UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549



FORM 20F



£

ANNUAL REPORT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934



OR



T

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2008



OR



£

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



OR



£

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934



Date of event requiring this shell company report:

Not Applicable



For the transition period from

to



Commission File Number 0-22617



MINCO GOLD CORPORATION

(formerly Minco Mining & Metals Corporation)

(Exact name of registrant as specified in its charter)



A CORPORATION FORMED UNDER THE LAWS OF BRITISH COLUMBIA, CANADA

(Jurisdiction of incorporation or organization)



Suite #2772, 1055 West Georgia Street, PO Box 11176, Vancouver, British Columbia, Canada,V6E 3P3

(Address of principal executive offices)



Securities registered or to be registered pursuant to Section 12(b) of the Act:



Common SharesAmerican Stock ExchangeTitle of each className of each exchange on which registered




Securities registered or to be registered pursuant to Section 12(g) of the Act.



Common Shares, no par value

(Title of Class)



Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:   None



Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.



1





---

Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report:  December 31, 2008:    42,989,051



Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.



Yes £

No  T



If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.



Yes T

No £



Note  Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.



Yes T

No £



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of Accelerated filer and large accelerated file in Rule 12b-2 of the Exchange Act.  (Check one):



Large accelerated filer:   £

Accelerated file:   £

Non-accelerated filer:  T



Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:



U.S. GAAP£

International Financial Reporting Standards as issued

OtherT

By the International Accounting Standards Board£



If other has been checked in response to the previous question, indicate by check mark which financial statement item the restrant has elected to follow:



TItem 17

£Item 18



If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Yes £

No  T



(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)



Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.



Yes £

No £

Not Applicable





2





---

TABLE OF CONTENTS





PAGE



INTRODUCTION AND USE OF CERTAIN TERMS

5



FORWARD-LOOKING STATEMENTS

5



GLOSSARY OF MINING TERMS

5



PART I



ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

9



ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

10



ITEM 3.

KEY INFORMATION

10



ITEM 4.

INFORMATION ON THE COMPANY

18



ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

50



ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

62



ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

72



ITEM 8.

FINANCIAL INFORMATION

74



ITEM 9.

THE OFFER AND LISTING

74



ITEM 10.

ADDITIONAL INFORMATION

75



ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT

MARKET RISK

87

ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

88



PART II



ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

88



ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY



HOLDERS AND USE OF PROCEEDS

88



ITEM 15.

CONTROLS AND PROCEDURES

88



ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

90



ITEM 16B.

CODE OF ETHICS

90



ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

91



ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS134

FOR AUDIT COMMITTEES

91





3





---

ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER

AND AFFILIATE PURCHASERS

91



ITEM 16F.

OTHER

91



PART III



ITEM 17.

FINANCIAL STATEMENTS MINCO GOLD

102



ITEM 18.

FINANCIAL STATEMENTS MINCO SILVER

143





SIGNATURES

170



ITEM 19.

EXHIBITS

171





4





---

Introduction And Use of Certain Terms



Minco Gold Corporation (formerly Minco Mining & Metals Corporation) is incorporated under the laws of the province of British Columbia, Canada.  In this document, the term Company refers to Minco Gold Corporation and its consolidated subsidiaries. Where required, the term Minco Gold refers to Minco Gold Corporation as a standalone entity. The Companys consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles ("GAAP") and are presented in Canadian dollars.  Unless otherwise indicated, references to dollar amounts in this Annual Report relate to Canadian dollars.  Minco Gold Corporation files reports and other information with the Securities and Exchange Commission ("SEC") located at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.   Copies of the Companys filings with the SEC may be obtained by accessing the SECs website located at www.sec.gov.   Further, the Company also files reports under Canadian regulatory requirements on SEDAR.  Copies of the Companys reports filed on SEDAR can be obtained by accessing SEDARs website at www.sedar.com. The principal executive office of the Company is located at Suite #2772, 1055 West Georgia Street, PO Box 11176, Vancouver, British Columbia, Canada,V6E 3P3, Tel: 604-688-8002, Fax: 604-688-8030, email address info@mincomining.ca  and website www.mincomining.ca.



FORWARD-LOOKING STATEMENTS



The following discussion contains forward-looking statements regarding events and financial trends which may affect the Companys future operating results and financial position.  Such statements are subject to risks and uncertainties that could cause the Companys actual results and financial position to differ materially from those anticipated in forward looking statements.  These factors include, but are not limited to, the fact that the Company is in the exploration stage, will need additional financing to develop its properties and will be subject to certain risks since its prospects are located in China, all of which factors are set forth in more detail in the section entitled Risk Factors in Item 3.D. and Operating and Financial Review and Prospects at Item 5.



GLOSSARY OF TERMS



|                         |                                                                                                                                                                                                                                                                                                                                                                                                
|------------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|757 Team               | means the No. 757 Geo-Exploration Team, an entity owned and controlled by the Guangdong Geological Bureau (GGB) of the PRC government.                                                                                                                                                                                                                                                       
|757 Transfer Agreement | means the agreement dated November 19, 2004 between 757 Team and Minco China pursuant to which 757 Team agreed to transfer and sell to Minco China the Original Fuwan Silver Permit.                                                                                                                                                                                                           
|Additional Permits     | means collectively the Luoke-Jilinggang Permit, the Guyegang-Sanyatang Permit, the Guanhuatang Permitand the Dadinggang Property.                                                                                                                                                                                                                                                              
|alteration             | chemical and mineralogical changes in a rock mass resulting from reaction with hydrothermal fluids or changes in pressure and temperature.                                                                                                                                                                                                                                                     
|Amending Contract      | means the contract dated January 10, 2006 between Minco Silver Corporation and GGB.                                                                                                                                                                                                                                                                                                            
|anomalous              | adjective describing a sample, location or area at which either (i) the concentration of an element(s) or (ii) a geophysical measurement is significantly different from (generally higher than) the average background concentrations in an area.  Though it may not constitute mineralization, an anomalous sample or area may be used as a guide to the possible location of mineralization.
|anomaly                | an area defined by one or more anomalous points.                                                                                                                                                                                                                                                                                                                                               
|antimony               | A trivalent and pentavalent metalloid element that is commonly metallic silvery white, crystalline, and brittle yet rather soft.                                                                                                                                                                                                                                                               
|assay                  | an analysis of the contents of metals in mineralized rocks.                                                                                                                                                                                                                                                                                                                                    



5





---



|                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Assignment Agreement         | means the assignment agreement dated August 20, 2004 between the Minco Gold, Minco Silver Corporation, Minco China and Minco BVI.                                                                                                                                                                                                                                                                                                                                                
|Au                           | Gold.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Baojiang                     | means Foshan Baojiang Nonferrous Metals Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                             
|breccia                      | a coarse grained rock composed of large, >2mm angular rock fragments that have been cemented together in a fine grained matrix.                                                                                                                                                                                                                                                                                                                                                  
|Changkeng JV Agreement       | means the formal joint venture agreement dated September 28, 2004 between the Company, GGB, Zhenjie, Baojiang and GD Gold.                                                                                                                                                                                                                                                                                                                                                       
|Changkeng Permit             | means the reconnaissance survey exploration permit (#T01120080102000011) which expires on September 10, 2009 in respect of the 1.19 km2Changkeng gold property in Gaoyao City of Guangdong Province in southern China.                                                                                                                                                                                                                                                           
|Changkeng Property           | means the 1.19 km2Changkeng gold property in Gaoyao City of Guangdong Province in southern China which adjoins the property underlying the Fuwan Silver Permit.                                                                                                                                                                                                                                                                                                                  
|CIM                          | Canadian Institute of Mining, Metallurgy and Petroleum.                                                                                                                                                                                                                                                                                                                                                                                                                          
|Company or Minco           | means Minco Gold Corporation (formerly Minco Mining & Metals Corporation).                                                                                                                                                                                                                                                                                                                                                                                                     
|concentrates                 | to separate ore or metal from its containing rock or earth.                                                                                                                                                                                                                                                                                                                                                                                                                      
|Dadinggang Property          | means the small area within the Luoke-Jilinggang Permit, about 0.395 km2. This area was extended from the original Luoke-Jilinggang Permit in late 2006.                                                                                                                                                                                                                                                                                                                         
|deposit                      | a mineralized body which has been physically delineated by drilling, trenching and/or underground work and may contain a sufficient average grade of metal or metals to warrant further exploration and/or development expenditures; such a deposit does not qualify as a commercially mineable ore body until final technical, legal and economic factors have been resolved.                                                                                                   
|diamond drill holes          | a drilling method whereby rock is drilled with a diamond impregnated, hollow drilling bit which produces a continuous, in-situ record of the rock mass intersected in the form of solid cylinders of rock which are referred to as core.                                                                                                                                                                                                                                         
|fault or block fault       | a fracture in a rock across which there has been displacement.  Block faults are usually steep, and break the earths crust into blocks that are displaced vertically and/or laterally relative to each other.                                                                                                                                                                                                                                                                 
|First Confirmation Agreement | means the confirmation agreement dated May 2, 2005 between the Company, Minco China and Minco Silver Corporation.                                                                                                                                                                                                                                                                                                                                                                
|Fuwan JV Agreement           | means the formal joint venture agreement dated September 28, 2004 between Minco Silver Corporation and GGB.                                                                                                                                                                                                                                                                                                                                                                      
|Fuwan Permits                | means, collectively, the Fuwan Silver Permit and the Additional Permits.                                                                                                                                                                                                                                                                                                                                                                                                         
|Fuwan Property               | means the Fuwan silver property which is located in Guangdong Province in southern China beside the Xijiang River consisting of the following three components: (i) the properties which are the subject of the Fuwan Silver Permit; (ii) the properties which are the subject of the Luoke-Jilinggang Permit and the Guyegang-Sanyatang Permit; (iii) the Guanhuatang

permit

; and (iv) Minco Golds interests in the silver mineralization located on the Changkeng Property.



6





---



|                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Fuwan Silver Permit       | means the reconnaissance survey exploration permit (# 0100000730293) in respect of the 0.79 km2Fuwan silver property in Gaomong Region, Foshan City of Guangdong Province issued to Minco China and initially having validity from August 20, 2007 to July 20, 2009.   The Fuwan Silver Permit was transferred to FoShan Minco, a subsidiary of Minco Silver, before the permits original expiry date in conjunction with the combination of the Fuwan Silver Permit and the Luoke-Jilinggang Permit as one permit, under a new expiry date of the permit of July 20, 2011.
|g/t                       | unit of grade expressed in grams/tonne.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|gangue                    | the non economic portion of ore.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|GD Gold                   | means Guangdong Gold Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|geophysical               | the use of geophysical instruments and methods to determine subsurface conditions by analysis of such properties as specific gravity, electrical conductivity, and magnetic susceptibility.                                                                                                                                                                                                                                                                                                                                                                                   
|GGB                       | means Guangdong Geological Bureau, an entity owned and controlled by the Guangdong Geological Bureau of the PRC government.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|gouge                     | a thin layer of soft earthy putty-like rock material along the containing wall of a mineral vein.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|grade                     | the amount of valuable mineral in each tone of ore, expressed as ounces per ton or grams per tonne for precious metal and as a percentage by weight for other metals.                                                                                                                                                                                                                                                                                                                                                                                                         
|Guanhuatang Permit        | means the reconnaissance survey exploration permit (# 0100000510045) in respect of the 37.38 km2Guanhuatang silver and multi-metals property in Foshan City of Guangdong Province issued to Minco China and having validity from April 7, 2005 to April 7, 2008. The new expiry date of the permit is on April 07, 2010.                                                                                                                                                                                                                                                      
|Guyegang-Sanyatang Permit | means the reconnaissance survey exploration permit (# 0100000510047) in respect of the 91.91 km2Guyegang-Sanyatang silver and multi-metals property in Gaoming Region, Foshan City of Guangdong Province issued to Minco China and having validity from April 7, 2005 to April 7, 2008. The new expiry date of the permit is on April 07, 2010.                                                                                                                                                                                                                               
|hydrothermal              | of or pertaining to heated water, to the action of heated water, or to the products of the action of heated water.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|limestone                 | A sedimentary rock consisting of chiefly >50% calcium carbonate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Luoke-Jilinggang Permit   | means the reconnaissance survey exploration permit (# 0100000620526) in respect of the 75.76 km2Luoke-Jilinggang silver and multi-metals property in Gaoyao City, Zhaoqing City of Guangdong Province issued to Minco China and having validity from December 31, 2006 to April 7, 2008. The new expiry date of the permit is on July 20, 2011.                                                                                                                                                                                                                               
|Minco Base Metals         | means Minco Base Metals Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|Minco BVI                 | means Minco Silver Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Minco China               | means Minco Mining (China) Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Minco Gold                | means Minco Gold Corporation (formerly Minco Mining & Metals Corporation).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Minco Silver              | means Minco Silver Corporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



7





---



|                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------------------------------------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|mineral reserve                    | the economically mineable part of a measured mineral resource or indicated mineral resource demonstrated by at least a preliminary feasibility study.  This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.  A mineral reserve includes diluting minerals and allowances for losses that may occur when the material is mined.
|mineral resource                   | a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earths crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction.  The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge.                                                           
|mineralization

MOLAR            | the process or processes by which a mineral or minerals are introduced into a rock, resulting in an economically valuable or potentially valuable deposit.
Means the Ministry of Land and Resources                                                                                                                                                                                                                                                                                    
|Original Fuwan Silver Permit       | means the reconnaissance survey exploration permit (# 440000040093) in respect of the 0.79 km2Fuwan silver property in Gaoming Region, Foshan City of Guangdong Province, legally conferred to 757 Team by Guangdong Department of Land and Resources on September 12, 2003.                                                                                                                                                                                                           
|outcrop                            | an exposure on the surface of the underlying rock.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|oz                                 | Troy ounce consisting of 31.1035 grams.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Pb                                 | Lead.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Preliminary Changkeng JV Agreement | means the preliminary joint venture agreement dated April 16, 2004 between Minco Gold, GGB, Zhenjie and Baojiang.                                                                                                                                                                                                                                                                                                                                                                      
|Preliminary Fuwan JV Agreement     | means the preliminary Fuwan joint venture agreement dated April 16, 2004 and amended August 18, 2004 between Minco BVI and GGB                                                                                                                                                                                                                                                                                                                                                         
|pyrite                             | A sulphide mineral of iron and sulphur.                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Pyroclastic                        | refers to a sedimentary rock composed or airborne volcanic material from a volcanic eruption.                                                                                                                                                                                                                                                                                                                                                                                          
|Qualified Person                   | an individual who is an engineer or geoscientist with at least five years experience in mineral exploration, mine development, production activities and project assessment, or any combination thereof, including experience relevant to the subject matter of the project or report and is a member in good standing of an approved self-regulating organization.                                                                                                                    
|quartz                             | A common rock-forming mineral comprised of silicon and oxygen (SiO2).                                                                                                                                                                                                                                                                                                                                                                                                                  
|RMB                                | means the Chinese currency Renminbi.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|sample                             | a sample of selected rock chips from within an area of interest.                                                                                                                                                                                                                                                                                                                                                                                                                       
|sandstone                          | A medium grained clastic sedimentary rock.                                                                                                                                                                                                                                                                                                                                                                                                                                             
|Sb                                 | Antimony.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Second Confirmation Agreement      | means the confirmation agreement dated August 24, 2006 between Minco Gold, Minco China and Minco Silver.                                                                                                                                                                                                                                                                                                                                                                               
|sedimentary rock                   | A rock that has been formed by the consolidation of loose sediment that has accumulated in layers.                                                                                                                                                                                                                                                                                                                                                                                     



8





---



|                                  |                                                                                                                                                          
|--------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|sedimentary                     | formed by the deposition of solid fragmented material that originates from weathering of rocks and is transported from a source to a site of disposition.
|State                           | means the central government of China                                                                                                                    
|strike                          | the direction or trend that a structural surface takes as it intersects the horizontal.                                                                  
|sulphide                        | a class of minerals commonly combining various elements in varying ratios with sulphur.                                                                  
|tonne                           | metric unit of weight consisting of 1,000 kilograms.                                                                                                     
|Transfer Confirmation Agreement | means the confirmation agreement dated November 19, 2004 between 757 Team, GGB and Minco China.                                                          
|Triassic                        | the period of geological time from 225 to 195 million years before present.                                                                              
|vein                            | A tabular mineral deposit formed in or adjacent to faults or fractures by the deposition of minerals from hydrothermal fluids.                           
|veinlet                         | A small vein; the distinction between vein and veinlet tends to be subjective.                                                                           
|volcanic                        | pertaining to the activity, structures or rock types of a volcano.                                                                                       
|Zhenjie                         | means Zhuhai Zhenjie Development Ltd.                                                                                                                    

JVs

means Joint Venture established with Chinese partners. The Company owns controlling interests of over 50% in all JVs in China.  Joint Venture as used in reference to Chinese joint venture, co-operative joint venture, equity joint venture, Sino-foreign joint venture and Sino-foreign co-operative joint venture does not refer to a joint venture as contemplated by US or Canadian GAAP. The term reflects the nomenclature of the related agreements.



