                                        | 11       |
|           Soil Sampling                              | 11       |
|           Stream Sediment Sampling                   | 11       |
|           Rock Chip Sampling                         | 11       |
|           Drill Core Sampling                        | 11       |
|                                                                                              |          |

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| 9. SAMPLE PREPARATION, ANALYSIS AND SECURITY                                                                                  | 12 |
|-------------------------------------------------------------------------------------------------------------------------------|----|
|           Soil Sampling                                                     | 12 |
|           Stream Sediment Sampling                                          | 12 |
|           Rock Chip Sampling                                           | 12 |
|           Drill Core Sampling                                               | 12 |
|           Chain of Custody                                                  | 12 |
|           Retention Samples                                                 | 12 |
|                                                                                                                     |    |
| 10. DATA VERIFICATION AND QUALITY CONTROLS                                                                                    | 13 |
|           Certified Reference Material and Blanks                           | 13 |
|           Inter-Laboratory Replicates                                       | 13 |
|           Laboratory Pulp Duplicates                                        | 14 |
|           Conclusions from QC Procedures                                    | 15 |
|           Due Diligence Check Analyses                                      | 16 |
|           Results of Due Diligence Check Assays                             | 16 |
|           Conclusions from Due Diligence Check Assays                       | 16 |
|                                                                                                                     |    |
| 11. ADJACENT PROPERTIES                                                                                                       | 17 |
|                                                                                                                     |    |
| 12. MINERAL PROCESSING AND METALLURGICAL TESTING                                                                              | 17 |
|                                                                                                                     |    |
| 13. MINERAL RESOURCE AND MINERAL RESERVE ESTIMATE                                                                             | 17 |
|                                                                                                                     |    |
| 14. EXPLORATION RESULTS                                                                                                       | 18 |
|           Summary of Exploration Results                                    | 18 |
|           Regional Stream Sediment Sampling                                 | 19 |
|           Soil Sampling                                                     | 19 |
|           Rock Chip Sampling                                                | 20 |
|           Geophysical Surveys                                               | 20 |
|                Ground Magnetics                    | 20 |
|                IP/Resistivity                      | 20 |
|                Time Domain EM Survey               | 21 |
|           Geological Mapping                                                | 21 |
|           Drilling                                                          | 22 |
|                                                                                                                     |    |
| 15. OTHER RELEVANT DATA AND INFORMATION                                                                                       | 23 |
|                                                                                                                     |    |
| 16. INTERPRETATION AND CONCLUSIONS                                                                                            | 23 |
|                Environmental and Social Issues     | 23 |
|                Satellite Imagery                   | 23 |
|                Stream Sediment Geochemistry        | 23 |
|                Soil Geochemistry                   | 24 |
|                Outcrop and Drill Core Geochemistry | 24 |
|                Sampling and Analytical QA/QC       | 24 |
|                Geology and Structure               | 24 |
|                Geophysics                          | 25 |
|                Drilling                            | 25 |
|           Discussion                                                        | 25 |
|                                                                                                                     |    |
| 17. RECOMMENDATIONS                                                                                                           | 25 |
|           Proposed Budget                                                   | 26 |
|                                                                                                                     |    |

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| REFERENCES                                                                    | 27 |
|-------------------------------------------------------------------------------|----|
|                                                                     |    |
| CERTIFICATES OF AUTHORS                                                       |    |
|           Ruben S Verzosa   |    |
|           Steven R McMullan |    |
|                                                                     |    |
| **LIST OF TABLES**                                                            |    |
|                                                                     |    |
| Table 1: Huidong Exploration Licence                                          | 2  |
| Table 2: Stratigraphy of the Huidong-Boka Vicinity                            | 7  |
| Table 3: Summary of Exploration Works                                         | 18 |
| Table 4: Drill Hole Data                                                      | 22 |
|                                                                     |    |
| **LIST OF PHOTOGRAPHS**                                                       |    |

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| Photo 1  | Typical artisanal mining activity Laowangshan                                             |
|----------|-------------------------------------------------------------------------------------------|
| Photo 2. | Limestone quarry at Laoshuijing                                                           |
| Photo 3  | Small scale artisanal mining excavation at Laowangshan                                    |
| Photo 4  | Songping road showing typical steep terrain, narrow winding road and terraced cultivation |
| Photo 5  | Road to Songping showing steep terrain in the license area                                |
| Photo 6. | Cutting core with diamond saw                                                             |
| Photo 7. | Longyear LF-90 diamond drill rig                                                          |
| Photo 8  | Core logging facility at Dingjiaping                                                      |
| Photo 9  | Chinese XY-4 diamond drill                                                                |
| Photo 10 | Core logging facility at Laoshuijing                                                      |
| Photo 11 | Core logging facility at Laoshuijing                                                      |
| Photo 12 | Logantek geophysicist operating IP transmitter at Laowangshan                             |
| Photo 13 | IP survey line at Laowangshan showing steep topography                                    |
| **LIST OF FIGURES** |                                                                         |
|---------------------|-----------------------------------------------------------------------------------|
|           |                                                                         |
| Figure 1            | Location Map                                                                      |
| Figure 2.           | Exploration License                                                               |
| Figure 3            | Huidong Access and Infrastructure                                                 |
| Figure 4            | Regional geology showing distribution of the Emeishan Flood basalt and Panxi Rift |
| Figure 5            | Local Geology Dongchuan Area                                                      |
| Figure 6.           | Huidong Property Geology                                                          |
| Figure 7.           | Exploration Model                                                                 |
| Figure 8            | Regional Stream Sediment Anomalies (ppb Au)                                       |
| Figure 9            | Soil Sample Coverage                                                              |
| Figure 10           | Anomalous Gold areas and Geochemical Associations                                 |
| Figure 11           | Dingjiaping Gold in Soil Geochemical Anomalies                                    |
| Figure 12           | Laowangshan Gold in Soil geochemical anomaly                                      |
| Figure 13           | Laoshuijing-Ganhai Gold in Soil geochemical anomaly                               |
| Figure 14           | Relationship of Au Anomalies to major structures                                  |
| Figure 15           | Rock Chip Sampling showing Areas of Detailed Geological Mapping                   |
| Figure 16           | Total Magnetic Intensity reduced to magnetic pole                                 |
| Figure 17           | IP Chargeability Anomalies                                                        |

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| Figure 18 | IP/Resistivity response from Laoshuijing Line 5 typical of Boka type exploration model                 |
|-----------|--------------------------------------------------------------------------------------------------------|
| Figure 19 | TEM Anomalies                                                                                          |
| Figure 20 | Dingjiaping TEM inversion showing stratified conductivity layering with possible fault at station 5000 |
| Figure 21 | Laowangshan Line 4-4 TEM inversion showing conductivity anomaly at station 7000                        |
| Figure 22 | Drill Hole Locations at Dingjiaping Prospect                                                           |
| Figure 23 | Drill Hole Locations at the Laoshuijing Prospect                                                       |
| Figure 24 | Compilation Map                                                                                        |

**LIST OF APPENDICES**APPENDIX I – Geochemical Sample Database from Drill Core				APPENDIX II – Drill Sections

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Page 1

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> 
Corner

Longitude (DMS)*

Latitude (DMS)*

A

102°54’00”

26°33’45”

B

103°02’15”

26°33’45”

C

103°02’15”

26°30’30”.

D

102°54’00”

26°30’30”
				* The coordinates of the exploration licence are given in geographic latitude and longitude on the Beijing/Yellow Sea datum.

The Property has not been legally surveyed.