ZhongJia

means a subsidiary, Zhongjia Minco in China



All disclosure about our exploration properties in this Annual Report conforms to the standards of United States Securities and Exchange Commission Industry Guide 7, Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations, other than disclosure of Mineral Resources, Measured Mineral Resources, Indicated Mineral Resources and Inferred Mineral Resources, which are Canadian geological and mining terms as defined in accordance with Canadian National Instrument 43-101 under the guidelines set out in the CIM Standards.



In this Annual Report references to Canadian National Instrument 43-101 are references to National Instrument 43-101, Standards of Disclosure for Mineral Projects, of the Canadian Securities Administrators and references to CIM Standards are references to Canadian Institute of Mining, Metallurgy and Petroleum (the CIM) Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council on August 20, 2000 as may be amended from time to time by the CIM.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Cautionary Note to U.S. Investors concerning estimates of Measured Mineral Resources and Indicated Mineral Resources.                                                                                                                                                                                                                                                                                                                  
| | This Annual Report uses the terms Measured Mineral Resource and Indicated Mineral Resource. We advise U.S. investors that while such terms are recognized and permitted under Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them. U.S. investors are cautioned not to assume that any part or all of the Mineral Resources in these categories will ever be converted into Mineral Reserves.



9





---



PART 1



ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS



A.

DIRECTORS AND SENIOR MANAGEMENT



The following table sets forth as of June 15, 2009, the names, business addresses and functions of the Companys directors and senior management.



|                    |                                                                                    |                                                
|------------------- | ---------------------------------------------------------------------------------- | -----------------------------------------------
|Name                | Business Address                                                                   | Position                                       
|Ken Cai             | Suite #2772, 1055 West Georgia Street, Vancouver, British Columbia, Canada,V6E 3P3 | President, Chief Executive Officer and Director
|Robert M. Callander | 43 Delhi Avenue
North York, Ontario, Canada  M5M 3B8                               | Director                                       
|Michael Doggett     | Vancouver, British Columbia, Canada                                                | Director                                       
|Malcolm F. Clay     | West Vancouver, British Columbia, Canada                                           | Director                                       
|Dwayne Melrose      | Suite 1200, Kunxun Tower, 9 Zhichun Road, Haidian District, Beijing, China, 100191 | VP Exploration and Director                    
|Paul Zhang          | Suite #2772, 1055 West Georgia Street, Vancouver, British Columbia, Canada,V6E 3P3 | Chief Financial Officer and VP Finance         



B.

ADVISERS



The Company's registrar and transfer agent for its common shares is Computershare Trust Company of Canada, located at 510 Burrard Street, Vancouver, British Columbia, V6C 3B9, Canada, telephone: 604-661-0224, fax: 604-661-9401, internet: www.computershare.com.  The principal executive office of the Company is located at Suite #2772, 1055 West Georgia Street, PO Box 11176, Vancouver, British Columbia, Canada,V6E 3P3, Tel: 604-688-8002, Fax: 604-688-8030, email address info@mincomining.ca  and website www.mincomining.ca.  The Company's legal advisors are Salley Bowes Harwardt, located at 1185 West Georgia Street, Suite 1750, Vancouver, British Columbia, Canada, V6E 4E6 and US legal advisors are Bullivant, Houser, Bailey PC (formerly Bartel Eng & Schroder), located at 1331 Garden Hwy., Suite 300, Sacramento, CA, 95833.



C.

AUDITORS



The Company's auditors areErnst & Young, LLP, Chartered Accountants, located at Pacific Centre, 700 West Georgia Street, Suite 2300, Vancouver, British Columbia, Canada, V7Y 1C7.



ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE



Not applicable.



10





---

ITEM 3.

KEY INFORMATION



A.

SELECTED FINANCIAL DATA



The following selected financial information for the fiscal years ended December 31, 2008, 2007, 2006, 2005 and 2004 are derived from the financial statements of the Company and should be read in conjunction with the financial statements and the notes attached to this Annual Report.  The Companys financial statements are prepared in accordance with Canadian generally accepted accounting principles (GAAP).  Over the period reviewed, there have been significant differences between Canadian GAAP and United States GAAP.



Canadian GAAP



|                                                 |                   |                     |                   |                   |                   |  |  |  |  |  | 
|------------------------------------------------ | ----------------- | ------------------- | ----------------- | ----------------- | ----------------- |  |  |  |  |  | 
|                                                 | December
31, 2008 | December
31, 2007   | December
31, 2006 | December
31, 2005 | December
31, 2004
|Operations                                       |                   |                     |                   |                   |                  
|Interest and sundry income                       | $      356,359    | $         306,819   | $    673,570      | $    475,554      | 318,424          
|Exploration expense                              | 10,546,507        | 2,947,948           | 2,535,281         | 2,666,958         | 766,377          
|Operating loss                                   | (15,373,756)      | (7,973,486)         | (8,295,163)       | (5,514,779)       | (3,234,271)      
|Loss from continuing operations                  | (14,429,035)      | (7,540,635)         | (1,529,160)       | (939,153)         | (850,421)        
|Loss for year                                    | (13,264,305)      | (7,580,231)         | (1,589,324)       | (1,013,541)       | (861,662)        
|Loss per Common share
from continuing operations |                   |                     |                   |                   |                  
|(basic and diluted)                              | $          (0.30) | $            (0.18) | $        (0.04)   | $        (0.03)   | $          (0.03)
|Common shares used in calculations               | 42,970,813        | 42,908,809          | 41,193,591        | 34,501,784        | 28,117,471       
|                                                 |                   |                     |                   |                   |                  
|Consolidated Balance Sheet Data                  |                   |                     |                   |                   |                  
|Total assets                                     | 10,558,425        | 16,747,109          | 19,584,528        | 18,643,798        | 13,025,691       
|Mineral interests                                | -                 | 358,500             | 358,500           | 100               | 100              
|Total liabilities                                | 8,688.807         | 2,819,893           | 501,128           | 1,365,105         | 316,154          
|Net assets                                       | 1,869,618         | 13,844,531          | 19,083,400        | 17,278,693        | 12,709,537       
|Share capital                                    | 34,021,922        | 33,941,510          | 33,809,903        | $28,187,245       | $24,690,137      
|Shares outstanding  basic                       | 42,989,051        | 42,928,385          | 42,865,219        | 38,633,992        | 35,043,897       



United States GAAP

|                                   |                     |                   |                   |                   |                  
|---------------------------------- | ------------------- | ----------------- | ----------------- | ----------------- | -----------------
|                                   | December 31, 2008   | December
31, 2007 | December
31, 2006 | December
31, 2005 | December
31, 2004
|Operations                         |                     |                   |                   |                   |                  
|Interest and sundry income         | $         356,359   | $    306,819      | $    673,570      | $    475,554      | $   318,424      
|Exploration expense                | 10,546,507          | 2,947,948         | 2,535,281         | 2,666,958         | 766,377          
|Loss for year                      | (16,893,597)        | (7,582,231)       | (6,802,234)       | (5,427,996)       | (3,407,927)      
|                                   |                     |                   |                   |                   |                  
|Income (loss) per common share     |                     |                   |                   |                   |                  
|From continuing operations         |                     |                   |                   |                   |                  
|(basic and diluted)                | $            (0.39) | $      (0.18)     | $      (0.17)     | $      (0.16)     | $       (0.12)   
|Common shares used in calculations | 42,970,813          | 42,908,809        | 41,193,591        | 34,501,784        | 28,117,471       
|                                   |                     |                   |                   |                   |                  
|Consolidated Balance Sheet Data    |                     |                   |                   |                   |                  
|Total assets                       | 8,419,352           | 16,747,109        | 19,838,955        | 18,643,798        | 13,056,229       
|Mineral interests                  | -                   | 358,500           | 358,500           | 100               | 100              
|Total liabilities                  | 8,688,807           | 2,819,893         | 501,128           | 1,365,105         | 315,154          
|Net assets                         | (269,455)           | 13,844,531        | 19,337,827        | 17,278,693        | 12,741,075       
|Share capital                      | $    36,837,578     | $36,757,166       | $36,625,559       | $31,002,901       | $26,044,338      
|Common shares outstanding          | $    42,989,051     | 42,928,385        | 42,865,219        | 38,633,992        | 35,043,897       



11





---



Exchange Rates



The following table sets forth information as to the average period end, high and low exchange rate for Canadian dollars and US dollars for the periods indicated based on the noon buying rate in New York City for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York (US$1.00 = S/B C$1.0838 as at July 28, 2009).



|                       |         |            |      |     
|---------------------- | ------- | ---------- | ---- | ----
|Year Ended December 31 | Average | Period End | High | Low 
|2008                   | 1.07    | 1.22       | 1.30 | 0.97
|2007                   | 1.07    | 0.99       | 1.19 | 0.92
|2006                   | 1.13    | 1.16       | 1.17 | 1.10
|2005                   | 1.22    | 1.14       | 1.27 | 1.14
|2004                   | 1.26    | 1.20       | 1.40 | 1.18
|2003                   | 1.35    | 1.29       | 1.58 | 1.29



The following table sets out the high and low exchange rate for each month during the previous six months:



|              |        |       
|------------- | ------ | ------
|Month         | High   | Low   
|June 2009     | $1.163 | $1.078
|May 2009      | $1.205 | $1.089
|April 2009    | $1.271 | $1.198
|March 2009    | $1.306 | $1.219
|February 2009 | $1273  | $1.213
|January 2009  | $1.277 | $1.176
|December 2008 | $1.301 | $1.182



B.

CAPITALIZATION AND INDEBTEDNESS



The following table sets forth our capitalization and indebtedness as of December 31, 2008 and December 31, 2007 in accordance with Canadian GAAP.  This section should be read in conjunction with the consolidated financial statements and related notes contained elsewhere in this Annual Report.



|                                      |                                                                     |                         |                        
|------------------------------------- | ------------------------------------------------------------------- | ----------------------- | -----------------------
|                                      |                                                                     | As of
December 31, 2008 | As of
December 31, 2007
|Shareholders equity                  |                                                                     |                        
|                                      | Common shares, unlimited number of common shares without par value: |                         |                        
|                                      | 42,989,051 (2007  42,928,385) issued and outstanding shares        | 34,021,922              | 33,941,510             
|                                      | Contributed surplus                                                 | 4,930,097               | 3,721,117              
|                                      | Deficit                                                             | (37,082,401)            | (23,818,096)           
|Total capitalization and indebtedness | 1,869,618                                                           | 13,844,531             





C.

REASONS FOR THE OFFER AND USE OF PROCEEDS



Not applicable.





12





---

D.

RISK FACTORS



In addition to the other information presented in this Annual Report, you should consider the following carefully in evaluating the Company and its business.  This Annual Report contains forward-looking statements that involve risks and uncertainties.  The Companys actual results may differ materially from the results discussed in the forward-looking statements.  Factors that might cause such a difference include, but are not limited to, those discussed below and elsewhere in this Annual Report.



Limited Operating History



The Company has no history of earnings and there are no known commercial quantities of mineral reserves on the Companys property. Accordingly it is not possible to predict when, if at all, the Company will generate revenues or income from its operations.



Exploration and Development is a Speculative Business



Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits that, though present, are insufficient in quantity and quality to return a profit from production.



The marketability of minerals acquired or discovered by the Company may be affected by numerous factors which are beyond the control of the Company and which cannot be accurately predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment, the availability of mining equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental protection, the combination of which factors may result in the Company not receiving an adequate return of investment capital.



All of the properties in which the Company has an interest or a right to acquire an interest are in the exploration stages only and are without a known body of commercial ore. Development of the subject mineral properties would follow only if favourable exploration results are obtained. The business of exploration for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines.



There is no assurance that the Companys mineral exploration and development activities will result in any discoveries of commercial bodies of ore. The long-term profitability of the Companys operations will in part be directly related to the costs and success of its exploration programs, which may be affected by a number of factors.  Substantial expenditures are required to establish reserves through drilling and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis.



No Assurance of Production



Mineral exploration is highly speculative in nature, involves many risks, and frequently does not lead to the discovery of commercial reserves of minerals. While the rewards can be substantial if commercial reserves of minerals are found, there can be no assurance that the Company's past or future exploration efforts will be successful, that any production  there from will be obtained, or that any such production which is attempted will be profitable.



Industry Specific Risks



The exploration, development, and production of minerals are capital-intensive businesses, subject to the normal risks and capital expenditure requirements associated with mining operations, which even a combination of experience, knowledge and careful evaluation may not be able to overcome.





13





---

Factors Beyond Company's Control



Discovery, location and development of mineral deposits depend upon a number of factors, not the least of which is the technical skill of the exploration personnel involved. The exploration and development of mineral properties and the marketability of any minerals contained in such properties will also be affected by numerous factors beyond the control of the Company.  These factors include government regulation, high levels of volatility in market prices, availability of markets, availability of adequate transportation and refining facilities and the imposition of new or amendments to existing taxes and royalties. The effect of these factors cannot be accurately predicted.



Uninsured Risks



The Companys mining activities are subject to the risks normally inherent in mineral exploration, including but not limited to environmental hazards, industrial accident, flooding, periodic or seasonal interruptions due to climate and hazardous weather conditions, and unusual or unexpected formations. Such risks could result in damage to or destruction of mineral properties or production facilities, personal injury, environmental damage, delay in mining and possible legal liability.



The Company may become subject to liability for pollution and other hazards against which it cannot insure or against which it may elect not to insure because of high premium costs or other reasons. The payment for such liabilities would reduce the funds available for exploration and mining activities and may have a material impact on the Company's financial position.



Currency Exchange Rates



The Company maintains its accounts in US dollar, Canadian dollar and Chinese Renminbi (RMB) denominations. The government of the Peoples Republic of China (PRC or China) maintained the exchange rate between the RMB and the US dollar as a constant until July 2005 and thus exchange rates between the Canadian dollar and the RMB fluctuated in tandem with the changing exchange rates between the US and Canadian dollars. Since July 2005, the value of the RMB has been tied to a basket of currencies of Chinas largest trading partners.Given that most of Minco Golds expenditures are currently and are anticipated to be incurred in Canadian dollars and RMB, Minco Gold is subject to foreign currency fluctuations which may materially affect its financial position and operating results. The Company does not currently have a formal hedging program to mitigate foreign currency exchange risks.



Competition



The precious metal minerals exploration industry and mining business are intensely competitive. The Company competes with numerous other companies and individuals in the search for and the acquisition of attractive precious metal mining properties. Many of these competitors have substantially greater technical and financial resources than the Company. Competition could adversely affect the Companys ability to acquire suitable properties or prospects in the future.



Future Financing



The Company has limited financial resources and has no assurance that additional funding will be available to it for further exploration and development of its projects. There can be no assurance that the Company will be able to obtain adequate financing in the future or that the terms of such financing will be favourable. Failure to obtain such additional financing could result in delay or indefinite postponement of further exploration and development of its projects with the possible loss of such properties.



Uncertainty of Estimates



Resource and reserve estimates of minerals are inherently imprecise and depend to some extent on statistical inferences drawn from limited drilling, which may prove unreliable. Although estimated recoveries are based upon test results, actual recovery may vary with different rock types or formations in a way which could adversely affect operations.





14





---

Management and Directors



The success of the Company is currently largely dependent on the performance of its officers. The loss of the services of these persons will have a materially adverse effect on the Companys business and prospects. There is no assurance the Company can maintain the services of its officers or other qualified personnel required to operate its business. Failure to do so could have a material adverse affect on the Company and its prospects. The Company has not purchased any key-man insurance with respect to any of its directors or officers to the date hereof. The loss of any key officer of the Company could have an adverse impact on the Company, its business and its financial position.



Potential Conflicts of Interest



None of the Companys officers and directors devotes their full-time efforts to the Company. Certain members of the Companys board and officers of the Company also serve as officers or directors of other companies involved in natural resource exploration and development. Consequently, there exists the possibility that those directors and officers may be in a position of conflict. In particular, Ken Z. Cai serves as Director and CEO in each of the Company, Minco Silver and Minco Base Metals. In addition, Paul Zhang serves as Chief Financial Officer and Vice President Finance and Dwayne Melrose serves as Vice President, Exploration with each of the Company, and Minco Silver and as a Director of Minco Base Metals. Any decision made by those directors and officers will be made in accordance with their duties and obligations to deal fairly and in good faith with the Company and such other companies. In addition, such directors and officers will declare, and refrain from voting on, any matter in which such directors or officers may have a conflict of interest. Nevertheless, there remains the possibility that the best interests of the Company will not be served because its directors and officers have other commitments.



Fluctuating Mineral Prices



Factors beyond the control of the Company may affect the marketability of metals discovered, if any. Metal prices have fluctuated widely, particularly in recent years. The effect of these factors cannot be predicted.