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    - August 1958 - February 1960: 1:200000 regional geological survey was done by No. 1 regional survey team of Sichuan geological bureau. Comprehensively summarized the nature of regional geology and principle of mineralization distribution.				 April 1977 - October 1984: 1:50000 regional geological and ore deposit survey were done by Panxi geological team of Sichuan geological bureau. The strata sequence and nature of structure were clarified by this survey so that the geological frame is outlined for the future work.			
The mapping style is chronostratigraphic rather than lithological, and is interpretive rather than observational, and at relatively coarse scale, so is of little use for detailed mineral exploration.**Exploration by Chinese Agencies**
- 1953: Dongchuan prospecting team of Kunming Exploration Company conducted a detailed prospecting program that focussed on copper. A couple of promising copper occurrences were discovered.				 1955 – 1958: 302 geophysical team of Chinese geological department performed 1:50000 and 1:100000 magnetic and geochemical surveys at Huidong and surrounding area. Promising anomalies were outlined.				1955 – 1959: Tong’an team of Sichuan Geological Bureau conducted mineral exploration program. Xiaoshuijing hematite deposit discovered.				
- 1956 – 1959: Team 529 of Sichuan Geological Bureau conducted reconnaissance mineral exploration program, verified main mineral deposits.				 1957: phosphorite prospecting team of Sichuan Industry Department conducted reconnaissance exploration on phosphorite.				1957 – 1961: Xichang geological team of Sichuan Geological Bureau conducted reconnaissance multi-mineral exploration program.				
- 1962 – 1970: Team 403 Geological conducted reconnaissance exploration program on several iron deposits within the current Huidong Property, a resource of 16.3 million tons was defined.				 1971 – 1980: Team 113 Geological took over 403 Geological Team’s duties, finished the exploration on the iron deposits and estimated resources.			
**Modern Exploration**The historical mining and active artisanal mining in the early 1990’s probably drew the attention of Team 404 of the Yunnan Nuclear Industry to the Huidong area (Muto, 2004). Team 404 carried out 1:50,000-scale stream sediment sampling in the area that detected 

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			several gold anomalies. Information on the number of samples collected and the sample distribution and sample analyses is not currently available.			The copper and gold mineralization at Laowangshan, in the south central part of the concession was discovered by geologists of the Peoples Liberation Army (PLA) in 1994. The PLA explored the area and from 1994 to 1997 completing construction of an access road and several exploration adits. The PLA subsequently abandoned the Laowangshan workings, reportedly lost interest in the Project because of lack of cooperation from the local government. No data are available to show the results of their work.			Except for a few still active small scale copper and gold mining in the Laowangshan area, no other significant exploration work was conducted on the Huidong Property between the time the PLA ceased work in 1997 and the time Team 209 acquired the Property from Team 204 in early 2004.			On 6 April 2004 Magnus signed a preliminary agreement with Team 209 for the establishment of a joint venture company to conduct mineral exploration in Huidong County, Sichuan Province, China. The parties signed a formal agreement on 6 July 2004. In September 2004 Magnus initiated the exploration programme described in this report.**Historical and Active Artisanal Mining**Anecdotal reports indicate that gold and copper have been mined in the Laowangshan area since the Qing dynasty (approximately 100 years ago). Some artisanal mining activity is still active within the license area (Photos 1 to 3) at Dingjiaping and Laowangshan.**5. GEOLOGICAL SETTING****Regional Geology and Tectonics**The Huidong Property is located in one of the most tectonically complex regions of SE Asia: the juncture between the India, Eurasia, Sunda and South China Blocks, driven by collision between the northward-moving Indo-Australian Plate and Eurasia (Socquet & Pubellier, 2004) (Figure 4).			Huidong lies at the western margin of the Yangtze Craton which is the southern half of the Proterozoic-Early Palaeozoic South China Block. The Siamo and Indochina Blocks collided with the southern margin of the South China Block between the Late Palaeozoic and Triassic (Lehrmann *et al.*, 2005). The two regions are separated by a major suture comprising the Ailaoshan and Songma (Red River) faults which have been active from the Palaeozoic to modern day.			The Yangtze Craton stabilised as a craton in Neoproterozoic times during the Yangtze Orogeny (Lehrmann *et al.*, 2005) and platform sedimentation occurred through to the Early Palaeozoic. Rifting of the South China Block from Gondwana in the Devonian was followed by further passive continental margin sedimentation during the Late Palaeozoic.			Uplift and crustal thinning heralded the outpour of voluminous flood basalts (Emeishan Basalt) during the Lower-Upper Permian transition in response to mantle plume activity (He *et al*., 2003). Emeishan flood basalts and associated mafic and ultramafic intrusives cover an area of 5x105 km2 extending from the eastern margin of the Tibetan Plateau onto the South China Craton.
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			Deposition of extensive carbonate sediments between the Upper Permian and Middle Triassic ended with the Indosinian Orogeny in the Mid-Late Triassic (Lehrmann *et al.*, 2005). The basin rapidly subsided resulting in deposition of deep water turbidites over the carbonates.			Huidong and the neighbouring Boka gold deposit are underlain by metamorphosed sediments of Neoproterozoic age (Southwestern Resources Inc, 2007). Both properties lie just west of the Xiaojiang Fault, a major regional N-S fault system that forms part of the Panxi Rift.			The Panxi Rift zone is a major continental rift feature situated at the western edge of the Yangtze Craton formed during the Late Palaeozoic. The Rift extends over a length of some 1,000km and width of 350km, and is typified by generally N-S trending normal fault structures. The Panxi Rift was the main locus for extrusion of the Emeishan basalts.**Property Geology**The oldest rocks in the Huidong area are Meso-Proterozoic Huili Group (which correlates to the Kunyang Group in Yunnan) which occur in an erosional window surrounded by Palaeozoic and Mesozoic strata. The Kunyang Group is mainly comprised of carbonaceous shale, argillite, phyillite, slate, carbonate and minor mafic volcanics (Figure 5 and 6).			The NeoProterozoic Zhengdan (Sinian) Group unconformably overlying the Kunyang comprises dolostone, sandstone and conglomerate. The stratigraphy of the area is presented in Table 6 (modified from Yang, 2006).			Undifferentiated Palaeozoic and Mesozoic rocks conformably overlie the Proterozoic, but are only seen in the NE and NW corners of the licence area. Intrusive phases of the Emeishan in the form of gabbro and diabase also occur in the area, most in the form of dykes and small intrusive stocks that follow the dominant north to northwesterly structural tend.
**Table 2: Stratigraphy of the Huidong-Boka Vicinity****(Sichuan Province Group names)**

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**Code**

**Age**

**Group**

**Thickness**

**Lithology**

4

Mesozoic

Cretaceous

Leidashu

  

Quartz arenite, siltstone and mudstone

Xiaoba

  

Upper: mudstone with sandstone and siltstone ; lower: feldspar quartz arenite

Jurassic

Xinchun

  

Felspathic arenite with mudstone

Yimen

  

Mudstone with sandstone at bottom

Triassic

Baiguowan

  

Siltstone and mudstone

3

Paleozoic

Permain

Ermei Basalt

  

Upper: basaltic conglomerate, Lower: basaltic breccia and basalt

Xuanwei

  

Marl, carbonaceous shale with coal

Maokou

  

Limestone with basalt at top

Qixiap

  

Limestone with greywacke at bottom

Liangshan

  

Carbonaceous shale with coal

Cambrian

Erdaoshui

  

Dolostone with shale

Xiwangmiao

  

Argillaceous dolostone with siltstone

Dachaohe

  

Banded argillaceous dolostone with shale

Longwangniao

  

Dolostone with shale

Canglangpu

  

Sandstone with shale, bioclastic limestone and shale

Qiongzhusi

  

Siltstone, shale with phosphatic rocks at bottom

Maidiping

  

Dolostone with banded silica

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2

  Upper Proterozoic

Zhengdan

Dengying

> 1000

Dolostone

Chengjian

950

Sandstone, conglomerate

1

Meso-								Proterozoic

Upper								Kunyang

Madi

450

Dolostone, sandstone and volcanics

Xiaohekou

766

Sericite slate, sandstone, conglomerate at top

Dayingpan

3030

Sericite slate with intercalated carbonaceous slate, conglomerate at bottom

Mid								Kunyang

Qinglongshan

1300

Muddy dolostone, interlayered with slate

Heishan

1786

Carbonaceous sericite slate with pyrite nodules muddy limestone, with pyrite nodules carbonaceous slate with Cu ore body at bottom