The Mining Industry Is Highly Speculative



The Company is engaged in the exploration for minerals which involves a high degree of geological, technical and economic uncertainty because of the inability to predict future mineral prices, as well as the difficulty of determining the extent of a mineral deposit and the feasibility of extracting it without the expenditure of considerable money.



Penny Stock Rules May Make It More Difficult to Trade the Companys Common Shares



The SEC has adopted regulations which generally define a penny stock to be any equity security that has a market price, as defined, less than US$5.00 per share or an exercise price of less than US$5.00 per share, subject to certain exceptions.  The Company's securities may be covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors such as institutions with assets in excess of US$5,000,000 or an individual with net worth in excess of US$1,000,000 or annual income exceeding US$200,000 or US$300,000 jointly with his or her spouse.  For transactions covered by this rule, the broker-dealers must make a special suitability determination for the purchase and receive the purchasers written agreement of the transaction prior to the sale.  Consequently, the rule may affect the ability of broker-dealers to sell the Company's securities and also affect the ability of the Company's investors to sell their shares in the secondary market.





15





---

The Company is a Passive Foreign Investment Company for United State Federal Income Tax Purposes



The Company believes that it is not a passive foreign investment company (PFIC) for United States Federal income tax purposes because it does not earn 75% or more of its gross income from passive sources, or more than 50% of the value of its assets during the year is attributable to assets that produce or are held for the production of passive income.   See Item 10.E. Taxation - United States Tax Consequences - Passive Foreign Investment Companies.



Risks Related to Doing Business in China



PRC Political and Economic Considerations



The business operations of the Company will be located in, and the revenues of the Company derived from activities in, the PRC. Likewise, the Companys operations in the PRC are currently conducted through and with the assistance of Minco China, a Chinese company. Accordingly, the business, financial condition and results of operations of the Company could be significantly and adversely affected by economic, political and social changes in the PRC. The economy of the PRC has traditionally been a planned economy, subject to five-year and annual plans adopted by the state, which set down national economic development goals. Since 1978, the PRC has been moving the economy from a planned economy to a more open, market-oriented system.



The economic development of the PRC is following a model of market economy under socialism. Under this direction, it is expected that the PRC will continue to strengthen its economic and trading relationships with foreign countries and that business development in the PRC will follow market forces and the rules of market economics. However, the Chinese government continues to play a significant role in regulating industry by imposing industrial policies. In addition, there is no guarantee that a major turnover of senior political decision makers will not occur, or that the existing economic policy of the PRC will not be changed. A change in policies by the PRC could adversely affect the Companys interests in China by changes in laws, regulations or the interpretation thereof, confiscatory taxation, restrictions on currency conversion, imports and sources of supplies, or the expropriation of private enterprises.



In order to conduct exploration and development of mineral deposits in the PRC, resource companies are required to obtain licenses and permits from the relevant authorities in the PRC, including a business license which authorizes companies to carry on business in the PRC. The business license of Minco China is subject to an annual review process pursuant to which it must pass annual inspections of the Administration for Industry and Commerce in the PRC. As a result, if Minco China does not pass its annual review it will not be authorized to carry on business in the PRC which may adversely affect the Companys interests in its properties. The Company believes that it and Minco China are operating in compliance with all applicable rules and regulations.



The purpose set out in Minco Chinas articles of association includes, among other things, the application of advances and appropriate exploration and mining technology and scientific methods to develop mine exploration and development software and technology, improve exploration precision and accuracy, and to reduce exploration risks.  Minco Chinas scope of business according to its articles of association includes, among others, the exploration of mineral deposits, development of exploration technology, and the development of software for mine exploration and development.  However, Minco Chinas approved business scope contained in its business licence does not clearly state that Minco China is approved to conduct exploration and mining business because Minco China has not obtained the approval from the Ministry of Commerce for its exploration and mining business.  Minco China has applied to amend the scope of its business to more clearly include mining exploration and development.  Minco Chinas application has been approved by the Beijing Metropolitan Department of Commerce and is subject to the final approval of the Ministry of Commerce.  While Minco China expects that its business scope application will be approved, no guarantee can be given that the Ministry of Commerce approval will ultimately be obtained.



Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions there under, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations. Amendments to current laws, regulations and permits governing operations and activities of companies



16





---

engaged in mineral resource exploration and development, or more stringent implementation thereof, could have a material adverse impact on the Company and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in development of new mining properties.  The Companys various property interests and potential property rights in the PRC involve various Chinese state-sector entities, including the GGEDC and 757 Team, whose actions and priorities may be dictated by government policies, instead of purely commercial considerations.  Additionally, companies (such as Minco China) with a foreign ownership component operating in the PRC may be required to work within a framework which is different to that imposed on domestic Chinese companies. The Chinese government is opening up opportunities for foreign investment in mining projects and this process is expected to continue. However, if the Chinese government should reverse this trend and impose greater restrictions on foreign companies, the Companys business and future earnings could be negatively affected.



PRC Legal System and Enforcement



Most of the material agreements to which the Company or its affiliates are party or will be party in the future with respect to mining assets in the PRC are expected to be governed by Chinese law and some may be with Chinese governmental entities. The PRC legal system embodies uncertainties that could limit the legal protection available to the Company and its shareholders. The outcome of any litigation may be more uncertain than usual because: (i) the experience of the PRC judiciary is relatively limited, and (ii) the interpretation of PRC laws may be subject to policy changes reflecting domestic political changes.  The laws that do exist are relatively recent and their interpretation and enforcement involve uncertainties, which could limit the available legal protections. Even where adequate law exists in the PRC, it may be impossible to obtain swift and equitable enforcement of such law or to obtain enforcement of judgments by a court of another jurisdiction. The inability to enforce or obtain a remedy under such agreements would have a material adverse impact on the Company.



Many tax rules are not published in the PRC, and those that are published can be ambiguous and contradictory, leaving a considerable amount of discretion to local tax authorities. PRC currently offers tax and other preferential incentives to encourage foreign investment.  However, the tax regime of the PRC is undergoing review and there is no assurance that such tax and other incentives will continue to be available. There is also no guarantee that the pursuit of economic reforms by the State will be consistent or effective and as a result, changes in the rate or method of taxation, reduction in tariff protection and other import restrictions, and changes in state policies affecting the mining industry may have a negative effect on its operating results and financial condition.



Environmental Considerations



Although the PRC has enacted environmental protection legislation to regulate the mining industry, due to the very short history of this legislation, national and local environmental protection standards are still in the process of being formulated and implemented. The legislation provides for penalties and other liabilities for the violation of such standards and establishes, in certain circumstances, obligations to rehabilitate current and former facilities and locations where operations are being or have been conducted.  The Company believes that there are no outstanding notices, orders or directives from central or local environmental protection agencies or local government authorities alleging any breach of national or local environmental quality standards by Minco China, GGB, the 757 Team or any other party in respect of the Companys properties in China. Although the Company intends to fully comply with all environmental regulations, there is a risk that permission to conduct exploration and development activities could be withdrawn temporarily or permanently where there is evidence of serious breaches of such standards.





17





---

Reliability of Information



While the information contained herein regarding the PRC has been obtained from a variety of sources, including government and private publications, independent verification of this information is not available and there can be no assurance that the sources from which it is taken or on which it is based are wholly reliable.



Ownership and Regulation of Mineral Resources is subject to extensive government regulation



Ownership of land in China remains with the State, and governments at the national, regional and local levels, are extensively involved in the regulation of exploration and mining activities. Transfers of exploration and mining rights are also subject to governmental approval.  Failure or delays in obtaining necessary approvals could have a materially adverse affect on the financial condition and results of operations of the Company. Nearly all mining projects in the PRC require government approval. There can be no certainty that any such approvals will be granted (directly or indirectly) to Minco China in a timely manner, or at all.



18





---

ITEM 4.

INFORMATION ON THE COMPANY



Cautionary Note to U.S. Investors



We describe our properties utilizing mining terminology such as "measured resources" and "indicated resources" that are required by Canadian regulations but are not recognized by the SEC. U.S. investors are cautioned not to assume that any part of the mineral deposits in these categories will ever be converted into reserves.



A.

HISTORY AND DEVELOPMENT OF THE COMPANY



The Company is a British Columbia corporation whose common shares trade on the Toronto Stock Exchange (TSX) under the trading symbol MMM.  The Companys common shares were also listed in the United Stated on the Over the Counter (OTC) market under the symbol MMAXF.  On November 11, 2005 the Company received listing approval from The American Stock Exchange (AMEX).  The Company began trading on the AMEX on November 22, 2005 with its trading symbol on the AMEX as MMK.  On February 1, 2006 the Company began trading its shares on the TSX and AMEX under its new name Minco Gold Corporation.  The symbol on the TSX remains unchanged and the new symbol on the AMEX is now MGH.  On May 9, 2007 the Company began trading on the Frankfurt Stock Exchange under the ticket symbol MI5 and the German securities code is (WKN) A0MKB6.



The Company was incorporated under the laws of the Province of British Columbia on November 5, 1982, under the name Caprock Energy Ltd.  On September 14, 1989 Caprock Energy Ltd. changed its name to Consolidated Caprock Resources Ltd. On February 8, 1993 Consolidated Caprock Resources Ltd. changed its name to Minco Mining & Metals Corporation.  On January 29, 2007 the Company changed its name to Minco Gold Corporation.  The principal executive office of the Company is located at Suite #2772, 1055 West Georgia Street, PO Box 11176, Vancouver, British Columbia, Canada,V6E 3P3, telephone 604-688-8002.  Through joint ventures with Chinese governmental entities, and others, the Company is engaged in the acquisition, exploration and development of precious and base metal mineral projects in the Peoples Republic of China.  The Company has subsidiaries which are also engaged in the acquisition and exploration of mineral projects in China. See Item 4, C - "Organizational Structure."  The Company has no affiliation with 3M Corporation, which company's trading symbol in the United States is MMM.



At present, all of the Company's properties are in the exploration stage and further exploration will be required before final evaluations as to the economic and legal feasibility can be determined.  None of the Companys properties has a known body of commercial ore, nor are any such properties at the commercial development or production stage.  No assurance can be given that commercially viable mineral deposits exist on any of the Companys properties.  Further, the Companys interest in joint ventures, which own properties, will be subject to dilution if the Company fails to expend further funds on the projects.  The Company has not generated cash flows from operations.  These facts increase the uncertainty and risks faced by investors in the Company.   For more information see Item 3. D. - "Risk Factors."



On November 15, 2008 the Company completed its intended Plan of Arrangement and spun off the White Silver Mountain Project to Minco Base Metals Corporation (Minco Base Metals) with the intention to build a strong base metals company in China.  The Plan of Arrangement resulted in the shareholders of the Company receiving one common share of Minco Base Metals for every five common share of the Company held on the record date, which was November 15, 2007.  The Company now holds no shares of Minco Base Metals.



The Company believes that separating its assets into two companies, with Shareholders holding proportionate interests in each company provides a significant opportunity to increase overall shareholder value, with increased flexibility to utilize and exploit their respective assets.



Concurrently, the Company has designated the Anba Property (held by the joint venture company on the White Silver Mountain project) as a non-material project and does not intend to perform any further work on the property. As a general policy, the Company does not intend to spend significant amount of money on a property until it has received all required approvals.



19





---



B.

BUSINESS OVERVIEW



Background



All disclosure about our exploration properties in this Annual Report conforms to the standards of United States Securities and Exchange Commission Industry Guide 7, Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations, other than disclosure of Mineral Resources, Measured Mineral Resources, Indicated Mineral Resources and Inferred Mineral Resources, which are geological and mining terms as defined in accordance with Canadian National Instrument 43-101 under the guidelines set out in the CIM Standards. U.S. investors in particular are advised to read carefully the definitions of these terms as well as the explanatory and cautionary notes in the Glossary, and the cautionary notes below, regarding use of these terms.



The Company is engaged in the exploration and acquisition of gold, silver and base metal properties in China.  The Company is an exploration stage company and none of the properties are currently beyond the advanced exploration stage. There is no assurance that a commercially viable mineral deposit exists on any of our properties and further exploration work may be required before a final evaluation as to the economic and legal feasibility is determined.  For further information, see Item 3.D  Risk Factors.  Since the signing of the Companys first co-operation agreement on the Chapuzi Project in China in 1995, the Company has been active in mineral exploration and property evaluations in China.  The Company intends, through its subsidiaries, to build a portfolio of base metal and precious metal properties in China.



The Company currently holds interest in a number of sino-foreign co-operative joint ventures with Chinese mining organizations, holding mineral rights in China, located in Sichuan, Xinjiang, Hebei, Henan Inner Mongolia, Guangdong and Gansu provinces.  The Company in 2004, spun-out its Silver and Base Metals properties to Minco Silver Corporation and Minco Base Metals Corporation respectively and retains its gold projects (Gobi Gold, Gold Bull Mountain, Longnan, Xiaoshan and Changkeng).  The equity markets for junior mineral exploration companies are unpredictable.  The Company may also enter into cost sharing arrangements through joint venture agreements.  While management believes that the quality of the concessions now held by the Company will attract joint venture partners in the short-term and medium-term, there is no guarantee that the terms would be as favorable as management would like.  For detailed property descriptions please refer to section D  Description of Property.



Financial (Canadian GAAP)



Year Ended December 31, 2008



In 2008, the Company generated cash of $2,928,000 from financing activities, compared to $573,000 in 2007. The 2008 financing consists of issuance of common shares in Minco Gold through the exercise of stock options, which generated $46,000, and the repayment of a loan from one related party, which generated cash of $2,881,000.



In 2008, the Company used cash of $10,656,000 to support operating activities compared to $4,883,000 in 2007.  The net loss in 2008 was $14,429,000. In order to reconcile the loss to cash flows, it is necessary to eliminate non-cash expenses, such as amortization of $101,000, stock-based compensation of $1,243,000, write down of mineral interest of $359,000 and equity loss on investment in Minco Silver of $949,000. In addition, certain other operating items did not generate cash including a dilution gain of $1,544,000, the write down of short-term investments of $76,000 and the minority non-controlling interest loss of $83,000. Its also necessary to consider cash used or generated by non-cash working capital items. In aggregate, non-cash working capital generated cash of $1,431,000.  Cash flow generated by discontinued operations in 2008 was $677,000 compared to $2,000 in 2007.





Year Ended December 31, 2007



In 2007, the Company generated cash of $573,000 from financing activities, compared to $4,940,000 in 2006. The 2007 financing included issuance of common shares in Minco Gold through the exercise of stock options, which



20





---

generated $106,000, the contribution of cash from non-controlling interests of $512,000, offset by the cost of a share buyback program of $44,000.



In 2007, the Company used cash of $4,883,000 to support operating activities compared to $5,387,000 in 2006.  The net loss in 2007 was $7,504,000. In order to reconcile the loss to cash flows, it is necessary to eliminate non-cash expenses, such as amortization of $55,000, stock-based compensation of $2,023,000, a gain on sale of Minco Silver shares of $2,978,000 and equity loss on investment in Minco Silver of $3,240,000. In addition, certain other operating items did not generate cash including a dilution gain of $191,000, write down of short-term investments of $233,000 and the minority non-controlling interest in the loss of $429,000. Its also necessary to consider cash used or generated by non-cash working capital items. In aggregate, non-cash working capital generated cash of $295,000.  Cash flow generated from discontinued operations in 2007 was $2,000 compared to $220,000 cash used in 2006.



Year Ended December 31, 2006



In 2006, the Company generated cash of $4,940,000 from financing activities, compared to $9,343,000 in 2005. The 2006 financing included issuance of common shares in Minco Gold, which generated $4,853,000, including the exercise of options generating $1,130,000 and the exercise of warrants yielding $3,723,000.  During the period from January 1, to November 16, 2006, Minco Silver generated a total of $87,000 from the issuance of common shares through the exercise of warrants.



In 2006, the Company used cash of $5,387,000 to support operating activities compared to $3,530,000 in 2005.  The net loss in 2006 was $1,589,000. In order to reconcile the loss to cash flows, it is necessary to eliminate non-cash expenses, such as amortization of $52,000, stock-based compensation of $2,820,000 and equity loss on investment in Minco Silver of $521,000. In addition, certain other operating items did not generate cash including a dilution gain of $5,213,000, write up of short-term investments of $19,000 and the minority non-controlling interest in the loss of $1,382,000. Its also necessary to consider cash used or generated by non-cash working capital items. In aggregate, non-cash working capital used cash of $577,000.