Luoxue

520

Dolostone, Cu orebody at bottom muddy and sandy dolostone, main Cu strata

|

120

Yinmin

416

Red sandy mud dolostone with slate, Cu orebody Fe-rich slate with Fe-Cu orebody conglomerate and breccia, with Fe orebody

|

369

Lower								Kunyang

Pingdingshan

> 467

Sericite slate, Fe-rich  slate, some mafic volcanics

Caiyuanwan

> 560

Dolostone, slate, with some limestone, Fe-rich conglomerate at bottom

Wangchang

945

Sandstone, with some intercalated siltstone and slate

Shahaigou

> 643

Sericite slate, with intercalated limestone

**Structure**The Huidong Property is structurally very complex with four major (and locally two minor) episodes of overlapping structural deformation recognized (Standing, 2006).**The western and eastern parts of the Project have fundamentally different tectonic grain to the central area, however all areas share similar tectonic evolution. The Sujialu, Laowangshan and Laoshuijing areas are characterised by N-S folds and similarly oriented reverse and thrust faults, whereas in the Dingjiaping and Ganghai areas these structures are oriented E-W.				Regionally, the Laowangshan Au-Cu anomalies are apparently coincident along the same NW oriented sinistral fault structure as the Boka deposit, which is herein referred to as the Huidong-Boka Fault.				On outcrop scale, mineralization is commonly associated with narrow shears and breccias parallel to bedding planes, and less commonly crosscutting subvertical structures may also be mineralized.**Mineralization**The Huidong Project occurs within a well-endowed polymetallic district.				The Dongchuan Cu district to the south is one of the largest Cu areas in China. The historical production is approximately 500mt averaging 1% Cu and 0.3g/t Au. Dongchuan mineralization is hosted by dolomitic limestone that overlies carbonaceous sediments 

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			which are stratigraphically equivalent to the Huidong sediments. Mineralization has both structural and stratigraphic controls.			The Huizhe Zn-Pb-Ag district occurs to the southeast of Huidong and is hosted by Palaeozoic carbonates. The district houses high-grade Zn-Pb sulphide deposits with Zn grades between 20-25% and Pb grades between 5-8%. The field has produced more than 4mt of Zn metal and has resources exceeding 3mt of Zn metal. Ore is characterised by breccia replacement-style mineralization.			The Boka gold deposit operated by Southwestern Resources Inc is the basis for the exploration model at Huidong. The Boka mineralization is hosted by Kunyang Group**carbonaceous argillite/shale, siltstone and minor proportion of sandstone. Mineralization is controlled by lithologic contacts and crosscutting structures (Southwestern Resources Inc, 2007).			Several styles of Au-Cu mineralization have been noted at Huidong: bedding-parallel faults and breccia, crosscutting faults and dykes, and bedding-related. Individual Au occurrences at Huidong are described below.**6. DEPOSIT TYPES**The basis for the exploration model at Huidong is a sediment-hosted vein (SHV) deposit typified locally buy the Boka Au-Cu deposit approximately 15km to the south in a similar geological setting.**Boka Deposit Exploration Model**The geological characteristics of the Boka deposit considered important as exploration criteria are as follows (after Winter, 2005)(Figure 7):			- mineralization is fundamentally stratigraphically controlled and is hosted by arenites with increasing grades at the lower contact with carbonaceous argillites. The argillites may have acted as a seal to mineralizing fluids or as a chemical reactant to precipitate mineralization.				 the chronostratigraphic level is probably not important, as the arenite/argillite layering is stratigraphically and tectonically repeated.				arenaceous sediments show brittle deformation (brecciation) compared to argillaceous units which show ductile deformation (bedding parallel foliation). The competency contrast between the brittle-ductile units may be a factor in localizing mineralization.				
- orebodies occur along N-S trending steeply dipping normal faults which may have acted as conduits for mineralizing fluids, but mineralization is discontinuous along strike suggesting some control by crosscutting features.				 mineralization is accompanied by quartz-carbonate veining.				steep crosscutting fault structures may also be mineralized and may be the primary hydrothermal fluid channel.				
- sulphide assemblage commonly pyrite with minor chalcopyrite and sphalerite				 sulphides occur as breccia matrix and veinlet stockworks and may be locally massive.				gold grades appear to fall into three ranges: 100ppm to 1g/t Au – less deformed arenite, average 2.5g/t in vein/breccia type ore, and >10g/t in massive sulphide type ore. Grade increases proportionally with intensity of quartz-carbonate veining and sulphides.			

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- alteration assemblage includes: de-carbonization, sericitization, muscovitization, carbonatization, sulphidization, silicification and phosphorization, but the zonation is not understood.			  **Other Factors for Consideration at Huidong**    - steep topography has displaced material from source by mechanical creep and surface hydrological processes, causing displacement of geochemical anomalies from the source area.				 other types of gold enrichment may occur, including particularly red-clay (karstic infill), supergene enrichment in lateritic soils, and alluvial concentration.			
**Exploration Methodology**
- Geochemistry – Au and associated elements (Cu, As, Pb).				 Magnetics – location of mafic dykes related to Ermeishan basalts which may have intruded along structures which could act as fluid channels.				IP/Resistivity – stockwork sulphides and altered fault/fluid pathways.				
- Electromagnetics – massive sulphide bodies, shear zones in carbonaceous (graphitic) units.				 Alteration Facies mapping – understanding of the alteration zonation associated with mineralization and distinction from diagenetic processes.			
The exploration programme conducted by Magnus primarily used the characteristics of the Boka deposit as a guide to mineralization.**7. MINERALIZATION****Mineral Prospects within the License Area**The Huidong Property is in its initial stage of exploration. The knowledge of primary mineralization in the Property is limited to the gold and copper bearing veins and shear zones exploited by small scale artisanal miners in the Dingjiaping and Laowangshan areas.*Dingjiaping Prospect*– Dingjiaping is located in the northwest part of the Huidong licence, where artisanal mining has been previously active. As many as 61 adits from less than 10m to 60m length have been mined along narrow quartz-carbonate veins that are concordant with the bedding of the host rock. The quartz veins average 1m thick and contain pyrite, some of which reportedly carry visible gold, explaining the presence of alluvial gold miners in a tributary of the Daqiao River draining the immediate area. Gold grades from grab samples from road cuts and adits returned values generally less than 0.5g/t but in one vein from 0.21 to 6.18g/t Au.*Laowangshan Prospect* – Laowangshan is located in the south-central part of the Huidong Property. The prospect is the site of several adits up to 280m length driven along narrow quartz and sulphide veins generally trending E-W. The adits follow brecciated zones in limestone raging in width from less than 1m to 10m and usually mineralized with pyrite, malachite, chalcopyrite and covellite, (Yang, 2006). Gold values from grab samples range from 0.20 g/t to 5.0g/t. Several scattered surface showings of malachite and chalcopyrite occur in the area with some samples showing visible gold.				Some artisanal mining is currently active in the area with the recovery of copper ore and gold. Quartz carbonate veins and mineralized shear zones up to 10m width occur near the contact 

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			between limestone and underlying phyllites. As at Dingjiaping, the deposits are concordant with the bedding. Gold panning is active in the main drainage channel in the immediate vicinity.*Ganhai Prospect*– Ganhai is west of Laowangshan but is significant as it is not in a drainage channel. The Ganhai target has two mapped artisanal mining sites, and is a strong and consistent geochemical anomaly up to 280 ppb in outcrop chip samples and 180ppb in soils. Gold anomalies correlate with Ag, Ni, Co, Fe, Sb, Mn, Bi.*Laoshuijing Prospect*– Laoshuijing is located in the northeastern corner of the Huidong Property. Unlike Dingjiaping and Laowangshan, there is no evidence of current or historical artisanal mining activities, but the area has anomalous Au, Cu and As soil geochemical anomalies up to 438ppb Au.**8. SAMPLING METHOD AND APPROACH****Soil Sampling**Soil samples were collected in three phases focussing into anomalous gold areas. The original low density survey was undertaken by Long Teng, which collected 2326 samples on a 750m X 250 m grid. This was followed by a more detailed grid survey undertaken by the Geochemical and Geophysical Institute of the Yunnan Geological Survey comprising 5362 samples collected at 250 m by 100 m interval. The most detailed survey also by the Yunnan Geological Survey comprised 4353 samples at 40m intervals along east-west lines spaced 80m on anomalous Au areas from the previous surveys.			Approximately 1kg of soil was excavated from a depth of 60cm or the top of bedrock if the soil cover is thin.**Stream Sediment Sampling**Stream sediment samples were collected on a regional scale outside of the Huidong exploration licence area to locate new target areas for possible acquisition of new exploration licences by Magnus. Stream sediments were taken from the upper reaches of tertiary drainage channels in drainage capture sub-basins surrounding the Huidong licence.**Rock Chip Sampling**Rock chip samples were taken with a hammer and chisel in continuous channels along outcrop road cuts. Rock chips were collected in a catch tray under the chisel to prevent contamination. Samples were composited over 2m intervals.**Drill Core Sampling**Drill core was inserted into plastic core trays, marked and measured at the drill site, then delivered to either the Dingjiaping or Laoshuijing camp for further processing (Photos 6 to 11). The core was first photographed, and then cut in half along the entire length with a diamond saw. The core was then logged for a broad suite of geology, mineralization, structure, alteration and geotechnical parameters.			Composite samples of half core were taken over a nominal 2m width except where distinct lithological boundaries were observed and sample intervals varied. Samples were tagged and sealed in cloth bags for road transport to the SGS sample preparation facility in Kunming.
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**9. SAMPLE PREPARATION, ANALYSIS AND SECURITY****Soil Samples**The sample preparation protocol was the same for all phases of the soil geochemical programme. Samples were air dried, disaggregated and screened to -60# (less than 0.31mm) to yield a minimum of 300g sample. A 150g subsample of the fine fraction was sent to Acme Analytical Laboratories in Vancouver for 35 element ICP analysis. The remaining fine fraction is retained should reanalysis be required.**Stream Sediment Samples**Samples were dried and screened to -80# and the fine fraction sub-sampled with a scoop with 50g used for fire assay/AAS analysis and the remainder retained for reference.**Rock Chip Samples**Rock chip samples were prepared and analyzed using the same method as the drill core as discussed below.**Drill Core Samples**Sample preparation was completed at the SGS laboratory in Kunming, which is independent of Magnus and the JV partner. Samples were crushed in a jaw type crusher to 75% passing -6mm, split using a riffle splitter, then approximately 1kg pulverized to >85% passing -200#. The pulverized material was subsampled with a riffle splitter, with 200g of pulverized material sent by train to the SGS laboratory in Tianjin, China and the remaining pulp reject retained. On arrival, the samples were entered into the laboratory sample tracking system before analysis. The pulverized samples were homogenized and riffle split into three fractions: 50g for gold analysis, 50g for multi-element analysis, and 100g for retention.			Gold analysis was measured using the standard Fire Assay technique on a 50g charge with an AAS finish. Multi-element analyses used the ICP-MS method. Specific analytical protocols are detailed on the SGS Web site (SGS, 2007).			Both the SGS Tianjin and Intertek Beijing laboratories are ISO certified facilities.**Chain of Custody**Drilling was directly supervised by Magnus geologists and technicians. Drill core was delivered daily to the secure core logging facilities at Laoshuijing and Dingjiaping.			Core was measured to check drill depths, split using a diamond saw and photographed before sampling. Samples were inserted into cloth bags with sample tags inside and marked outside with unique sample numbers. A sample tag with the sample number and depth was also placed in the core tray.			The sample Chain of Custody was documented with Sample Dispatch/Receipts from the field to delivery at the sample preparation facility and the analytical laboratory. At no time were samples out of the direct supervision of Magnus personnel except when in transit between laboratories with licensed carriers.**Retention Samples**The half core samples are stored at the Laoshuijing and Dingjiaping camps in a secure locked storage facility. Fine reject and analytical pulps of the rock chip samples and core are stored in a secure warehouse in Jinning Village near Kunming.
Page 12
**10. DATA VERIFICATION AND QUALITY CONTROLS**Only QC statistics of drill core samples are discussed in this report. Three types of quality control procedures were instituted by Magnus: blanks, Certified Reference Material (CRM), and independent laboratory replicates. In addition to the Magnus control samples, the analytical laboratory routinely split and assayed duplicate samples from the pulverised material.			The total sample population comprised 1710 samples from Dingjiaping and 465 samples from Laoshuijing. A total of 44 CRM and blank samples were submitted with two control samples in each sample batch. There were 68 samples sent to an independent laboratory (Intertek), and there were 243 pulp duplicates assayed by the primary laboratory (SGS). There were no drill core or sample preparation duplicates used in this programme.**Certified Reference Material and Blanks**Certified Reference Material (CRM) was provided by the Chinese Academy of Geological Sciences (CAGS). CAGS is an accredited laboratory under the China National Accreditation Board for Laboratories (CNAL), and the CRM is certified under Chinese National Standard DZG 93-09 for Rock and Mineral Assay Regulations – Gold and Silver. No variance statistics on the CRM variance are provided by CAGS, but the material is certified within the published regulatory limits.			The reported standard assay values of the CRM were 0.0005, 0.0015, 0.1, 0.3 and 5.7ppm Au which spanned the range of expected assays from the drill core. The Lower Detection Limit (LDL) from SGS using the defined sampling protocols and FA/AAS analysis is considered to be 0.01ppm Au. CRM values of 0.0005 and 0.0015ppm Au are below the LDL and are considered blank samples for monitoring contamination.			QC failures for CRM are defined as two successive assays >2 standard deviations or any one assay >3 standard deviation from the reference value. Of the 44 CRM samples submitted, all passed the stated QC criteria.
**Standard**

**N**

**Mean**

**SD**

**QC Failure**

0.0005

9

0.008333

0.007528

0

0.0015

8

0.0175

0.015

0

0.1

10

0.092

0.006325

0

0.3

13

0.268333

0.021249

0

5.72

4

5.8975

0.527028

0

**Total**

**44**

  

  

**0**

Of the 17 blanks inserted, 8 assayed higher than the LDL, with one sample of 0.02ppm and one sample at 0.04ppm. This suggests there may be a minor random contamination in the sample preparation or analytical process. There was no evidence of systematic Au contamination based on the blank samples submitted.**Inter-Laboratory Replicates**A total of 68 replicate subsamples from the pulverized material was split and sent to the Intertek Laboratory in Beijing for Au fire assay/AAS finish. Results of the replicate samples indicate there is no bias between the labs used for the majority of the drill core assays, but there is relatively high variance at low assay values.

Page 13

**Laboratory Pulp Duplicates**SGS assayed 243 duplicates split from the pulps from 2175 samples submitted (approximately 11%) as an internal quality control on the analytical method and the homogeneity of the samples.