Agreements



The Fuwan Joint Venture



On August 20, 2004, the Company, Minco Silver, Minco China and Minco BVI entered into an assignment agreement (the Assignment Agreement) whereby Minco Gold, Minco BVI and Minco China assigned to Minco Silver their respective interests in each of the following:



a)

the preliminary Fuwan Joint Venture agreement dated April 16, 2004 and amended August 18, 2004 between Minco BVI and GGB;

b)

the right to earn the 51% interest in the silver mineralization to be acquired by Minco Gold pursuant to the Changkeng JV Agreement; and

c)

certain additional exploration permits identified by and to be acquired by Minco China, namely the Additional Permits.



In consideration for the assignment of the foregoing interests, Minco Silver issued 14,000,000 common shares to the Company.



The Company holds 13,000,000 common shares of Minco Silver which, as of December 31, 2008, represents an ownership interest of 40.48% of Minco Silver.  During December 2007, the Company sold 1,000,000 common shares of Minco Silver at a gross price of $3.25 per share. This transaction resulted in a gain of $2,978,034.















21





---

The Changkeng Joint Venture



On April 16, 2004, Minco Gold, GGB, Zhenjie and Baojiang entered into a preliminary joint venture agreement to explore and develop the mineral property underlying the Changkeng Permit. The target mineral on the Changkeng Property is gold but the property is known to also contain silver mineralization.



On August 20, 2004, Minco Silver, Minco Gold, Minco China and Minco BVI entered into the Assignment Agreement whereby Minco Gold, Minco BVI and Minco China assigned to Minco Silver their respective interests in, among other things noted above, Minco Golds right to earn up to a 51% interest in the Changkeng Propertys silver mineralization pursuant to the Preliminary Changkeng JV Agreement.



The Preliminary Changkeng JV Agreement was superseded by a formal joint venture agreement dated September 28, 2004 made among the original four parties to the preliminary joint venture agreement and a fifth company, GD Gold. The Changkeng JV Agreement provides for the establishment of a Sino-foreign joint venture with limited liability to be named Guangdong Minco-Jinli Mining Co., Ltd. (the Changkeng JV) to explore and develop non-ferrous and precious metals resources. The Changkeng JV Agreement provides that the total investment of the Changkeng JV (the Changkeng Total Investment) will be 100 million RMB and that the registered capital of the Changkeng JV will be 50 million RMB.



The contribution proportions of the parties to the preliminary Changkeng JV Agreement were as follows: GGB - 19%; Minco Gold - 51%; Zhenjie - 18%; Baojiang - 10%; and GD Gold - 2%. In order to earn a 51% equity interest in the Changkeng JV, Minco Gold must contribute 51 million RMB of the Changkeng Total Investment in six instalments.  The parties to the Changkeng JV Agreement agreed that following the establishment of the Changkeng JV, the parties would take the necessary steps to acquire the Changkeng Permit from the 757 Team for total consideration of 33 million RMB (approximately $5.88 million Canadian Dollars).



On February 8, 2007, Minco China replaced Minco Gold as the controlling shareholder in MingZhong by signing a joint venture agreement with the JV partners to form Guangzhou MingZhong Mining Co., Ltd (MingZhong); GD Gold chose not to participate in the new agreement. This agreement superseded the previous JV agreement on September 28, 2004. The contribution proportions of the parties to the Changkeng JV Agreement are as follows: Minco China - 51%; GGB 21%; Zhenjie - 18%; Baojiang - 10%. A business license was granted in 2007 to Guangzhou Mingzhong Mining Co. Ltd. (Mingzhong), a co-operative joint venture established among Minco China, GGB, and two private Chinese companies to jointly explore and develop the Changkeng Property.  Under the terms of the agreement, Minco China had the right to earn a 51% equity interest in Mingzhong with a total contribution of RMB 51 million (approx. US $7.1 million).  The other shareholders will contribute RMB 49 million (approx. US $6.8 million) for their 49% equity interest in Mingzhong.



The original Changkeng Permit has been renewed each year since 2004 and is currently in good standing until September 10, 2009.



Mingzhong has signed a purchase agreement to buy a 100% interest in the Changkeng Exploration Permit on the Changkeng Property from the 757 Team.  The total purchase price (the Purchase Price) is  RMB 49 million (approx. US $6.8 million), payable in three instalments within two years.  The Ministry of Lands and Resources has approved the Purchase Price and the transfer of the Changkeng Exploration Permit from 757 Team to Mingzhong.  The Company can now proceed with the exploration program on the Changkeng Property with the granting of the business license and the transfer of the Changkeng Exploration Permit.



The Silver Standard Agreement



Minco Gold, Minco Silver and Silver Standard Resources Inc. (Silver Standard) entered into a strategic alliance agreement dated October 4, 2004 (the Silver Standard Agreement). The Silver Standard Agreement provides that Minco Gold shall acquire silver-dominant projects in China only through Minco Silver and that all silver-dominant projects located in China that are brought to the attention of Minco Gold shall be referred to Minco Silver.  The Silver Standard Agreement further provides that Silver Standard shall not actively explore for or seek out silver-dominant



22





---

projects located in China but shall be entitled to acquire interests in silver-dominant projects located in China that are brought to its attention on an unsolicited basis.



In the event a silver-dominant property is brought to the attention of either Minco Gold or Minco Silver and Minco Silver determines not to acquire an interest in the property, Minco Gold or Minco Silver, as the case may be, shall provide Silver Standard with the opportunity to acquire an interest in that property prior to offering the opportunity to third parties.  Similarly, in the event that a silver-dominant property is brought to the attention of Silver Standard and it decides not to acquire an interest in that property, Silver Standard shall provide Minco Silver with the opportunity to acquire an interest in that property prior to providing the opportunity to third parties.



The 757 Team Agreement



Pursuant to an agreement made between the 757 Team and Minco China dated November 19, 2004, as amended November 19, 2004 (the 757 Transfer Agreement), the 757 Team agreed to sell to Minco China its interests in the property which is the subject of the Fuwan Exploration Permit in consideration for the purchase price of 10.33 million RMB (approximately $1.5 million). Pursuant to a confirmation agreement dated May 5, 2005 among the Company, Minco China and Minco Silver, Minco China has confirmed that it holds its interest in the Fuwan Exploration Permit in trust for the Fuwan JV.



The acquisition of the 757 Teams interests in this exploration permit was completed in 2007 and the Fuwan Exploration Permit, which replaces the original exploration permit held by the 757 Team, was issued to Minco China and is held in trust for the Fuwan Joint Venture.  The 757 Transfer Agreement provides that the purchase price for the Fuwan Exploration Permit is to be paid in three installments as follows:



(a)

40% (4,132,000 RMB or $600,000) within 30 days of receipt of approval from MOLAR to the transfer of the Fuwan Exploration Permit and within one week of Minco Chinas decision to proceed with the purchase following the receipt of results of a drilling inspection program on the Fuwan Property (the Commencement Date);

(b)

30% (3,099,000 RMB or $460,000) within 12 months after the Commencement Date; and

(c)

30% (3,099,000 RMB or $460,000) within 24 months after the Commencement Date.



The Commencement Date was established as July 20, 2005. Minco Silver has paid 10,330,000 RMB (or $1,472,000) to the 757 Team, representing its 100% share of the foregoing payments.



BACKGROUND TO MINING IN CHINA



Gold has been produced in China for over 4,000 years.  In the past ten years China has grown into the world's fourth largest gold producer.  In 2003, gold production was over 200 tonnes.  It is presumed that early Chinese production was from placer deposits, and placer reserves still account for over 15% of Chinas total gold production.  The primary gold producing provinces in China are Shandong, Henan, Hebei, Shaanxi, Heilongjiang, Liaoning and Inner Mongolia. In 2003, there were 800 gold mines in China with stable production capacity of 150 tonnes per year.



The Chinese mining industry has traditionally been closed to foreign participation.  However, a change in the mineral resources law implemented by Chinas central government permits foreign participation.  The regulation of mining, including gold mining, in China is in a state of evolution from a totally planned, state-controlled condition to free market conditions, as experienced in developed and most developing countries.  The Ministry of Lands and Mineral Resources (MLR) administers geological exploration and also carries out exploration through its own personnel.  The following is a general description of China's foreign investment in China and the history of gold mining therein.



General Background



China is the worlds fourth-largest country, after Russia, Canada and the United States, with an area of over 9,596,960 square kilometers and the population of China is estimated at approximately 1.3 billion people.  Industry is the most important sector of the economy of the China, accounting for 52.9 percent of its gross domestic product (GDP) in 2004.  The mining industry accounted for an estimated 6 percent of the national industrial output in 2004.  Services accounted for 33.3 percent and



23





---

agriculture accounted for the remaining 13.8 percent of GDP in 2004.  In 2003, agriculture accounted for 49 percent of employment, while industry employed 22 percent and services 29 percent, with the mining industry employing more than 20 million people.  Since 1978, China has been moving from a planned economy to a more open, market-oriented system, with the result that the economic influence of privately owned enterprises and foreign investors has been steadily increasing.  The result of this economic development has been the quadrupling of GDP since 1978.



Agricultural output doubled in the 1980s, and industry has posted major gains, especially in coastal provinces, where foreign investment has helped spur output of both domestic and export goods.  Growth has not been without setbacks, as issues such as inflation, excessive capital investment, inefficient state owned enterprises and banks, and deterioration in the environment have periodically caused the State to backtrack, re-tightening central controls from time to time.



The Chinese legal system is comprised of written statutes and the interpretation of these statutes by the Peoples Supreme Court.  The General Principles of the Civil Law of the PRChas been in effect since January 1, 1987.  Continuing efforts are being made to improve civil, administrative, criminal and commercial law especially since Chinas accession into the WTO.  This includes the development of laws governing foreign investment in China, including a regime for Sino-foreign co-operative joint ventures and increased foreign participation in mineral resource exploration and mining.



Foreign Investment



Direct foreign investment in China usually takes the form of equity joint ventures (EJVs), co-operative joint ventures (CJVs) and wholly foreign-owned enterprises (WFOEs). These investment vehicles are collectively referred to as foreign investment enterprises (FIEs).



An EJV is a Chinese legal person and consists of at least one foreign party and at least one Chinese party.  The EJV generally takes the form of a limited liability company.  It is required to have a registered capital to which each party to the EJV subscribes.  Each party to the EJV is liable to the EJV up to the amount of the registered capital subscribed by it.  The profits, losses and risks of the EJV are shared by the parties in proportion to their respective contributions to the registered capital.  There are also rules and regulations governing specific aspects of EJVs or FIEs, including capital contribution requirements, debt-equity ratio, foreign exchange control, labour management, land use and taxation.  Unlike an EJV, a CJV may be, but need not be, incorporated as a separate legal entity.  The relationship between the parties is contractual in nature.  The rights, liabilities and obligations of the parties are governed by the CJV contract, as is each partys share of the goods produced or profits generated.  A CJV is considered a legal person with limited liability if it is incorporated as a separate legal entity.



The establishment of FIEs requires the approval of various Chinese government authorities. Generally, the approval authority is determined on the basis of the total amount of investment involved and the location of the project in question. The State Council must approve restricted foreign invested projects having an investment of US$100 million or more, encouraged and permitted foreign investment projects having an investment of US$500 million or more.  Subject to the above, the State Development and Reform Commission and the Ministry of Commerce are authorized by the State Council to approve foreign investment projects under restricted catalogue having an investment of US$50 million or more, and foreign investment projects under the encouraged or permitted catalogue having an investment of US$100 million or more. Provincial authorities are authorized to approve projects less than the above thresholds under various catalogues.  However, companies which conduct exploration or mining will be required to obtain the approval of the Ministry of Commerce as required by doc. 70 issued by the State of Council in 2000.



Co-operative Joint Ventures



Co-operative joint ventures (CJVs) are a form of foreign direct investment in China and are governed by the Law of the PRC on Sino-foreign Co-operative Joint Ventures(implemented in 1988 and revised in 2000) and the PRC Sino-foreign Co-operative Joint Venture Law Implementing Rules (implemented in 1995) (collectively the CJV Law).  Foreign investment in mining in China may also take the form of Sino-foreign equity joint ventures or wholly foreign owned enterprises.  The CJV Law permits a CJV to choose to operate as a legal person by forming a limited liability company, subject to approval by relevant governmental authorities.  In that case, the limited liability company owns all of the CJVs assets, and the liabilities of the investor are limited as provided in the co-operative joint venture contract entered into between them.  The CJV Law requires investors in a CJV to make an investment or other contribution, which may take the form of



24





---

cash, material, technology, land use rights, or other property rights.  Investors must satisfy their contribution obligations within the time frame prescribed by their joint venture contract subject to applicable PRC regulations.  Failure to satisfy contribution obligations by investors may lead to penalty and even to the business license being revoked by the governmental authorities.  Profits of a CJV are distributed as agreed by investors in the CJV contract and distributions need not be proportionate to each investors contributions. The CJV contract also determines how liquidation proceeds are to be distributed when the CJV contract is terminated.



Ownership and Regulation of Mineral Resources



Exploration for and exploitation of mineral resources in China is governed by the Mineral Resources Law of the PRC of 1986, amended effective January 1, 1997, and the Implementation Rules for the Mineral Resources Law of the PRC, effective March 26, 1994.  In order to further implement these laws, on February 12, 1998, the State Council issued three sets of regulations: (i) Regulation for Registering to Explore Mineral Resources Using the Block System, (ii) Regulation for Registering to Mine Mineral Resources, and (iii) Regulation for Transferring Exploration and Mining Rights (together with the mineral resources law and implementation rules being referred to herein as the Mineral Resources Law).  Under the Mineral Resources Law, the Ministry of Land and Resources (MOLAR) is charged with supervision nationwide of mineral resources prospecting and development.



The mineral resources administration authorities of provinces, autonomous regions and municipalities, under the jurisdiction of the State, are charged with supervision of mineral resources prospecting and development in their respective administration areas.  The peoples governments of provinces, autonomous regions and municipalities, under the jurisdiction of the State, are charged with coordinating the supervision by the mineral resources administration authorities on the same level.  The Mineral Resources Law, together with the Constitution of the PRC, provides that mineral resources are owned by the State, and the State Council, the highest executive body of the State, regulates mineral resources on behalf of the State.



The ownership of the State includes the rights to: (i) occupy, (ii) use, (iii) earn, and (iv) dispose of, mineral resources, regardless of the rights of owners or users of the land under which the mineral resources are located.  Therefore, the State is free to authorize third parties to enjoy its rights to legally occupy and use mineral resources and may collect resource taxes and royalties pursuant to its right to earn.  In this way, the State can direct and regulate the development and use of the mineral resources of China.



Mineral Resources Permits



The Provisions in Guiding Foreign Investment and the Industrial Catalogue in Guiding Foreign Investment, which was updated on April 1, 2002, January 1, 2005 and October 31, 2007 (collectively the Investment Guiding Regulations) govern foreign investment in China and categorize industries into four types where foreign investment is: (i) encouraged, (ii) permitted, (iii) restricted, or (iv) prohibited.  In mining industries, encouraged projects include the exploration and mining of coal (and its derived resources), iron, manganese, copper and zinc minerals, etc.  Restricted projects include the exploration and mining of the minerals of tin, antimony and other noble metals including gold and silver, etc.



Prohibited projects include the exploration and mining of radioactive minerals, and rare earth.  Foreign investment is permitted if the exploration and mining of the minerals is included in the other three categories.  Subject to the Investment Guiding Regulations, foreign investment in the exploration and mining of minerals is generally encouraged, in particular in relation to minerals in the western region of China.



Until January, 2000, the production, purchasing, distributing, manufacturing, using, recycling, import and export of silver was strictly regulated by the Regulations of the Peoples Republic of China on the Control of Gold and Silver.  Since then however, Chinas silver and gold markets have been fully opened and are now treated as commodities not subject to any special control or restrictive regulation by the State Council of China.  However, foreign investment in the exploration and mining of silver remains restricted.  China has adopted, under the Mineral Resources Law, a licensing system for the exploration and exploitation of mineral resources.  MOLAR and its authorized provincial or local departments are responsible for approving applications for exploration permits and mining permits.  The approval of MOLAR is also required to transfer those rights.





25





---

Applicants must meet certain conditions for qualification set by the State Council of China.  Pursuant to the Mineral Resources Law, the applicant for a mining right must present stated documents, including a plan for development and use of the mineral resources and an evaluation report of the environmental impact thereof.  The Mineral Resources Law allows individuals to excavate sporadic resources, sand, rocks and clay for use as materials for construction and a small quantity of mineral resources for sustenance.  However, individuals are prohibited from mining mineral resources that are more appropriate to be mined in scale by an enterprise, the specified minerals that are subject to protective mining by the State and certain other designated mineral resources, as may be determined by MOLAR.  Once granted, all exploration and mining rights are protected by the State from encroachment or disruption under the Mineral Resources Law.  It is a criminal offence to steal, seize or damage exploration facilities, or disrupt the working order of exploration areas.



Exploration Rights



Exploration permits are registered and issued to licensees.  The period of validity of an Exploration Permit can be no more than three years.  The Exploration Permit area is described by a basic block.  An Exploration Permit for metallic and non-metallic minerals has a maximum of 40 basic blocks.  When a mineral that is capable of economic development is discovered, the licensee may apply for the right to develop such mineral.  The period of validity of an Exploration Permit can be extended by application and each extension can be no more than two years in duration.  During the term of the Exploration Permit, the licensee has the privileged priority to obtain the mining right to the mineral resources in the exploration area covered by the Exploration Permit, provided the licensee meets the conditions of qualification for mining rights holders.  Further, the licensee has the rights, among others, to: (i) explore without interference within the area under permit during the permit term, (ii) construct exploration facilities, and (iii) pass through other exploration areas and adjacent ground to access the permitted area.



After the licensee acquires the Exploration Permit, the licensee is obliged to, among other things: (i) start exploration within the prescribed term, (ii) explore according to a prescribed exploration work scheme, (iii) comply with State laws and regulations regarding labour safety, water and soil conservation, land reclamation and environmental protection, (iv) make detailed reports to local and other licensing authorities, (v) close and occlude the wells arising from prospect work, (vi) take other measures to protect against safety concerns after the prospect work is completed, and (vii) complete minimum exploration expenditures as required by the Regulations for Registering to Explore Resources Using the Block.



Mining Rights



Holders of mining rights, or concessionaires, are granted licenses to mine for maximum terms of 10 to 30 years, based on magnitude of the mining project.  The concessionaires may extend the term of a mining license with an application at least 30 days prior to expiration of the term.  The user fee for the mining right is equal to RMB 1,000 per square kilometer per year.  Where there is any prior State investment in or State sponsored geological work conducted on a mineral property, the State must be compensated based on the assessed value of the State input before mining rights can be granted.  Concessionaires enjoy the rights, among others, to: (i) conduct mining activities during the term and within the mining area prescribed by the mining license, (ii) sell mineral products (except for mineral products that the State Council has identified for unified purchase by designated units), (iii) construct production and living facilities within the mine area, and (iv) use the land necessary for production and construction, in accordance with applicable law.



Concessionaires are obliged to, among other things: (i) conduct mine construction or mining activities within a defined time period, (ii) conduct efficiently production, rational mining and comprehensive use of the mineral resources, (iii) pay resources tax and mineral resources compensation (royalties) pursuant to law, (iv) comply with State laws and regulations regarding labour safety, water and soil conservation, land reclamation and environmental protection, (v) be subject to the supervision and management from both the departments in charge of geology and mineral resources, and (vi) complete and present mineral reserves forms and mineral resources development and use statistics reports, according to applicable law.



Transferring Exploration and Mining Rights



A mining enterprise may transfer its exploration or mining rights to others, subject to the approval of MOLAR or its authorized departments at provincial or local level, as the case may be.  An Exploration Permit may only be transferred if the transferor has: (i) held the Exploration Permit for two years as of the issue date, or discovered minerals in the exploration block, which are able to be explored or mined further, (ii) a valid and subsisting Exploration Permit, (iii) completed the



26





---

stipulated minimum exploration expenditure, (iv) paid the user fees and the price for prospect rights pursuant to the relevant regulations, and (v) obtained the necessary approval from the authorized department in charge of the minerals. Mining rights may only be transferred if the transferor needs to change the ownership of such mining rights because it is: (i) engaging in a merger or split, (ii) entering into equity or co-operative joint ventures with others, (iii) selling its enterprise assets, or (iv) engaging in a similar transaction that will lead to the alteration of the property ownership of the enterprise. A Mining Permit may only be transferred if the transferor has: (i) commenced production for no less than one year, (2) a valid and subsisting Mining Permit without title dispute, and (iii) paid the user fees,  the price for the mining right, resource tax and mineral resource compensation pursuant to laws.



Environmental Laws



In the past ten years, laws and policies for environmental protection in China have moved towards stricter compliance and stronger enforcement. The basic laws in China governing environmental protection in the mineral industry sector of the economy are the Environmental Protection Law, the Environment Impact Assessment Law and the Mineral Resources Law.  The State Administration of Environmental Protection and its provincial counterparts are responsible for the supervision of implementation and enforcement of environment protection laws and regulations.  Provincial governments also have the power to issue implementing rules and policies in relation to environmental protection in their respective jurisdictions.  Applicants for mining rights must submit environmental impact assessments and those projects that fail to meet environmental protection standards will not be granted licenses. In addition, after exploration the licensee must perform water and soil maintenance and take steps towards environmental protection.  After the mining rights have expired or the concessionaire stops mining during the permit period and the mineral resources have not been fully developed, the concessionaire shall perform water and soil maintenance, land recovery and environmental protection in compliance with original development scheme, or must pay the costs of land recovery and environmental protection.  After closing, the mining enterprises shall perform water and soil maintenance, land recovery and environmental protection in compliance with mine closure approval reports, or must pay the costs of land recovery and environmental protection.



Sino-Foreign Co-Operative Joint Ventures



Legal Framework



Each of the various joint venture entities through which the Company may carry out business in China has been or will be formed under the laws of China as a Sino-foreign co-operative joint venture enterprise and is or will be a legal person with limited liability.  All joint ventures entered into, or to be entered into, by the Registrant must be approved by both the Ministry of Commerce (MOC) and the State Development and Reform Commission (SDRC) in Beijing or their provincial bureaus.



The establishment and activities of each of the Companys joint venture entities are governed by the law of the Peoples Republic of China on Sino-foreign co-operative joint ventures and the regulations promulgated there under (the China Joint Venture Law).  As with all Sino-foreign co-operative joint venture enterprises, the Companys joint venture enterprises will be subject to an extensive and reasonably well-developed body of statutory law relating to matters such as establishment and formation, distribution of revenues, taxation, accounting, foreign exchange and labor management.  On January 1, 1997, an amendment to the Mineral Resources Law of China became effective.  Among other things, the amended law deals with foreign ownership of Chinese mines and mineral rights, and allows, under some circumstances, the transfer of exploration rights and mining rights.  Pursuant to this law, new regulations were made effective on February 12, 1998.



The MOLAR administers a new computerized central mineral title registry established in Beijing, which has streamlined the application for exploration and mining permits.  Under existing laws, in order to form a mining joint venture, foreign companies always complete two levels of agreements. In general, the first level of agreement is a letter of intent or a memorandum of understanding, which sets forth broad areas of mutual co-operation.  The second level of agreement is a joint venture contract that sets out the entire agreement among the parties and contemplates the establishment of a Chinese Legal Person, a separate legal entity.  Before a joint venture can be created, an assessment or feasibility study of the proposed joint venture must be prepared and approved by the SDRC or its provincial bureau. Therefore, upon completing a co-operation agreement, the parties prepare a feasibility study of the proposed joint venture and submit this feasibility study to the SDRC for the project verification, the granting of which depends upon



27





---

whether the proposed project broadly conforms to the economic policy issued by the government and any prescribed regulations.



Upon receiving this approval in principle, the parties then negotiate and prepare a joint venture contract and submit it to the MOC, or its provincial bureaus, which approves the specific terms of all joint venture contracts between Chinese and foreign parties.  Within one month after the receipt of a certificate of approval from MOC, a joint venture must register with the State Administration of Industry and Commerce (the SAIC).  Upon registration of the joint venture, a business license is issued to the joint venture.  The joint venture is officially established on the date on which its business license is issued.  Following the receipt of its business license, the joint venture applies to the MOLAR to approve and grant to the joint venture its exploration permits and/or mining licenses.



Governance and Operations



Governance and operations of a Sino-foreign cooperative joint venture enterprise are governed by the Chinese joint venture law, the parties joint venture agreement and by the articles of association of each joint venture entity.  Pursuant to relevant Chinese laws, certain major actions of the joint venture entity require unanimous approval by all of the directors present at the meeting called to decide upon actions, such as amendments to the joint venture agreement and the articles of association; increase in, or assignment of, the registered capital of the joint venture; a merger of the joint venture with another entity; or the termination and dissolution of the joint venture enterprise.



Term



Under the joint venture agreement, the parties will agree to a term of the joint venture enterprise from the date a business license is granted.  However, the term may be extended with the unanimous approval of the board of directors of the joint venture entity and the approval of the relevant Chinese governmental entities.



Employee Matters



Each joint venture entity is subject to the Chinese employment laws and regulations.  In compliance with these laws and regulations, the management of the joint venture enterprise may hire and discharge employees and make other determinations with respect to wages, welfare, insurance and discipline of its employees.  Generally, in the joint venture agreement, the standard of salary, social welfare insurance and traveling expenses of senior management will be determined by the board of directors of the joint venture entity.  In addition, the joint venture will establish a special fund for enterprise development, employee welfare and incentive fund, and a general reserve.  The amount of after-tax profits allocated to the special funds is determined at the discretion of the board of directors on an annual basis.



Distributions



After provision for a reserve fund, an enterprise development fund and an employee welfare and incentive fund, and after provision for taxation, the profits of a joint venture enterprise will be available for distribution to the Company and its other shareholders, such distribution to be authorized by the board of directors of the joint venture entity.



Assignment of Interest



Under joint venture agreements and the Chinese Joint Venture Law, any assignment of an interest in a joint venture entity must be approved by the relevant governmental authorities.  The China Joint Venture Law also provides for pre-emptive rights and consent of the other party for proposed assignments by one party to a third party.



Liquidation



Under the Chinese Joint Venture Law and joint venture agreements, the joint venture entity may be liquidated in certain limited circumstances including the expiry of its term or any term of extension, inability to continue operations due to severe losses, failure of a party to honor its obligations under the joint venture agreement and articles of association in such a manner as to impair the operations of Chinese governmental entitles and force majeure.





28





---

Resolution of Disputes



In the event of a dispute between the parties, attempts will be made to resolve the dispute through consultation. This is the practice in China and the Company believes that its relationship with Chinese governmental entities is such that it will be able to maintain a good working relationship with respect to the operations of its joint venture enterprises.  In the absence of a friendly resolution of any dispute, the parties may agree that the matter will be settled by an arbitration institute.  The parties may jointly select an arbitration institution to resolve disputes in the joint venture contract if it has been stated in the joint venture contract or when the dispute is raised.  Awards of the arbitration institute are enforceable in accordance with the laws of China by Chinese courts.   In the absence of a valid arbitration agreement, both parties or either party may decide to resort to Chinese courts to resolve disputes between the parties over the terms of the joint venture contract.



Expropriation



The Chinese Joint Venture Law also provides that China generally will not nationalize and requisition enterprises with foreign investment.  However, in special circumstances where demanded by social public interest, enterprises with foreign investment may be requisitioned by legal procedures, but appropriate compensation will be paid.



Division of Revenues



Revenues derived from operating joint ventures, once all necessary agreements, permits and licenses are obtained, will be divided between the Company and the entities which are parties to the joint venture according to the terms of each individual joint venture, which terms will vary from project to project.  The Company will be subject to various taxes on its revenues.



C.

ORGANIZATIONAL STRUCTURE



Minco Gold was incorporated under the laws of the Province of British Columbia on November 5, 1982, under the name Caprock Energy Ltd.  On February 19, 1996, current management acquired its interests in Minco Gold pursuant to the PCR Agreement, and the Teck-Cominco Agreements.  The following chart sets forth the Company's corporate structure, including its significant subsidiaries, related parties and their jurisdictions of incorporation along with the various mineral properties held by each of them, as at the date of this Annual Report:

















































29





---

INTERCORPORATE RELATIONSHIPS

MINCO GOLD CORPORATION

(formerly Minco Gold & Metals Corporation)









D.

DESCRIPTION OF PROPERTIES



The following is a discussion of the properties that Minco Gold holds directly and through its subsidiaries.









30





---

I.

CHANGKENG GOLD PROPERTY



The detailed history and background of Minco Golds Changkeng Gold Property is disclosed above under The Changkeng Joint Venture.





Location



The Changkeng gold deposit is located approximately 45 km southwest of Guangzhou, the fourth largest city in China with 13 million people and the capital city of Guangdong Province. The project is adjacent to Minco Silvers Fuwan Silver deposit and situated close to well established water, power and transportation infrastructure.



Background



Gold was discovered at Changkeng in early 1990 by systematic follow up of stream sediment and soil geochemical anomalies identified from surveys completed by the Guangdong Provincial government (Regional Geological Survey Team of Guangdong Bureau of Geological Exploration). Illegal, small scale mining began in 1991 and removed most of the oxidized, near surface mineralization. Based on 8 trenches and 21 diamond drill holes, P&E Mining Consultants ((P&E) of Brampton, Ont. prepared an initial NI 43-101 compliant resource estimate on the deposit in March 2008.  The current resources residing on the Changkeng deposit include 379,000 ounces of gold indicated and 333,400 ounces of gold inferred.



Since 1949, mineral exploration in China has been performed at all scales by professional geologists and engineers organized into a series of brigades, each with specific mandates, geological, geochemical, mineral deposits evaluation, etc.  There is no historical record of gold mining in the area before the discovery of gold in early 1990.  Small-scale mining activities began in 1991 and a large portion of the oxidized mineralized zones between lines seven and eight have been mined out.  A summary of this history follows:



1959  1971

Geological exploration for pyrite, coal and uranium was carried out intermittently by different geological teams.

1986  1989

The Chinese government's Regional Geological Survey Team of Guangdong Bureau of Geological Exploration conducted a regional stream-sediment sampling program at 1:200,000 scale.  Significant gold and silver geochemical anomalies were delineated in the Changkeng-Fuwan area.  The gold and silver anomalies were followed-up with detailed soil sampling at 1:50,000 scale and it was proved that there is good potential for gold-silver mineralization in the area.

1990  1994

The Changkeng-Fuwan gold and silver deposits were discovered in 1990 during the following-up of the 1:50,000 soil geochemical anomalies by the 757 Team .  Detailed exploration was conducted at the Changkeng-Fuwan gold and silver zone and its adjacent area from 1990 to 1995.

1990

Report on reconnaissance investigation of gold mineralization in Changkeng, Gaoyao County, Guangdong Province was completed by the 757 Team.

1992

Geochemical soil sampling and mercury survey over the Luzhou-Shizhou area of 24 square kilometers to the south of Changkeng-Fuwan gold and silver deposits were conducted at 1:10,000 scale.  Test drilling over two geochemical anomalies intersected silver mineralization at Dieping and Luzhou areas.

1993

Seismic and electrical surveys were conducted along nine profiles over the Luzhou-Shizhou area.  Sections with good potential for gold and silver were delineated.



Drilling Results



Minco completed a limited drilling program at Changkeng in October 2004, confirming the results from previous Chinese drilling and the continuity of the Zone 1. All the holes were drilled vertically and true widths of the intersections have not yet been established. The holes are drilled on a northwest-southeast grid approximating the dip direction of the mineralized zone.



In late 2007, six holes were drilled to expand and confirm the mineralization on the Changkeng gold deposit.



31





---

Significant gold results of the drilling are as follows and the complete results can be found on the Companys website:

·

CK2006 5.788 g/t Au over 12.62 metres (m)

·

CK2007 5.54 g/t Au over 8.0 m

·

CK2010 7.83 g/t Au over 26.81 m, including 12.23 g/t Au over 14.81 m



2008 Work Program



An initial NI 43-101 resource estimate technical report was prepared by Qualified Persons Eugene Puritch, P.Eng. and Tracy Armstrong, P.Geo. of P&E Mining Consultants Inc. and the resource estimate was released on March 12, 2008. The estimate contains an indicated gold resource of 2.1 million tonnes @ 5.61 g/t gold (Au) for a total of 379,000 oz Au and an inferred gold resource of 2.2 million tonnes @ 4.82 g/t Au for a total of 333,400 oz Au. The Changkeng deposit remains open along strike to the northeast and southwest. Details of the resources residing on the Changkeng Deposit are shown in Table 1.



|               |           |          |         |          |         |               |             
|-------------- | --------- | -------- | ------- | -------- | ------- | ------------- | ------------
|Classification | Tonnes    | Au
(g/t) | Au
(oz) | Ag
(g/t) | Ag
(oz) | AuEq **
(g/t) | AuEq **
(oz)
|Indicated      | 2,101,000 | 5.61     | 379,000 | 10.7     | 723,000 | 5.81          | 392,100     
|Inferred       | 2,152,000 | 4.82     | 333,400 | 9.3      | 643,000 | 4.99          | 345,100     

Table 1: Resource Gold Estimate @ 1.5 g/t AuEq** Cut-Off Grade

* The AuEq grade was calculated from metal prices of Au US$650/oz and Ag US$12.50/oz with respective recoveries of 95% and 90%. The calculated Au:Ag ratio was 55:1



1. Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation,

sociopolitical, marketing, or other relevant issues.

2. The quantity and grade of reported Inferred Resources in this estimation are conceptual in nature and there has been insufficient exploration to define these inferred resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category.