Page 14

**Conclusions from QC Procedures**
the Chain of Custody and security procedures are sufficient to prevent tampering of the samples and ensure the integrity of the core and retention samples.
- there is no evidence of systematic contamination of the samples with gold based on the blanks submitted with the samples.   two out of 17 blank samples assayed higher than the LDL, which indicates a minor contamination problem in the sample preparation or analytical procedure.of the 44 CRM samples submitted, all assays fall within an acceptable range of the certified gold values.
- the CRM standards are not distributed evenly within the range of the assays, and the linearity of the accuracy of the drill core assays cannot be confirmed.   there appears to be no long term bias in the analyses, and there are no irregular sample batches identified.there is no apparent bias between the main analytical laboratory (SGS) and the independent laboratory (Intertek).
- the reproducibility of most of the laboratory pulp duplicates is within ±10% which is acceptable and no changes to the sample preparation or analytical protocol are indicated. Based on these data the pulps are reasonably homogenous with respect to gold.   the Inter-Lab Replicates and the Due Diligence sampling (discussed below) both indicate some variance in duplicate assays from the same sample. This could indicate an inherent inhomogeneity (nugget effect) or variance introduced in the sample preparation protocol.			
Page 15
**Due Diligence Check Analyses**Samples were taken by the Independent author (McMullan) to verify the results of the drill core assays.			The subsample population for check assays comprised 49 samples of fine reject material from drill core, including 4 duplicates. Samples were selected from sections with anomalous gold, sections with no gold, and of representative lithologies. This is approximately 1:100 sample frequency.			As this is only a test of the veracity and precision of previous work, no CRM standards or blank material was inserted in the batch. Four higher grade Au samples were split for duplicate assays to estimate precision and variance.			Samples were sent from Kunming to the ALS Chemex sample preparation facility in Guanzhou, China, then forwarded to the ALS Chemex analytical facility in Vancouver for assay using the AA23 (30g sample Fire Assay/AAS finish), which was the same as previous assays by Magnus.**Results of Due Diligence Check Assays**One sample was discarded as misnumbered. The paucity of higher grade samples makes the correlation line between the subsample and the global population less representative. Of the 48 check samples, 29 assayed lower grade than the original, 6 assayed higher, and 13 samples were at the Lower Detection Limit (LDL) which were not included in the statistics.			Repeat sample assays (ALS Chemex Vancouver) are approximately 14% lower than original assays (SGS Tianjin China), but the correlation between the populations is good (correlation coefficient 0.82). This indicates a possible laboratory analytical bias.			Four samples deviated >10% from the correlation line, all of which were higher grade >0.3ppm. This indicates a possible inherent inhomogeneity (nugget effect) of the mineralization.**Conclusion from Due Diligence Check Assays**The check samples show the same overall variation as the original assays, and the sampled population is representative of the global population. The check samples represented different lithotypes and alteration, and spanned the range of grades in the global population. The duplicate assays reported are within an expected range, and based on these data the subsample is representative of the global population.			Duplicate samples have a relatively high variance which suggests the inherent inhomogeneity (nugget effect) and/or sampling protocols may be a concern in future resource estimations. The number of duplicates in this subsample is not sufficient to precisely calculate the variance.			The possible laboratory analytical bias cannot be confirmed by the small sample set.
Page 16

**11. ADJACENT PROPERTIES**Mineral tenement information is difficult to obtain in China, so information on competitor activities in the surrounding area is incomplete. The most recent tenement map in Sichuan province indicates that the area surrounding the Huidong licence remains open for new licence applications.				The most active gold exploration project in the vicinity of Huidong is the Boka project operated by Southwestern Resources Inc. The SWG tenements are directly along trend to the south of Huidong. The Boka gold deposits occur as discontinuous lenticular sulphidic bodies concordant with bedding and are hosted in coarse clastics, slates and carbonaceous shales.**12. MINERAL PROCESSING AND METALLURGICAL TESTING**The Huidong Property is at an early exploration stage and no mineral processing or metallurgical testing has been conducted.**13. MINERAL RESOURCE AND MINERAL RESERVE ESTIMATE**The Huidong Property is at an early exploration stage and no mineral resource or mineral reserve estimates have been made.

Page 17

****
**14. EXPLORATION RESULTS****Summary of Exploration Results**A summary of the exploration work conducted on the Huidong Property is tabulated below.**Table 3: Summary of Exploration Works**
**Method**

**Contractor**

**Quantity**

**Comments**

Regional Stream								Sediments

Long Teng Mining

421 samples

Area outside of exploration								licence

Soil Sampling (low								density)

Long Teng Mining

2326 samples on 750m X								250 m grid

Analysed at Acme Analytical								Laboratories Vancouver

Soil Sampling (infill high								density)

Geochemical and Geophysical Institute of the Yunnan Geological Survey

5362 samples were collected								at 250 m by 100 m interval

Analysed at Acme Analytical Laboratories Vancouver

Soil Sampling (Anomaly								Infill)

Geochemical and Geophysical Institute of the Yunnan Geological Survey

4353 samples of one kilogram were collected at 40m intervals along east-west lines spaced 80m apart.

Analysed at Acme Analytical								Laboratories Vancouver

Rock Chip samples

Long Teng Mining

7953 samples
- Dingjiaping road cuts 5658 samples  Dingjiaping alteration 80 samplesGanhai road 107 samples
- Ganhai outcrop 197 samples  Laoshuijing outcrop mapping program by Jilin team: 60 samplesLaowangshan outcrop 1673 samples
- Laowangshan outcrop 53 samples  Laowangshan outcrop mapping by Jilin team: 125 samples
Satellite Image								Processing

Pacific Geomatics

Quickbird

  

Geological Mapping

Jilin University

9km22.25km2

LaowangshanLaoshuijing

Structural Mapping

Jon Standing – Jigsaw								Geoscience

Sujialu, Laowangshan, Laoshuijing, Dingjiaping and Ganghai areas

  

IP/Resistivity

Logantek Pty Limited

8km in Laowangshan and Laoshuijing areas

Dipole-dipole array

Time Domain EM

Baoding Geophysics

8.4km

MIL soundings integrated into Conductivity Depth sections

Magnetics

Logantek Pty Limited

21km in Laoshuijing area

Proton precession magnetometers with GPS navigation

Road Construction

Long Teng Mining

13km

Excavator and bulldozer

Page 18

Diamond Drilling

Baichuan Resources Ltd								(Team 209 Yunnan Brigade)

2902.7 metres Dingjiaping

7 holes using Longyear LF90 diamond drill rig

847.2 metres Laoshuijing

5 holes using Chinese XY-4 diamond drill rigs

Drill Core Analyses

SGS TianjinIntertek Beijing (replicates)Acme Analytical Vancouver (duplicates)