For the purposes of the resource update report, the resource was defined using approximate January 2008 24 month trailing average metal prices of US$650/oz Au and US$12.50/oz Ag. Costs of US$12/tonne for mining, US$13/tonne for processing/tailings management and US$5/tonne for G&A for a total of US$30.00/tonne and a process recovery of 95% for Au and 90% for Ag yield a cut-off grade of 1.50 g/t AuEq. The report is available at www.sedar.com. The mineral resources were estimated using the CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council December 11, 2005.



The purpose of this resource estimate was to:

 Take into consideration Minco Gold's recently completed 6 drill holes.

 Estimate gold resources that reflect Minco Gold's current exploration permit holdings on the Changkeng Property.

 Identify areas where inferred resources can be upgraded to indicated with additional drilling.

 Identify areas where the resource can be expanded.



Drilling Results

Minco completed an extensive exploration program that had been approved by the board of directors. The general objective of the exploration program is to upgrade the gold resource estimate to meet the minimum requirements of the Chinese government for application of a mining permit.



32





---

Within 2008, 11,809 metres of diamond drilling were completed in 60 drill holes, including sevenshallow observation holes, with a total footage of 692 metres, for the hydrogeological testing. The permit area has now been covered with a drill grid of 80X80 meters and the major mineralization zone has been infilled to a drill grid of 40X40 meters. Hydrogeological testing and further drilling is currently being conducted. Holes for more detailed metallurgical sampling have been completed but the metallurgical work has not commenced to date.



2009 Work Program To Date



In March 2009, the Company reported an NI 43-101 resource estimate for the Changkeng project on the distinct and separate gold dominant and silver dominant zones.  This resource estimate  was completed by P&E Mining Consultants Inc. of Brampton, Ontario in March 2009. The gold dominant deposit contains an indicated gold resource of 3.9 million tonnes @ 4.89 g/t gold ("Au") for a total of 623,100 oz contained gold and an inferred gold resource of 4.0 million tonnes @ 3.01 g/t Au for a total of 386,800 oz Au. The silver dominant deposit contains an indicated silver resource of 5.6 million tonnes @ 170.0 g/t silver ("Ag") for a total of 30,708,000 oz contained silver and an inferred silver resource of 1.06 million tonnes @ 220.0 g/t Ag for a total of 7,517,000 oz Ag.



|               |           |          |         |          |           |              |            
|-------------- | --------- | -------- | ------- | -------- | --------- | ------------ | -----------
|Classification | Tonnes    | Au
(g/t) | Au
(oz) | Ag
(g/t) | Ag
(oz)   | AuEq *
(g/t) | AuEq *
(oz)
|Indicated      | 3,961,000 | 4.89     | 623,100 | 11.2     | 1,423,000 | 5.08         | 646,800    
|Inferred2      | 4,001,000 | 3.01     | 386,800 | 9.5      | 1,218,000 | 3.16         | 407,000    

Table 2:  Changkeng Gold Deposit Resource Estimate1 @ 1.2 g/t AuEq* Cut-Off Grade



* The AuEq grade was calculated from metal prices of US$800/oz Au and US$14/oz Ag with respective   recoveries of 95% and 90%. The calculated Au:Ag ratio was 60:1.



|               |           |          |            |          |        |       
|-------------- | --------- | -------- | ---------- | -------- | ------ | ------
|Classification | Tonnes    | Ag
(g/t) | Ag
(oz)    | Au
(g/t) | Pb
(%) | Zn
(%)
|Indicated      | 5,622,000 | 170      | 30,708,000 | 0.33     | 0.35   | 1.02  
|Inferred2      | 1,063,000 | 220      | 7,517,000  | 0.24     | 0.61   | 1.36  

Table 3: Silver Deposit Resource Estimate1 @ 35 g/t Ag Cut-Off Grade



The Company is currently working on the National Exploration Report for submission to MOLAR





II.

LONGNAN PROPERTIES (YANGSHAN, YEJIABA AND XICHENG EAST PROJECTS)



Minco Golds wholly-owned subsidiary, Minco China, presently holds 12 exploration permits in Longnan region of south Gansu Province. Nine of the permits are located in the Yangshan belt situated east and north of the Anba deposit.  Three permits are located in a geological terrain immediately north of the Yangshan belt and are referred to as the Xicheng East permits.  All 12 exploration permits are located over regional geochemical gold anomalies with host rocks and structure similar that at Anba and other gold deposits in the region.



Total expenditures funded by the Company from inception to December 31, 2008 were $2,797,887 as compared to December 31, 2007, $1,383,760.



Yangshan Project Area



The Yangshan Sub-project Area consists of five exploration permits.  The geochemical data in the Companys stream sediment sampling program at the northeast extension of the Anba gold deposit outlines 20 composite anomalies of Au, As, Sb or Ag which have been delineated in the survey area.  The gold anomalies coincide with strong As and Sb values located in a Devonian clastic rock unit closely associated with a regional arcuate fault structure.  The structural and



33





---

geological setting and geochemical features of these anomalies are comparable to those of the known areas of gold mineralization along the Yangshan gold trend.  Follow up for some selected gold anomalies was conducted with detail soil sampling and sketch mapping.  Peak values in soil gold anomalies range from 100 to 779 ppb.  Two significant gold occurrences, the Yuezhao and the Yangshanli, were discovered through surface trenching.





Yejiaba Project Area



The Yejiaba Sub-project Area consists of four exploration permits.  14 composite anomalies in stream sediment samples have been delineated in the Yejiaba project area, a belt parallel to and north of Yangshan.  The largest composite anomaly, the Madigou anomaly, is 23 square kilometers in area and characterized by coincident Au, Ag, As, and Sb values.  Follow up for selected stream sediment anomalies was conducted with detail soil sampling, peak values in soil anomalies are more than 100ppb for gold and from 1,000 to 14,000 ppb for silver.



Xicheng Project Area



Xicheng Project Area is located at the east extension of the well-known Xicheng Pb-Zn metallogenic belt northeast of Yejiana and consists of three exploration permits. 11 composite anomalies have been delineated in the project area. The largest anomaly is about 16 square kilometres in area and consists of coincident Au, Ag, Pb and Zn values. For the Xicheng East area as a whole, good potential for gold, silver, lead and zinc is indicated.  Follow up for some significant stream sediment anomalies was conducted with traverse line investigation, detailed soil sampling and sketch mapping.  Very strong anomalies for gold and silver were detected in soil samples and four Ag-Au-Pb-Zn occurrences were discovered.  High grade Ag, PB and Zn was detected from grab samples.



The samples above were analyzed for Au, Ag, As. Sb, Bi, Cu, Pb, Zn, W, Mo, Ba and Hg at the central lab of the Institute of Geophysical and Geochemical Exploration in Langfang, Hebei province. Analytical quality was controlled by inserting reference samples and duplicate samples in each 20-sample batch.  In November 2006 the Company announced that significant gold, silver, antimony, lead and zinc mineralization had been discovered in all the three sub-project areas, including the following most significant mineral occurrences:



Major semi-regional geochemical anomalies delineated in 2005 were followed up with traverse line investigation, soil sampling, and sketch mapping in 2006 and 2007.  Further detailed trenching and test drilling were conducted over significant soil gold anomalies and alteration and mineralization zones.  Significant gold, silver, antimony, lead and zinc mineralization has been discovered in all the three sub-project areas, including the following most significant mineral occurrences:



Yangshanli Gold Occurrence:  Eight structurally controlled alteration and mineralization zones have been identified with the largest and strongest composite anomalies of Au, As, Sb and Ag at the central section of the Yangshan Project Area.  Individual zone ranges from several hundreds to more than 1,600 metres in length.  Average grade of gold mineralization intersected in trenches is from 0.3 to 1.03g/t and width of mineralization zones varies from 4 to 13.4 metres.  Significant channel sample intersections include 1.02g/t Au over 7m, 0.79g/t Au over 10.3m, and 0.5g/t Au over 10.9m.



Yuezhao Gold Occurrence: A major gold zone has been identified on the Yuezhao area located at the east end of the Yangshan Project Area. Gold mineralization occurs in the Devonian dark-grey carbonaceous phyllite and the strata-bound gold zone can be traced over 1,000 meters at surface. Continuous channel sampling across the mineralization zone revealed an average gold grade of 2.17g/t gold over 11 meters.



Chengjiagou Silver-Gold-Lead (Ag-Au-Pb) Occurrence: Mineralization occurred in Devonian carbonaceous slate in an abandoned artisan adit in the Xicheng Project Area. One sample returned 133.3g/t Ag, 0.39 g/t Au, 4.25% Pb, 0.1% Zn, and 0.2% Cu. Another grab sample yielded 567.4g/t Ag, 0.52g/t Au, 7.07% Pb, 0.38% Zn, 0.3% Cu.



Miaogou Ag-Pb-Zn Occurrence:  Artisan mining tunnels and pits have been seen within very strong soil silver anomalies at the east section of the Xicheng East Project area.  Individual veins range from 0.2 to 1m.  Two grab samples returned 0.2 and 0.24g/t Au, 160 and 615g/t Ag, 5.24 and 25.44% Pb, 9.79 and 13.62% Zn, respectively.



34





---



Shiaigou Pb-Zn-Ag Occurrence:  Five Pb-Zn mineralization zones discovered in Devonian sandy slate. Individual vein is from 0.2 to 0.6m in width and 200 to 270m in length.  Grab samples returned 0.11-6.31% Pb, 4.39-25.8% Zn and 39-58g/t Ag.



Yangjiagou Silver-Gold-Lead (Ag-Au-Pb) Occurrences: Mineralization occurs in the Devonian carbonaceous slate in the Yejiaba Project Area. A grab sample from a mineralized outcrop in carbonaceous slate returned 137g/t Ag, 0.87g/t Au and 2.6% Pb.





2006 Exploration



Follow-up for some of the major drainage geochemical anomalies by a combination of geological mapping, prospecting, ridge and spur soil sampling, grid soil sampling and trenching was conducted in the three sub-project areas.  This has resulted in the direct discovery of Yuezhao, Yangjiogou, Chengjiagou, Qiuziping occurrences.  Significant soil anomalies of Au, As, Ag, and Sb were delineated at the Yangshanli area.



2007 Exploration



Exploration activities in 2007 were focused on detailed follow up for major gold and silver soil anomalies in the Yangshan and the Xicheng East Sub-project Areas and reconnaissance follow up for some minor stream sediment anomalies in the Yejiaba and the Yangshan Sub-project Areas, including:



1.

Trenching and test drilling at Yuezhao Gold Occurrence:  The Yuezhao mineralization zone was traced with trenching along strike with trenching and along dip with test drilling.  Results from test drilling indicate that the Yuezhao mineralization zone show a pinch-out pattern at depth and potential for further discovery is limited;

2.

Mapping and Trenching at Yangshanli Soil Anomaly:  Detailed mapping and trenching were conducted in one of the major soil anomalies at Yangshanli.  Eight alteration and mineralization zones were recognized in the anomalous area and gold mineralization was intersected in most of the exploration trenches over three zones;

3.

Soil sampling at some selected stream sediment anomalies in the Yejiaba and the Yangshan Sub-project areas; and

4.

Reconnaissance Investigation at Xicheng East:  Investigation has resulted in the discovery of the Miaogou, the Shiaigou Ag, Pb and Zn occurrences.



In 2007, an aggressive trenching and drilling program was proposed for the Yuezhao and the Yangshanli areas in the Yangshan sub-project area and the Chengjiagou and the Chachashi areas in the Xicheng East sub-project area in 2007. Following up for the unchecked significant stream sediment anomalies was also continued over the three subproject areas.



2008 Exploration



Exploration focus in 2008 was on the following:

1.

Detailed mapping, trenching and IP survey at the Yangshanli and adjacent areas in the Yangshan sub-project area;

2.

Detailed follow up investigation in Sanchawan, Chengjiagou, Shiaigou and Miaogou occurrences at the Xicheng East sub-project area to generate targets for further exploration.

3.

Reconnaissance investigation at some geologically favourable areas for regional target selection at the Yangshan, the Yejiaba and the Xicheng East sub-project areas.



The disastrous earthquake in May and aftershocks in the following months has seriously interrupted and delayed most of the exploration programs at Longnan.









35





---

Yangshanli

At the end of June 2008, a surface mapping and trenching program was initiated within the 3 km2 area in the Anpingli-Shibali area, and follow up for some major Au, As and Sb anomalies was conducted in the adjacent areas of the known mineralization zone. The surface mapping program is designed to better understand the structure control and trace the strike extension of the known gold mineralization intersected in trenches last year. 13km2 of 1:10,000 mapping was completed by the end of September. A new mineralization zone of more than 5 meters in width has been discovered about 1,000 meters north of the major known zone revealed in trenches TC21, TC7 and TC8. The new zone occurred at the contact zone between thick limestone and phyllite and closely associated with a NW-trending fault zone. Grade of continuous surface chip samples is from 0.25 to 0.8g/t Au with widths of 0.5 to 1.0 meters.



Five trenches were dug to trace the strike extension of the known mineralization outcrops but most of them did not reach bedrock. The effectiveness of trenching is very limited because of the thick overburden in most of the survey area.



An IP survey was completed in the 3km2 investigation area in September to define exploration targets at depth. Dip extensions of favourable rock units and structures as well as possible intrusives have been delineated with the results of the IP survey in the survey area.



Xicheng East

A reconnaissance survey program was initiated across the exploration areas at the Xicheng East sub-project area. The general objective of the reconnaissance investigation is to define targets for more detailed exploration by systematic traverse line mapping and sampling over the five known Pb-Zn-Ag occurrences and the Mohuashan geochemical soil anomalies. Channel samples were collected over known mineral occurrences and chip samples were collected over new alteration and mineralization zones along traverse lines.

Reconnaissance investigation was completed by September and consisted of 41.5km line kilometres of geological mapping and 236 chip and channel samples were collected over known mineral occurrences and favourable potential areas. Major results are summarized below:



1. Sanchawan Pb-Zn Occurrence: Mineralization occurred in sandstone at the contact zone between sandstone and limestone. The mineralization zone is 2.0 to 4.8m in width and can be traced for 150m along strike. Three artisan tunnels and mining pits were observed. Spot galena and limonite can be seen in samples. 31 channel samples were collected and 12 of them contain 0.28% to 1.85% Pb with widths of 0.5 to 1.0 meter. The zone is considered a Pb-dominated mineralization zone and deep potential of the zone should be further evaluated.



2. Chengjiagou Au-Ag-Pb Occurrence: Mineralization occurred in a small fractured zone in sandy slate. The observed mineralization zone is 2.3m in length and 0.03 to 0.3m in width. Banded and glaebule galena was observed associated with silification and pyrititization. Two of the seven channel samples contain 1.67g/t Au, 10g/t Ag, 0.43% Pb and 0.33g/t Au, 70g/t Ag and 2.39% Pb respectively. Further exploration will be carried out to evaluate mineralization potential along strike and in the hanging wall rocks where gold mineralization was detected.



3. Xiaodonggou and Sanhewan:

a) Xiaodonggou Pb-Zn-Ag Occurrence: Mineralization occurred in fissures developed in sericite schist. The fissures are 0.02 to 0.5m in width and tens of centimetres to several meters in length. Glaebule sphalerite Page 20 of 75 and galena, spotty pyrite filled in some of these fissures. 14 channel samples were collected and 4 of these samples contain 0.15% to 0.74% Pb, 0.14% to 2.14% Zn.



b) Sanhewan Pb-Zn Occurrence: Sanhewan is the west extension of the Xiaodonggou occurrence. A 2mwide alteration zone was observed and 12 chip samples were collected. 4 samples contain 0.48% to 0.56% Pb and 0.41% to 0.87% Zn.



Both Xiaodonggou and Sanhewan occurrences are located at the east extension of the regional Au-Ag mineralization zone. Two gold deposits are located at 5km and 9km west respectively at the zone.

Reconnaissance investigation and sampling have been restricted in surface observation and sampling of the observable mineralization outcrops.





36





---

Detailed surface mapping and investigation on the available artisan adits were conducted in October and November 2008 in Sanchawan and Xiaodonggou area. A grid soil sampling program was carried over the significant gold anomalies in early December in the Caopingshan area.



Regional Target Generation



In March 2008 Mincos field crew commenced reconnaissance work at Henjiawan which is geologically similar to the Anba deposit. Work consisted of mapping, trenching and sampling. A structural and alterationzone was identified and54 chip samples collected and the best results are 0.58, 0.42, 0.36, 0.89, 0.21 and 0.36 g/t Au. The gold mineralization is mainly associated with dark grey phyllite and granite dykes. Trenching was conducted in April 2008 and 46 channel samples were collected. Assay data returned from channel samples ranges from 0.01 to 0.02g/t Au.