2187 Au FA/AAS1866 multi element ICP

1:50 control samples1:20 duplicates
**Regional Stream Sediment Sampling**Stream sediment sampling identified strong Au anomalies at Xiaojie and Jinshuoqiao up to 1721ppb Au, but this is considered contamination from the operating mines. Gold anomalies >100ppb at Shanghuashan and Xiahuashan immediately north of the Huidong area are prospective (Figure 8).**Soil Sampling**The distribution of the soil samples and gold anomalies are presented in Figure 9 and 10.			The original low density survey identified anomalies up to 848ppb Au with 33 of 2326 samples considered highly anomalous at >2 standard deviations (approximately 50ppb) above the mean. The infill soil sampling survey identified anomalies up o 300ppb, and the detailed anomaly infill survey identified anomalies up to 3014ppb (3ppm) Au and 28000000ppb (2800ppm) Cu.			Four distinct anomaly groupings were identified from the soil surveys: Dingjiaping, Laowangshan, Ganhai and Laoshuijing (Figures 11, 12, 13). Interpretation of multi-element analyses indicates Au is generally correlated to Ag, Cu, As in all areas, with other element correlations depending on the underlying bedrock and soil profile development.			Gold anomalies are strongly associated with major fault structures, but the correlation to soil types or bedrock geology is not well understood due to the complexity of the structure and small areas of detailed geological mapping.			Soil sampling at Laowangshan – Ganhai has identified 6 major geochemical anomalies with extremely strong concentrations of gold and copper in soil up to 3 g/t gold and >1% copper. These soil anomalies are the most extensive in the Huidong Property, covering an area of approximately 6 km2.			Soil sampling at Laoshuijing identified three peaks with up to 0.438ppm Au and 984ppm Cu in an anomalous area of approximately 1.5 km2. Soils at Dingjiaping identified four peaks up to 0.973ppm Au and 28000ppm Cu in an anomalous area of approximately 2km2.			At the 10ppb Au level, geochemical anomalies outline distinct trends which correlate to fault structures (Figure 14). The Laowangshan anomaly is apparently strongly controlled by a regional NW trending fault which continues through the Boka deposit (herein termed the Huidong-Boka fault).			Correlation between Au and other elements is different in each prospect area:			          Laowangshan: positive: Cu, ±Ag, As, Co, Ni, ±Hg, weak negative La, Al, K and Ga
Page 19
			          Ganhai: Cu, ±Ag, As, Ni, ±Co, Mn, weak negative La, Al, K and Ga			          Laoshuijing: positive Se, As, Ag and Cu, negative Ni			          Dingjiaping: Cu, ±Ag, As, Ni, ±S, Mn, Mo, negative K and Al			The different elemental correlations in each area are probably a reflection of the host rock lithologies and soil profile development.**Rock Chip Sampling**The objective of the outcrop rock chip sampling of road cuts, outcrops and adits was primarily to correlate the soil geochemical anomalies directly to specific lithologies.			In general, the areas of high soil gold anomalies are coincident with anomalous gold in bedrock, although there is evidence of downslope displacement of the soil from the source (Figure 15). Detailed geological mapping at Laowangshan suggests that Au is hosted by dolomitic limestone overlying carbonaceous phyllites (Ma, 2006b, Wang, 2006).			Samples collected from the inactive Laowangshan copper-gold workings include 29.4g/t and 40.1 g/t Au and >2% Cu.**Geophysical Surveys**Induced Polarization, Transient Electromagnetics and Ground Magnetometer surveys were conducted in the early part of 2006 in the Dingjiaping, Laowangshan and Laoshuijing areas. The extreme topography limited coverage and hindered optimal procedures in conducting the different surveys. The methodologies and the results of the geophysical surveys were reported on by Logantek Pty Ltd of Australia (Logantek, 2006a & b).			Ground Magnetics			The magnetic survey at Laoshuijing covered the anomalous Au soil geochemical area (Figure 16). The total magnetic intensity readings were reduced to the magnetic pole to simplify the interpretation. Moderately strong linear magnetic bands are probably caused by mafic dykes related to the Ermeishan volcanics. The trend of the magnetic dykes is roughly N–S, corresponding to the main structural trend of the Panxi Rift.			Induced Polarization Survey			The Induced Polarization/Resistivity work was conducted in the Laowangshan and Laoshuijing areas, and used the dipole-dipole electrode array with electrode spacing of 50m and dipole spacing from n= 1 to 6. The data were corrected for terrain effects and inverted to true earth sections showing the distribution of the IP chargeability and resistivity in the earth (Figure 17, Photos 12 to 13).			The key elements of the exploration model important in the interpretation of the IP/Resistivity are structures which channel mineralizing fluids, favourable host rocks which contain reactive minerals (eg. graphite), and the veinlet and massive sulphide mineralization. These elements are expressed as narrow low resistivity zones with coincident high chargeability (Figure 18). Several IP/Resistivity anomalies were identified which correspond to this typical response expected from the Boka type exploration model (Figure 18).			Because there is no previous geophysics on the Huidong Project to substantiate the exploration model, several types of targets were selected for drill testing. Unfortunately due to the limited amount of drilling in the 2006 programme, and restricted access to some 
Page 20
			geophysical targets, the best IP/Resistivity targets have not been evaluated, and the effectiveness of this technique cannot be estimated.			Time Domain EM Survey			The Time Domain Electromagnetics (TEM) survey was contracted to Baoding Geophysics and the work was supervised and processed by Logantek (Pty) Limited. The survey used the Moving In Loop (MIL) sounding technique, which provides an effective cross section showing the distribution of electrical conductivity in the earth.			The MIL technique was selected in favour of Fixed Loop (FL) survey method, as the sub-horizontal stratigraphy and mineralization are imaged more effectively. However, due to the very steep topography, the MIL method proved to be difficult to execute, and survey production was limited compared to the FL type survey technique.			The key elements of the exploration model important in the interpretation of the TEM are resistivity contrasts between lithological layers, structures which shear carbonaceous units into graphite, and veinlet and massive sulphide mineralization. These elements are expressed as layered conductivity-depth sections and subvertical EM conductors.			Results of the TEM survey did identify several moderately conductive subvertical anomalies in the Laowangshan and Laoshuijing areas (Figure 19), but the conductivity depth sections at Dingjiaping shows undisturbed horizontal layering (Figures 20, 21). In general, the TEM results did not locate any strong conductive anomalies which would indicate graphitic or massive sulphide mineralization.			As the majority of the EM targets remain untested, the effectiveness of the technique or the survey parameters cannot be determined.**Geological Mapping**Detailed geological mapping by Jilin University was conducted in the Laowangshan area covering the anomalous Au + Cu soil anomaly. Bedrock is carbonaceous sericite phyllite, dolomitic crystallized limestone and sericite phyllite of the Huili Group, which is the correlative of the Kunyung Group in Yunnan Province which hosts the Boka deposit. The rocks are gently folded along a NE trending axis. The Daqiao River marks a major sinistral fault which can be traced over 10km to the Boka deposit.			Although no reserve estimates from the PLA test mining of the Laowangshan Copper deposit, grades from underground grab samples returned gold values from less than 1g/t to more than 7 g/t.			Artisanal miners have demonstrated the presence of economic grade copper and gold mineralization in quartz veins and shear zones in the Dingxiaping and Laowangshan areas. The veins are narrow and are generally less than 1m in thickness. At the Laowangshan area, several more adits were driven by artisanal miners. The copper and gold showings occur at the contact of carbonaceous shales and phyllite and an overlying carbonate unit. If this carbonate unit is a facies equivalent of the massive grey limestone marker overlying the “Mineralized Horizon” at Boka then the stratigraphy at the core of the LWS anticline and below should contain other mineralized horizons other than those mentioned above. This interpretation would also suggest that the upper part of the 200-metre thick “Mineralized Horizon” is exposed at the core of the Laowangshan anticline with the remaining lower part concealed below the anticline.
Page 21
			Detailed geological mapping by Jilin University also covered the Laoshuijing area. Three lithological units have been classified: crystal ribbon limestone, gray quartz phyllite and black-gray sericite phyllite. Volcanic rocks have also been mapped in the area: gabbro-diabase dykes, granite aplite dykes, and bedding parallel intrusive rock (sills or volcanic flows).**Drilling**The drilling contract was awarded to Baichuan Resources Limited, which is a Team 209 subsidiary company based in Kunming. A total of 3749.78metres of diamond core drilling was completed in 2006 on the Huidong Project. Seven holes were completed in the Dingjiaping area and five in the Laoshuijing area.			Baichuan used two Chinese made XY4 drills and one Longyear LF90. The productivity of the LF90 was much superior to the XY4 rigs. Drill holes were collared using HQ rods with 63.5mm size core, which was reduced to NQ rods with 47.6mm size core at depth or where there were drilling difficulties.			Drill hole orientation was measured at 50m intervals downhole using a Kodak camera and compass system. Core recoveries averaged 90 to 95% with some core loss in structural zones.**Table 4: Huidong Drill Data**
**HoleID**

**Zone**

**Easting**

**Northing**

**Elevation****(m)**

**Azimuth**

**Dip****angle**

**Total								Length								(m)**

DJP-1-06

Dingjiaping

18291907.72

2939355.49

2540

313.0

-58.5

484.2

DJP-2-06

Dingjiaping

18291636.49

2939378.02

2490

1.0

-48.0

411.9

DJP-3-06

Dingjiaping

18291148.00

2939213.00

2737

5.0

-55.0

456.1

DJP-4-06

Dingjiaping

18290685.17

2937843.53

2876

336.0

-65.0

465.2

DJP-6-06

Dingjiaping

18292289.00

2939573.00

2701

335.0

-65.0

303.4

DJP-5-06

Dingjiaping

18291931.00

2939503.00

2480

355.0

-60.0

497.9

DJP-7-06

Dingjiaping

18292133.00

2939598.00

2577

45.0

-59.0

284.0

LSJ-1-06

Laoshuijing

18301104.84

2939257.10

2050

21.5

-79.0

190.9

LSJ-11-06

Laoshuijing

18301018.00

2939275.00

2066

172.0

-70.0

81.3

LSJ-6-06

Laoshuijing

18301452.13

2938832.37

2065

215.0

-78.0

121.0

LSJ-7-06

Laoshuijing

18301125.55

2939064.55

2061

239.0

-50.0

237.0

LSJ-8-06

Laoshuijing

18301084.70

2939230.70

2035

155.0

-69.0

217.0
			At Dingjiaping, six of the holes were located on the steeply south-dipping north limb of the Malutang syncline to explore for downward extensions of east-west gold-bearing shear zones mapped on road cuts and also of concordant quartz carbonate veins with copper and gold values in old adits driven by artisanal miners (Figure 22).			All of the 7 holes drilled in Dingjiaping encountered narrow vein and breccia zones within units of phyllites, sandstone, siltstone, shales and some carbonaceous units.			At the Laoshuijing prospect where the 2 smaller XY-4 drill rigs were deployed, 5 holes were drilled mainly to investigate coincident strong IP chargeability and gold soil anomalies (Figure 23).
Page 22
			The initial drill program has intersected:- zones of strong alteration, bleaching and quartz-carbonate veining   zones of well developed sulphides mineralization – mainly pyrite but with some chalcopyrite and arsenopyritenarrow gold-mineralized structures			
The results of the current program include:

Hole                               Intersection                                            Interval            Gold					Number                          From (m)                     To (m)                (meter)             (ppm)DJP-1-06                      79.36                           80.2                   0.84                 2.36DJP-2-06                      51.62                           53.55                 1.93                 0.63					DJP-3-06                      183.75                         184.95               1.2                   1.03					DJP-6-06                      100.3                           107.7                 7.4                   0.45					including 100.3               104.4                           4.1                     0.60

Assay results of drill cores are appended with this report.**15. OTHER RELEVANT DATA AND INFORMATION**There are no other material data and information relevant to the Huidong Project within the scope of this report available at this time.**16. INTERPRETATION AND CONCLUSIONS**Key Observations from Exploration Programme are summarized below:

**Environmental and Social Issues**
- the impact of mining development is likely to be greater for social issues than the natural environment in this area.     historical and present-day artisanal mining activity within the license area has not as yet created significant impact on the natural environment.road building and drilling have had some impact on both the natural and social impact in the Project area, which has been mitigated. Drill sites have been replanted and roads have been blocked to prevent usage by local peoples for unlicensed activities (eg. illegal woodcutting).				
****

**Satellite Imagery**
- because of population centres, extensive cultivation in the river valleys and surface contamination by artisanal mining, satellite imagery has not been effective in locating new prospective target areas.				  **Stream Sediment Geochemistry**    - because of the numerous historical and active mines in the region, stream sediments have been contaminated (at geochemical levels) and this method has generally not been effective in locating new target areas.				          
Page 23
  
**Soil Geochemistry**
multi element analyses are necessary to identify mobile and immobile elements in the soil profile as pathfinders to bedrock mineralization.
- soil anomalies may be displaced downslope from the source by mechanical or chemical processes.				   
**Outcrop and Drill Core Geochemistry**
    follow-up of the copper-gold mineralization at Laowangshan on the eastern side of the river has led to the discovery of new copper-gold mineralization, which includes gold assays of 1.4, 1.02 and 1.43 g/t gold and associated copper assays of >1%.				

**Sampling and Analytical QA/QC**

sampling protocols and QA/QC are appropriate for the type of geochemical programmes used and have adequately monitored and controlled factors which would cause unreliable assays.
- Certified Reference Material (CRM) should be selected to span the expected range of gold assays, in particular the range 0.3 to 5.7ppm Au was not represented.   core and preparation duplicates should be routinely inserted into the sample protocol to estimate the analytical variance.control samples (blanks, CRM and duplicates) should be inserted at 10% frequency for quality control.				

**Geology and Structure**

the exploration model used for this programme is primarily based on the Boka deposit. However, indications from drilling and geological mapping suggest the Huidong Project may be stratigraphically higher than Boka, and different styles of mineralization may exist.
- Au mineralization in drilling, outcrop and adits occurs in fine grained arenaceous and carbonates (Yang, 2006). Coarser clastics (sandstones) are not mapped in the area, which is a negative factor if the Boka exploration model is used strictly. Porous sandstones are necessary as pathways for mineralizing fluid migration.   anomalous Au concentration was detected in the saprolite, soils, carbonaceous units, and fault zones, which indicates stratigraphic, weathering and structural controls on Au distribution.Laowangshan Area: Au soil geochemical anomalies appear to be associated with a major NW trending structure and a preferred stratigraphic horizon (dolomite). Folding of the sediments has repeated the structural/stratigraphic locus for mineralization.
- the closest analogue to the Boka “Mineralized Horizon” is the argillaceous and arenaceous units below the limestone at Laowangshan (Yang, 2005) although this may be at a different chronostratigraphic level.   gold mineralization is seen at different levels where the arenaceous/argillaceous units are stratigraphically or tectonically repeated.the Huidong-Boka Fault appears to be a strong control on Au occurrence in the Laowangshan area.				

Page 24

**Geophysics**
the geophysics responses which typify the exploration model have not been adequately tested by drilling due to logistics (steep topography) and restricted access to cultivated lands in the growing season. The relative effectiveness of the geophysical methods used cannot be assessed.				

**Drilling**

construction of access roads and drill pads have caused some considerable environmental impact which has been remediated, but may be avoided with man-portable drilling rigs.
- the efficiency of the Chinese manufactured XY4 drill rigs was poor compared to the Longyear LF-90.				   **Discussion**The Huidong Project is considered favourable for the discovery of significant Au-Cu mineralization for the following reasons:    - stratigraphy similar to Boka deposit.   within the same structural corridor (Panxi Rift) as Boka and other major mining camps (Dongchuan Cu, Huizhe Zn-Pb-Ag).strongly anomalous soil and rock geochemistry of Au and associated elements with locally derived source.
- known Au + Cu mineralization with historical and active artisanal underground and placer mining activity.   significant outcrop sampling and drill intersections of ore-grade Au + Cu tenor			
The exploration programme conducted by Magnus is preliminary in nature, and has not investigated all of the known targets identified from geochemistry, geological mapping, artisanal mining and geophysics (Figure 24). In particular, the Laowangshan area which has the highest soil geochemical anomalies on the Property (3 g/t gold and >1% copper), previous mining activity, EM conductors interpreted to represent graphitic fault/shear zones, and structural alignment with Boka (Huidong-Boka Fault) was not drill tested.**17. RECOMMENDATIONS**The following exploration programme is recommended:
- Detailed geologic mapping on a scale of 1:2,000 at the Dingjiaping, Laowangshan and Laoshuijing prospects with priority to be given to the Laowangshan. The adits should be mapped individually indicating the nature of the structure encountered with regards to widths, mineralization, alteration, attitude and possible geological extensions. Mapping should be observational (especially lithology, alteration) rather than chronostratigraphic or interpretive, and be undertaken using 3-dimensional survey control. As part of the mapping programme, vertical section measurements especially in the Laowangshan area to determine the correlation of the stratigraphic sequence with the Boka deposit.     IP/Resistivity and/or TEM surveys in selected areas in Laowangshan, with emphasis on locating sulphide rich areas.			
Page 25
- Airborne Geophysical surveys to include magnetics, radiometrics and possibly EM-conductivity parameters. This survey is aimed at covering large ground of adverse topography to identify conductive sulphide targets.			     Diamond drilling mainly in the Laowangshan area and untested targets at Dingjiaping and Laoshuijing. The use of man-portable drill rigs is recommended to reduce the environmental impact.			
**Proposed Budget**An estimate of expenditures to carry out and complete the above recommendations is found in Appendix II in this report.

**Item**

**Unit Cost**

**Unit**

**Quantity**

**Amount**

Diamond Drilling

80  

metre

5000

400,000.00

Airbrone Magnetics/Radiometrics Survey

150  

kilometre

300

45,000.00

Analyses

18  

sample

5000

90,000.00

Bulldozer hire

2875  

month

2

5,750.00

Bulldozer mobilization/demobilization

2000  

fixed cost

1

2,000.00

Excavator hire

5750  

month

2

11,500.00

Excavator mobilization/demobilization

2000  

fixed cost

1

2,000.00

Geological Mapping 1:2000 scale

10  

hectare

1400

14,000.00

IP/Resistivity and/or TEM Survey

30  

kilometre

1000

30,000.00

Environmental Restoration

 

2,000.00

Road and Drill Site Preparation

 

5,000.00

Fuel and Maintenance

 

15,000.00

Salaries and Benefits (local staff)

 