Reconnaissance investigation at the Yejiaba area has been conducted on the extension zones of an adjacent known gold deposit. 45 line kilometres was investigated and 103 chip samples were collected. Gold mineralization was identified in the structurally fractured zones extended from the known deposit. Chip samples from the 3-5cm wide veinlets returned 0.58 to 24.6g/t Au. Four trenches were dug. Mineralization zone of 5m in width was delineated in one of the trenches with grade from 0.2 to 0.58g/t.



Regional reconnaissance investigation for exploration target generation was conducted in November and early December over the major multi-element anomalies associated with favourable geological and structural features in the Yangshan and the Yejiaba sub-project areas. The recent reconnaissance program has resulted in the following discoveries:



1.

Gouzikou Gold Occurrence, Oujiaba Permit, and Yangshan Sub-project: A 50m-wide EW-trending structural zone was discovered in the favourable Devonian lithological unit. 7 un-continuous samples from the 47 channel samples across the structural zone returned gold values 0.22, 0.15, 0.44, 0.15, 1.19, 0.46 and 0.21g/t Au respectively.

2.

Fujiwan Gold Occurrence, Shajinba Permit, and Yejiaba Sub-project: A 1-2m zone was identified at the contact zone between a granite porphyry dyke and the Carboniferous phyllite. Five chip samples from outcrops returned gold values 3.91, 2.87, 4.29, 3.11 and 1.21g/t Au.

3.

Shajinba Antimony Occurrence, Shajinba Permit, and Yejiaba Sub-project: Mineralization was observed at the contact zone between thick limestone and slate.

4.

Madigou Gossan Zone, Yejiaba Permit, and Yejiaba Sub-project: A gossan zone was discovered at the contact zone between Silurian slate and Carboniferous limestone. Peak values of 0.13-0.3g/t Au were detected in previous soil samples nearby.

5.

Regular Occurrences, Weiziping Permit, and Yejiaba Sub-project: By talking with local people, it is known that there has been a regular mining activity at the northern part of the Weiziping permit since ancient time.



III.

YANGSHAN GOLD BELT  WEST EXTENSION PROPERTIES



The Cooperation Agreement with No. 2 Exploration Institute of the Gansu Bureau of Geological Exploration (GBGE) for the exploration and development of mineral resources also in Gansu Province of China expired by the end of 2007.



GBGE repaid Minco China 1.3 million RMB in 2007 and the 13 permits Minco China took in trust for the JV remained with Minco China.  One permit has been given up, the other 12 permits now belong 100% to Minco China.



The cooperation agreement was terminated in 2007.



IV.

ANBA PROPERTY



Gansu Keyin Mining Co. Ltd. and Minco Golds joint venture (Keyin), signed a joint venture agreement in principal with the Gansu provincial government and two other companies in October 2003 for the exploration and development of the Anba gold property in the Yangshan gold field (the YGM JV).  Under the agreement, Keyin can earn 40%



37





---

interest in the YGM JV through investment of approximately $3.5 million over five years. The exploration permit for the Anba gold property expired in June 2006.



In April 2004, the board of directors of the YGM JV agreed to pay 3 million RMB (approximately $440,000) to Lan Zhou Qun Ying Ltd. ("Qun Ying") so that it might prepare for the transfer of the exploration permit to the YGM JV. Keyin and its Chinese partners each contributed 1.5 million RMB (approximately $220,000) towards this end. If Qun Ying could not fulfill the duties within six months, the 3 million RMB was to be returned to the YGM JV.  Qun Ying was unable to fulfill all the required duties and the YGM JV has authorized other persons to continue the work for the exploration permit transfer.  The YGM JV has also demanded the return of the total 3 million RMB advanced to Qun Ying. Of this amount, 1,500,000 RMB (approximately $220,000), representing Keyins portion, was written off by the Company  in 2006.  The remaining 1,500,000 RMB represents the Chinese partners portion.



Total expenditures funded by the Company on the Anba gold property from inception to December 31, 2007 were $490,422 and from the inception to December 31, 2006 were $477,481.  This entire project was terminated in 2007.





V.

BYC GOLD PROPERTY



On November 18, 2002, the Company entered into an agreement with the Inner Mongolian Bureau of Non-Ferrous Metals and Exploration, the license holder of the BYC gold project, to acquire a majority interest in the BYC gold project located in central Inner Mongolia, China.  In July 2003, the Company and the Inner Mongolia Bureau of Non-Ferrous Metal Exploration formed the Inner Mongolia Huayu-Minco Mining Co. Ltd. to explore and develop the BYC gold project.  In October 2003, the Company entered into a joint venture with New Cantech Ventures Inc. (New Cantech).  In 2003, Minco Gold entered into a letter agreement with New Cantech whereby New Cantech acquired two options to acquire up to a 60% interest in Minco Golds BYC Gold project in Inner Mongolia, China.



The first option is exercisable to acquire a 51% interest in the BYC property by issuing 500,000 common shares in the capital stock of New Cantech and by spending $2.4 million in exploration over three years.



The agreement was amended in March 2004 and in April 2005 so that New Cantech could exercise the first option by issuing to Minco Gold 500,000 common shares in the capital stock of New Cantech and by incurring a total of 12 million RMB (approximately $1.76 million) in three installments as follows:



1)

2 million RMB (approximately $294,000) on or before March 22, 2005, which has been completed;

2)

4 million RMB (approximately $588,000) on or before March 22, 2006 of which $487,588 had been advanced as of March 13, 2006; and

3)

6 million RMB (approximately $881,000) on or before March 22, 2007.



The second option is exercisable to acquire a further 9% interest in the property by bringing the project to pre-feasibility stage. The BYC project has all permits necessary to pursue exploration on this property.  Pursuant to the letter agreement, New Cantech has issued common shares of New Cantech to Minco Gold as follows:



·

September 2005  50,000 common shares at $0.30 per share for $15,000;

·

May 2005 - 100,000 common shares at $0.21 per share for $21,000; and

·

Year ended December 31, 2004 - 250,000 common shares at $0.34 per share for a value of $85,000 and 100,000 common shares at $0.37 per share for a value of $37,000.



This large property covers approximately 100 individual gold showings related to shear-hosted fracture systems within or peripheral to an elongate granite intrusion. The focus of recent exploration has been the North Zone, which is located on the north-west contact of the granite intrusion. Illegal local miners had removed approximately 400,000 tonnes of near surface oxide ore before being expelled by authorities. In New Cantechs program, six diamond drill holes were drilled in 2004 aggregating 1,434.5 metres in the North Zone and its north-east projections.  Geological mapping, trenching and sampling was completed in 2004 and 2005 to supplement diamond drilling information and contribute to understanding controls on mineralization.  A diamond drill program consisting of 1,500 metres was



38





---

initiated in Q4 of 2005.  This program tested new areas of mineralization exposed by illegal mining activity and follow-up on intersections from previous drilling.



On August 20, 2007, Inner Mongolia Huayu Minco Mining Co., Ltd. renewed two Reconnaissance Survey Exploration Permits from the Ministry of Land and Resources of China on the properties as follows:



a)

Houxiaonuqi gold property in Wulateqianqi of Inner Mongolia (Permit No. 0100000730295 expiring April 7, 2009); and

b)

Dongwufenzi gold property in Wulateqianqi of Inner Mongolia (Permit No.  0100000730294 expiring April 7, 2009).



Total expenditures funded by the Company from inception to December 31, 2007 were $869,535 (from inception to December 31, 2006  $835,437).  On October 3, 2006, the Company and New Cantech entered into a termination agreement, therefore as of the date of this Annual Report on Form 20F, New Cantech has no interest in the property.



On July 18, 2008 the Company signed an agreement with Long Da Fu (Beijing) Investments Co. Ltd (LongDaFu) to sell the interest in HYMK for RMB 7 million ($1.2 million). There was a transition period from September 10, 2008 to October 31, 2008 while the companies awaited government approval. Following receipt of government approval, on October 31, 2008, Long Da Fu took over management control and daily operations. Of the total RMB 7 million ($1.2 million), the Company received RMB 4.25 million ($757,710) and has recorded RMB 2.75 million ($490,283) as receivable on December 31, 2008. This was received subsequent to the year end 2008.





VI.

GOBI GOLD PROPERTY



The Company acquired its earn-in rights to the Gobi gold project, located in western Inner Mongolia in the south Gobi Desert, China, in 1999.  The Company has the right to acquire a 75% equity interest in Damo Mining Co. Ltd., who was assigned the licenses on the project, by spending approximately US$2,500,000 on exploration and development initially over a period of four years. The JV partners agreed to extend the period of earnin to a ten years before the original four-year period ended in 2003.



Total expenditures funded by the Company from inception to December 31, 2008 were $1,983,542 as compared to December 31, 2007, $1,713,010. The Company has earned a 65% project interest as at December 31, 2008.



During 1998 a regional exploration and property evaluation was carried out in Inner Mongolia on the Gobi gold project culminating in the joint venture agreement in 1999 between the Company and the Exploration Institute of Land and Resources of Inner Mongolia ("EILR").  In 1999, the Company and EILR created Inner Mongolia Damo Mining Co. Ltd., a fully-licensed Sino-foreign co-operative joint venture ("Damo Mining"), to explore for metallic  mineral  deposits within the Inner Mongolia Autonomous Region. Initially, Damo Mining will focus on exploring its existing license holding that covers 550 square kilometres. The Damo Mining joint venture agreement allows the Company to earn up to a 75% interest in joint venture by spending RMB 18 million (approximately US$2.5 million) on exploration on the Gobi gold project over four years.  In the event the Company does not spend the specified amounts, its interest in the joint venture agreement may be subject to being capped by a predetermined formula as set out in the joint venture agreement.



Inner Mongolia Damo Mining Co., Ltd.



Damo Mining was formed in 1999 and operates pursuant to a Sino-foreign co-operative joint venture contract between EILR and the Company.  Under the terms of the joint venture contract, Damo Mining's board of directors consists of seven directors of which the Company has the right to select four directors, including the chairman.  The Company has selected Messrs. Ken Cai and Sunzhaojun Huqiufeng as its representatives.  EILR has the right to select the remaining three directors.  Due to the Company's majority ownership and majority representatives on Damo Mining's board, the Company controls Damo Mining's operations in the ordinary course of business.  However, the following transactions by Damo Mining require the unanimous approval by its board: (i) terminating or dissolving Damo Mining; (ii) selling or mortgaging assets that have a value of 10% of Damo Mining's assets; (iii) increasing or decreasing Damo Mining's



39





---

registered capital; (iv) borrowing by Damo Mining; (v) merging Damo Mining; (vi) guaranteeing on behalf of Damo Mining; and (vii) establishing organizations under the board.



Property Description and Location



The Gobi gold project is located in the Gobi Desert of western Inner Mongolia, approximately 300 kilometres north of Yinchuan, the capital city of the neighboring Ningxia Province, and 900 kilometres northwest of Beijing.  The Gobi gold project is situated along the eastern extension of the Tian Shan Gold Belt, which hosts important deposits in Uzbekistan and Kyrgystan to the west.  World-class, sediment-hosted gold deposits occurring in the Tian Shan Gold Belt include Murantau with a resource of 140 million ounces gold (site of the Newmont Dump-Leach Project), Kalmakya with 26 million ounces gold and 13 million tons of copper, and Kumtor with 13 million ounces gold which is a Centerra Gold operated mine.  The Gobi gold Project is the culmination of a series of regional exploration programs undertaken by the EILR. EILR carried out a broad program of stream and drainage sampling.  This program highlighted several areas with gold concentrations some of which were followed up by mapping, prospecting and more closely spaced geochemical sampling.



Geological Setting



The Company believes that the potential for discovering more extensive, near surface skarn mineralization is good, given the limited exploration that has taken place beyond the surficial oxide zones. An initial  program of detailed ground  magnetic  surveys  combined with geological mapping  was  completed  to  give  better  resolution  of  features  controlling mineralization.  Other prospects identified in the license blocks from regional geochemical surveys have had limited to no follow-up work. Known mineralization is developed in calcareous sedimentary units and proximal to small felsic intrusions.  Field examination of two prospects visited in 1999 showed features indicative of skarn style mineralization.



The 2000 exploration program involved ground magnetic surveys and geological mapping over the two identified skarn prospects to establish drill targets. Field-checks of the remaining geochemical anomalies were conducted.  The 2002 drill program tested results from previous exploration programs and 2003 fieldwork involved more drilling on the most favorable targets



Exploration and Development Operations



In 2006, there were not any exploration activities approved by the Company, other than the exploration permit maintenance.



In 2007, trenching and drilling were conducted to the west extension of the known gold mineralization zone. The drilling program was primarily focused on tracing the strike and dip extensions of the thick low-grade gold mineralization intersected in the previous drilling program. Multilayer mineralization zones were intersected in all five completed holes. Width of each individual zone is from 1 metre to more than 20 metres and grade of gold is from 0.6g/t to 2.45g/t.





In May 2008, field programs were commenced. Exploration was focused on investigation of the surface distribution of the various-sized auriferous veins in the northeast extension area of the Zhula Mine. Trenching, channel sampling and chip sampling were conducted over geologically favourable areas and magnetic anomalies. A total of 165 samples were collected from trenches, abandoned mining pits and surface traverse lines, including 105 channel samples and 60 chip samples. Two parallel mineralization zones were identified between M8 and M9 magnetic anomalies. The two veins are 200-300m in length and 1-3m in width with gold grades of 1.05g/t and 1.47g/t in two trenches. Reprocessing of all the available raw data from previous IP programs will be arranged to further delineate and define any potential targets.



Environmental Considerations



The exploration activities proposed for the Gobi gold project, including potential drill testing of new anomalies, will



40





---

result in little surface disturbance,  and standard reclamation procedures will be used for areas such as trenches or drill pads.  The Company does not believe that there will be any potential environmental liability arising from these activities.



VII

JINNIUSHAN GOLD PROJECT (Gold Bull Mountain Project)



On November 14, 2006 the Company announced that its wholly-owned subsidiary, Minco China, had acquired a mining license on the Jinniushan Gold Mine (Gold Bull Mountain), covering 0.18 km2, and an exploration permit (16.68 km2), covering the strike extension of the Jinniushan Gold Mine.  Total consideration for the acquisition of the mining license and the exploration permit was approximately US$1 million.  The Company at the time of the announcement was in its final stage of the due diligence on the project and the acquisition is subject to regulatory approval.  Minco China has incorporated a local operation subsidiary in Hunan and the Gold Bull Mountain mining licenses were transferred to its subsidiary.



The 16.86 km2 Gold Bull Mountain gold project covers most part of the Jinniushan gold mineralization belt which extends for more than 15 kilometers and is recognizable with the distribution of abandoned artisan mining adits and tunnels. The Gold Bull Mountain mining license is located in the middle of the belt.  High grade quartz-vein style gold mineralization is hosted in the late Proterozoic sandy slate characterized with obvious silification, seritization and pyrititization.  The Company commissioned the preparation of a NI 43-101 report on the Jinniushan Gold Project. The technical report dated December 28, 2006 was prepared by Peter G. Folk, P. Eng., of 280 Wood Dale Drive, Comp. 47, Site 21, Mayne Island, B.C., Canada, V0N 2J2.



The technical report was prepared under the guidelines of Canadian National Instrument 43-101.  The Company filed the Updated 43-101 technical report on January 3, 2007 via SEDAR.  Peter G. Folk has consented to the inclusion of this information and has authorized the relevant contents.  The information below is from the December 28, 2006 Technical Report.



Summary



The Jinniushan gold project, located in the western part of Hunan Province in the Peoples Republic of China, consists of a 0.178 km2 mining permit and a contiguous 16.78 km2exploration permit along strike.  These permits have been acquired by a wholly-owned Chinese subsidiary of the Company for a total consideration of about CDN$1,210,000 (which includes a Mining License and exploration permits) and have been transferred into a local subsidiary in Hunan Province.  The area under Minco control represents a portion of an historical mining district, which has been in periodic production utilizing small-scale artisanal methods since before the formation of the modern China in 1949.  Gold-quartz mineralization occurs primarily within reverse-brittle-ductile-shear veins in a compressive environment within Proterozoic sedimentary rocks.  Most of these dip to the southeast parallel to a nearby mapped thrust fault which occupies the contact between Proterozoic and Cretaceous to Tertiary sandy sediments.



The project has some geological similarities (age and type of host rocks and similar structural regime) to an important, deep Au-Sb-W underground mine about 6 km to the southeast but the Jinniushan area lacks Sb and W.  To date Minco has re-opened, surveyed, mapped and sampled accessible portions of the primary historical underground mine on the acquired mining permit.



Property Description and Location



Through a 100% owned subsidiary, the Company has purchased, in eastern Hunan Province, China, a 0.178 km2 mining permit and a contiguous 16.78 km2exploration permit along strike.  The mining permit is located at 1100 40 15 east longitude and 280 38 15 north latitude, 40 km from the county seat of Yuanling.  The mining permit was transferred to the Minco subsidiary from the former state-owned Jinniushan Gold Mine and the exploration permit was acquired by taking over a private company in 2006.  Both permits are valid until mid-2009 and renewable thereafter.  Annual fees, relating to the area of the permits held, are less than $2,500 per year.  The law requires local compensation for temporary use of land for mining and exploration purposes; however, habitations and land under cultivation form only a small part of the whole area and are not considered to present a significant liability.  A China Compensation Fee on gold mined is 2% of net smelter revenue.