30,000.00

Transportation, communications and freight

5,000.00

Field Equipment and Supplies

5,000.00

Room and Board

15,000.00

Consulting

40,000.00

**Subtotal**

717,250.00

Contingency @ 10%

71,725.00

**Total**

788,975.00
			Respectfully submitted,			Steven R McMullan, P.Geo.                                                                                        30 June 2007			Consultant Geophysicist			Gaborone, Botswana			Ruben S Verzosa, P.Eng.                                                                                            30 June 2007			Consultant Geologist			Vancouver, Canada
Page 26
**REFERENCES**
Bureau of Geology and Mineral Resources of Yunnan Province, 1990: Regional Geology of				     Yunnan Province (English Summary): Geol. Memoirs				Charles G. Cunningham, Roger P. Ashley, I-Ming Chou, Huang Zushu, Wan Chaoyuan, and				     Li Wenkang, 1988: Newly discovered sedimentary rock hosted disseminated gold				     deposits in China, *Economic Geology***83**, p. 1462-1469				Chinese Academy of Geological Sciences, 1987: Guide to the Metallogenic Map of				     Endogenic Ore Deposits of China				Fan, Pow-Foong, 1984: Geologic Setting of Selected Copper deposits in China, *Economic					     Geology***79** pp. 1785-1795				He, B., Yu., Y-G., Chung, S-L., Xiao, L. & Wang, Y. 2003: Sedimentary evidence for a rapid,				     kilometre-scale crustal doming prior to the eruption of the Emeishan flood basalts. *Earth					     and Planetary Science Letters*, **213**, 391-405.				Klausen, M.B., Yao, Y., Wilson, A.H. & Chunnett, G., 2006: Lavas and intrusions in the Miyi				     volcanic rift segment, Emeishan Large Igneous Province . IAVCEI conference on				     Continental Basalt Volcanism, May 14-18, 2006, Guangzhou,				     http://web.telia.com/~u15300121/Posters2/IAVCEI2006.html				Lehrmann, D.J., Enos, P., Payne, J.L., Montgomery, P., Wei, J., Yu, Y., Xiao, J. & Orchard,				     M.J. 2005: Permian and Triassic depositional history of Yangtze platform and Great				     Bank of Guizhou in the Nanpanjiang basin of Guizhou and Guangxi, south China.				     Abstracts of the International Symposium on Triassic Chronostratigraphy and Biotic				     Recovery, Chaohu, China, *Albertiana***33**, pp. 149-168.				Logantek Pty Ltd., 2006a: Geophysical Survey Report, IP and Magnetic Surveys, Huidong				     Prospect, unpublished internal company report for Magnus International Resources Inc,				     25p.				Logantek Pty Ltd., 2006b: Geophysical Survey Report, TEM Surveys, Huidong Prospect,				     unpublished internal company report for Magnus International Resources Inc, 23p.				Ma, Leon G. 2006a: Gold Mineralization in Huidong and Boka, Part 1 and 2, unpublished				     internal company report for Magnus International Resources Inc., Part 1-15p.				Ma, LG, 2006b: Gold Mineralization in the Laowangshan Area, unpublished internal				     company report for Magnus International Resources Inc., 11p.				Muto, Paul, 2004: Huidong Gold-Copper Project, Sichuan Province, unpublished internal				     company report for Magnus International Resources Inc., 6p.				Securities and Exchange Commission, 2007: Form 8-K, Modification of Joint Venture Rights				     & Interests, filed by Magnus International Resources Inc.,14p plus Appendix.				     http://www.sec.gov/Archives/edgar/data/1163003/000112785507000328/magnus				     exh10_2.htm

Page 27
			SGS, 2007: http://www.sgs.com/2007-010_analysis_guide_final_with_jan_10_correction.pdf,			     accessed 9 June 2007.			Socquet, A. & Pubellier, M. 2004: Cenozoic deformation in western Yunnan (China –			     Myanmar border). *Journal of Asian Earth Sciences*, **24**, 495-515.			
Southwestern Resources Inc, 2007:				     http://www.swgold.com/i/pdf/SWG_may_2007_AGM.pdf, accessed 9 June 2007.				Standing, J: 2006: Structural controls on gold mineralization at the Mangshi Project, Yunnan				     Province and Huidong Project, Sichuan Province, south-western China, Jigsaw				     Geoscience, unpublished internal company report for Magnus International Resources				     Inc., 35p.				Verzosa, RS, 2007: Summary report on the Huidong Gold Property, Huidong County,				     Sichuan Province, Peoples Republic of China, unpublished internal company report for				     Magnus International Resources Inc., 39p.				Wang, Liancheng, 2006: Scheme for Exploration in Laowangshan Area, Jilin University,				     unpublished internal company report for Magnus International Resources Inc., 2p.				Winter, LDS, 2005: Boka Gold Project, Yunnan Province, PRC, report for Southwestern				     Resources Corporation, NI43-101 Filing on SEDAR, 48p.				Yang, Kai, 2005: Assessment of Hydrothermal Alteration and Gold Mineralization in the				     Huidong Concession and Its Implication for Exploration, unpublished internal company				     report for Magnus International Resources Inc., 18p.				Yang Kai, 2006: Summary on Geology and Gold Mineralization in the Huidong Concession,				     Part 1, 2 and 3. unpublished internal company report for Magnus International Resources				     Inc., Part 1 – 11p, Part 2 – 7p, Part 3 – 4p.				Yang, Yun, 2005: Main Points of Huidong Project on Gold Ore Exploration At				     Laowangshan-Malutang Mining Area, unpublished internal company report for Magnus				     International Resources Inc., 14p.				Yang Yun, 2006: Review and Prospect of Gold Exploration Project in Huidong Project Area,				     unpublished internal company report for Magnus International Resources Inc., 13p.

Page 28

**CERTIFICATE of AUTHOR**

I, Ruben S. Verzosa, hereby state that;
- I am a Consulting Geologist with office and residence at 23064 – 50 th  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 have read the definition of “qualified person” set out in National Instrument 43-101 (“NI43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be a “qualified person” for the purposes of NI 43-101.		            - I am the co-author of the report “Summary Report on the Huidong Gold Property”		              - I have not visited the Huidong Property and this summary report is largely a compilation of data in the files of Magnus International Resources Inc.		                - I have read NI 43-101CP and this report has been prepared in compliance with the guidelines set out in Form 43-101F.		                  - 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 filing of the Technical Report with any stock exchange and other regulatory authority and any publication by them for regulatory purposes, including electronic publication in the public company files on their Websites accessible by the public, of the Technical Report.		  			Dated in Langley, British Columbia on this day 30 June 2007.			<Signed>Ruben  S. Verzosa, P.Eng.              
*Steven R McMullan, P.Geo.**Consultant Geophysicist**Suite 104 Private Bag 00324**Gaborone, Botswana**Telephone +267 390 8565**Email steve@mcmulan.com***CERTIFICATE of AUTHOR**
  
I, Steven R McMullan, P.Geo. do hereby certify that:
                    I am a Consulting Geophysicist residing at Suite 104 Private Bag 00324 Gaborone Botswana,
- I graduated with a degree in Honours Earth Sciences from the University of Waterloo Canada in 1980,     I am a member of the Association of Professional Engineers and Geoscientists of Saskatchewan (Registered Professional Geoscientist No 10018), and an Active Member of the Society of Exploration Geophysicists.I have worked as a geophysicist continuously for a total of 27 years since my graduation from university.
- I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be a “qualified person” for the purposes of NI 43-101.     I am responsible for the preparation of this report in its entirety and Sections 17 Interpretation and Conclusions and 18 Recommendations of the technical report in collaboration with the co-author Mr Ruben Verzosa, P.Eng. titled “*Summary Exploration Activities Report on the Huidong Gold Property, Huidong County, Sichuan Province, People’s Republic of China*” dated 30 June 2007 (the “Technical Report”) relating to the Huidong Property. I visited the Huidong property on 10 – 12 April 2006.I have not had prior involvement with the Property that is the subject of the Technical Report.
- I am not aware of any material fact or material change with respect to the subject matter of the Technical Report that is not reflected in the Technical Report, the omission to disclose which makes the Technical Report misleading.     I am independent of the issuer according to the definition in section 1.4 of National Instrument 43-101 and applying all of the tests in section 3.5 of Companion Policy National Instrument 43-101CP.			
**

**
- I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form.     I consent to the filing of the Technical Report with any stock exchange and other regulatory authority and any publication by them for regulatory purposes, including electronic publication in the public company files on their Websites accessible by the public, of the Technical Report.		
			Dated this 30 June 2007			<Signed>			Steven R McMullan, P.Geo.