41





---

The mining permit is completely surrounded by the exploration permit and is defined by surveyed coordinates. Exploration permits in China are paper staked and can be defined by hand-held GPS units.  A map showing permit boundaries and known mining works (adits and trenches).  Being small underground mine workings of limited extent, the environmental liabilities that have been created by the various mining works are, in a Chinese context, not considered to be significant.  On exploration permits, the local (county) government is to be informed when work is to start and is in charge of some dealings with the local citizens.  For example at Jinniushan the local county government must deal with a small group of illegal miners said to be operating within the permit area.  Allowed underground work has been in progress for some time within the mining permit.



Accessibility, Climate, Local Resources

Infrastructure and Physiography



The location is well situated along a large man-made hydroelectric reservoir and is accessible by road and by lake-boat.  Hydroelectric power, telephone lines, cell-phone service, labour, goods and services are available nearby.  The climate is sub-tropical and the topography is hilly with elevations ranging from 92 to 232 m above sea level.  Vegetation, where not tamed by agricultural terraces, is thick and bushy.  All manner of exploration and mining work can be conducted on a year-round basis.  Surface rights have been sufficient for the operation of the small historical mines, which have operated in the area and are not considered to present a significant problem.  Expanded operations in the case that larger deposits are discovered will require the establishment of tailings areas without connection to the lake.  Insofar as there are few habitations (except along the lake) and no significant villages in the area under discussion the placement of larger scale tailings and plant sites should present no unusual difficulties.



History



The mining history of the area is similar to many other places in China in which uncontrolled mining has taken place (and continues to take place in some areas) with little regard for health and safety, environment, proper land use etc.  The mining permit and on-strike portions of the exploration permit were actively mined for gold (both placer gold and hard rock mines) in the period before 1949 when communist China was established, private enterprises were confiscated, and the mines were closed.



Only on the mining permit area was this work well organized, although mine plans, surveys and production figures have been lost.  When international gold prices increased in the 1970s hand mining at various locations resumed to be largely replaced by small local government operations at three locations in the 1980s.  In 1993, the local hydroelectric dam was completed and some of the historical mining areas were flooded.  In 2001 and 2004, the Federal Chinese government, in an attempt to bring some regulation and safety to gold mining, decreed the closure of two of the existing small (illegal) mines.  Production within the remaining mining permit stopped last year as part of a re-organization.



There are unconfirmed rumors that illegal hand miners are still operating in the area of the exploration permit.  In the history of the permit areas there has never been organized large or medium-scale mining.  Only the crudest of recovery methods using small crushers, gravity devices, cyanide ponds and mercury were utilized.  If records were ever kept, they have been lost.  Except for the active mining permit area, mine maps and engineering records do not exist.  Production figures are not known.  No drilling or other modern exploration techniques (geochemistry, geophysics, etc.) have ever been undertaken in the area.  On the exploration permit, to the northeast of the mining permit a group of mines was examined in 1992 by a geological unit of the Provincial Government.  Unfortunately, most of the results of this work are not available and, in any case, the most interesting zone, along about 900 m of strike length, became submerged when the hydroelectric reservoir was completed in 1993.



Geological Setting



Regional and Local Geology



The area of interest occurs within Paleozoic rocks of the South China Plate in unconformable and faulted contact with younger Cretaceous sediments.  A strong element of NW-SE compression is evident with abundant NE-SW fold axes and reverse faults striking in the same direction.  This is consistent with modern GPS observations, which show that entire area is moving to the southeast at a rate slightly less than 5 cm/year.  The geology of the region is divided into



42





---

low-grade metamorphically altered:



·

Cretaceous to Tertiary sediments comprising sandstone, shale and coal seams (K and K-E).

·

Small remnants of Devonian-Permian sediments (D-P).

·

Precambrian (Sinian or Late Proterozoic) to Silurian sandstone and slate or shale (Z-S).

·

Proterozoic sediments comprising slate, sandstone and siltstone (Pt1 and Pt2).



The Jinniushan Project has similarities to the Xiangxi (also called Woxi) Sb-Au-W underground mine, about 6 km to the southeast, which has reached over 1,000 m below surface and has been mined for over 100 years. The mine is the second largest Sb producer in China (Qinglin, Xie et al).  It has been classed as a Carlin type deposit (Li and Peters, 1998) and contains native gold, stibnite, tungstite, pyrite, arsenopyrite and aurotite.  Structurally the mineralization is found in shoots within reverse faults in Middle Proterozoic slates (RSG Global, 2006).  Although the structural setting is similar to that at the Jinniushan Project, geochemically the two are very different with no significant stibnite or tungsten minerals noted at Jinniushan.



Property Geology



Predominantly shear-hosted gold-quartz mineralization occurs in Proterozoic sandstones, and shales, which have undergone NW-SE compression.  The Proterozoic sequence is unconformably overlain by Cretaceous to Tertiary purplish sandy sediments and forms the central unit of a NE-SW trending anticline.  The southern contact between the two formations has been mapped as a thrust fault.  Gold mineralization is associated with brittle-ductile shears with a reverse sense of movement similar in form to the mapped thrust fault.



Shallow dipping tension veins splay off the shear veins, usually in the footwall.  The gold-quartz mineralization seen so far is entirely structurally controlled and the mineralizing fluids have barely affected the wall rocks.  The veins contain few examples of open space filling but rather appear to be of a deeply seated type containing ribbon structures consisting of alternating bands of country rock and vein quartz.  It appears that the shearing event within which the quartz veins were emplaced continued after the main mineralizing event to form re-sheared and brecciated veins.  Minor iron carbonate and sericitic wall rock alteration have been noted.



Deposit Types



Similar to the geometry of a mapped thrust fault are southeast variably dipping (usually about -500) quartz-pyrite (minor Pb, Zn, As) veins which have been emplaced within reverse-movement shears.  A secondary set of conjugate northwest dipping reverse shears is also present along with a flat set of quartz-filled tension fractures usually splaying off into the footwall.  In detail, the vein system is complex, but the main elements of the system, which have been emplaced under the effects of NW-SE compression, can be shown in the simple diagram below.  Theoretically, in this type of stress regime the individual mineralized ore shoots would likely have a strong horizontal trend.  Veins contain very little evidence of open-space filling and do not have banded epithermal characteristics.  Rather, white quartz veins containing ribbon structures and shearing which approaches the brittle-ductile provenance suggest a mesothermal setting.



The main focus of historical mining and of recent work has been on the set of shear veins located on the Mining Permit, however an additional six km of strike length is indicated to be prospective by the occurrence of numerous trenches and at least 17 small mine adits which are shown on existing maps.  Known shear veins average about 0.7 m in thickness, but there are locations where shear veins come close together and the intervening wall rock becomes permeated with tension veins.  In these cases much wider, but irregularly shaped, mineralized stockwork bodies may be formed.  Although presently there is no indication of disseminated mineralization, there could arise, through combinations of structures and naturally permeable sandstone host-rocks, a situation where low-grade bulk-mineable mineralization may be encountered.  This aspect should also be explored.



Mineralization



The central part of the mine is developed on at least three separate, but related shear veins across a horizontal width of



43





---

about 60 metres.  The strike length of the main portion of the mine is about 350 metres.  Most of the vein material above the primary access levels has been mined out and some material has been mined below these levels by means of declines.  The future of the mine is downwards.  Although the declines are well below the level of the man-made lake, the mine is almost completely dry (from a mining point of view the presence of the lake will require some engineering care, however this is well understood by the technical people involved).



At the current level of knowledge there is no reason to think that the mineralization will not go to considerable depth.  Also, although the shear-veins cross cut local lithologies, there may eventually be found to be some lithological control to the mineralization.  Where shear veins come close together the intervening space can become riddled with tension veins leading to the supposition that there may be sections of the mine where the narrow-vein, open-stope mining utilized in the past may be replaced by larger scale mining techniques.



Exploration



Before involvement by the Company, there was little organized exploration activity.  Tracked mining using open-stope methods took place at a rate of a few tonnes per day on the mining permit and have occurred at lesser scales (even perhaps to the present day) at other locations on the exploration permit.  Prior engineering and geological control and proper documentation of the mining works are unknown.  Ore processing consisted of small electric crushers, gravity separation, cyanidation in concrete ponds and some amalgamation by mercury.  The processing machinery has been removed, leaving crude foundations behind.  Neither the large quantities of waste-rock that were taken out of the mine, nor processed tailings are apparent and the author concludes that this material has gone into the lake.



Work done by the professional staff of Minco since the end of August, 2006 has consisted of underground surveying, mapping and sampling of accessible portions of the mine on the mining permit.  To date 71 channel samples have been taken within the mine and these are set out on the Companys website.



The preliminary results serve to show that gold in economically interesting quantities occurs in several veins within the central area of the mine.  The total strike length in which the best assays occur is about 350 metres.  A program of duplicate assays has been carried out whereby the sample rejects were sent to Process Research Associates Ltd in Yunnan for re-assay by fire assay techniques.  Each sample was fire assayed three to four times in Yunnan and the average results are shown on Table 1 shown above.  Also shown on the same table are the authors check sample results, which were taken at exactly the same locations as the prior samples.  These seven samples were analyzed by metallic screen analysis and fire assay at Acme Analytical Laboratories in Vancouver, British Columbia.  The table clearly shows that a strong nugget effect is present which affects the repeatability of results.



Nugget Effect



Because coarse gold has been reported in the mine the author requested that his samples be analyzed by metallic screen analysis and fire assay, which would be considered to be the most accurate assay method for samples with a strong nugget effect.



A cursory analysis of Table 1 shows a strong variation in gold values when the same sites are re-sampledsamples initially with high assays can be re-sampled with very low results and the opposite is also true.  This problem is often encountered in gold mining and can be illustrated by examining the metallic screen analyses shown in the table below.



|       |           |          |            |       
|------ | --------- | -------- | ---------- | ------
|       | Sample.Wt | CoarseAu | Fine Assay | TotAu 
|SAMPLE | Gm        | Mg       | gm/mt      | gm/mt 
|#1-14A | 506       | <.01     | 0.12       | 0.12  
|#2-01A | 505       | 29.78    | 64.6       | 123.57
|#2-02A | 503       | 7.02     | 17.31      | 31.27 
|#2-05A | 498       | 9.16     | 22.09      | 40.48 
|#3-05A | 505       | 9.16     | 13.47      | 31.61 
|#3-07A | 497       | 5.77     | 11.74      | 23.35 
|#3-09A | 495       | 0.07     | 0.09       | 0.23  



44





---



| |  |  |  | 
| |  |  |  | 

Table 2.  Metallic Screen Analysis from the authors seven check samples.



In this technique, approximately 500 grams are pulverized and passed through a -150 mesh screen.  The fine fraction and coarse fractions are fire assayed separately and the results are combined.  The above table shows that approximately 50% of the gold is in the form of coarse nuggets (greater than -150 mesh size).  Practically, a strong nugget effect means that each individual sample has a low confidence level, and that to prove a gold resource will be more than usually difficult.  In cases such as this, drilling can be used to define the geometry of the various veins; however it may be necessary, especially until experience is gained, to use underground drifting and sampling to prove-up the gold resource.



Geochemistry



Peter G. Folk had seven check samples also analyzed for 32 elements by ICP.  Results No other elements are present in economic concentrations and only Pb occurs in what might be considered to be weakly anomalous quantities.  Although seven samples is not statistically sufficient to come to a firm conclusion, the data may indicate that there is a negative correlation between Au and Ca, i.e. the more calcium that occurs in the sample, the weaker is the gold result.  In practical terms the negative correlation between Au and Ca may (if further work confirms the effect) yield a geochemical tool to help determine the validity of gold analyses, i.e. a high gold assay which also contains high Ca may be suspect.  It is likely that the element Ca noted in the data occurs in a calcium carbonate mineral therefore indicating a common mineralogical zonation whereby carbonates occur as a halo around a precious-metal-silicate core zone.  Further geochemical work and careful examinations underground should be undertaken to determine if these noted effects are actually present and can become useful exploration tools.



Recommendation made to

The Company by Peter G. Folk



In Mr. Folks opinion the character of the property is of sufficient merit to justify the following recommended program of work.  A staged program is envisaged whereby a second phase composed primarily of drilling from surface and underground development depends on the first phase of underground development and underground drilling on the mining permit, and surficial examinations over the area of the exploration permit.



Phase 1



Mining Permit



1.

A program of 440 m of underground development is recommended to expose large sections of prospective veins for sampling and to provide material for metallurgical testing.

2.

A program of 1,950 m of underground drilling is to follow the underground development.

3.

Preliminary metallurgical testing should be undertaken.



Exploration Permit



1.

The entire exploration permit needs to be examined and all of the mine openings, trenches, and prospect pits should be identified, mapped, sampled and defined with GPS coordinates.

2.

The most interesting mine workings should be rehabilitated and the workings mapped and sampled.

3.

Geological mapping should be undertaken over the entire permit.

4.

Soil geochemistry should be undertaken on widely-spaced lines.



Phase 2 (Contingent on the results of Phase 1)



Contingent on Phase 1 results, a phase 2 project would be concerned with diamond drilling targets defined in the Phase 1 surface program and would include further underground development utilizing a shallow shaft to access areas down dip of the known veins on the mining permit. Further metallurgical testing would be done as would preliminary environmental and engineering studies.  With positive results the end of the Phase 2 program would see the calculation of a gold resource and the project would be at a pre-feasibility stage.



45





---

Budget



It is the nature of mineral exploration that it is impossible to exactly predict what the results, best methods and expenditures will be, these being entirely dependant on factors at the exploration site, the timing of the work, and various contract costs at the time.  Below is a recommended estimate of expenditures prepared by Mr. Folk.  Mr. Folk also recommended that a budget be prepared in China at the time that various parts of the program are put to tender.



Phase 1



Underground development

450m @ $120/m



54,000

Underground drilling

1,950 m @ $20/m

39,000

Mine rehabilitationexploration permit

45,000

Surface mapping (geology, topography, hydrogeology)

83,000

Trenching

10,000 cubic m @ $10/cubic m

100,000

Preliminary metallurgical test

25,000

Assays

2,000 @ $20

40,000

Soil samples

500 samples @ $25 per analysis

12,500

Sample shipping

5,000

Camp costs, food and supplies

12,000

Local transportation, vehicle rental, gasoline and supplies

10,000

Non-camp lodging, food, hotels

10,000

Communications, telephone, internet

5,000

Office costs (Yuanling), drafting, report writing, consulting

25,000

Local public relations, social program

5,000

Supervision, engineering, geology, mine administration

50,000

Casual labor, camp maintenance, cooks, drivers

10,000

Airfare and other travel

8,000

Road construction and repairs

7,000

545,500

Contingency 10%

54,500

$600,000



Phase 2 (Contingent on the results from Phase 1)



Surface diamond drilling

3,300 m @ $100/m (large diameter)

330,000

Exploration shaft

150 m @ $1,200/ m (all inclusive)



180,000

Underground development

800 m @ $120/m

96,000

Assays

3,000 @ $20

60,000

Metallurgical studies

50,000

Engineering and environmental studies

75,000

Sample shipping

5,000

Camp costs, food and supplies

15,000

Local transportation, vehicle rental, gasoline and supplies

10,000

Non-camp lodging, food, hotels

20,000

Communications, telephone, internet

5,000

Office costs (Yuanling), drafting, report writing, consulting

50,000

Local public relations, social program

10,000

Supervision, engineering, geology, mine administration

50,000

Casual labor, camp maintenance, cooks, drivers

10,000

Airfare and other travel

8,000

Road construction and repairs

5,000

979,000

Contingency 10%

98,000



1,077,000

GRAND TOTAL

$1,677,000



46





---

Exploration and Development Operations



2007 Exploration Program



On February 6, 2007 the Company announced an update on the current exploration program of Jinniushan or Gold Bull Mountain Gold Project (hereafter the GBM Project), located in eastern Hunan Province, P.R. China.



The GBM gold belt extends for more than 15 kilometers and is recognizable by wide distribution of artisanal mining adits, pits and tunnels. Gold mineralization at the GBM belt occurs in late Proterozoic sandy slate characterized by strong silification, seritization and pyrititization. Four parallel quartz-vein style gold zones have been recognized with a strong continuity along strike and dip directions.



Minco geologists have completed a preliminary investigation program on the GBM Mining License area, including underground surveying, mapping, and sampling of accessible portions of the GBM gold mine. 71 channel samples in cross cuts were collected from four individual gold zones. At a cutoff of 1g/t gold, the average gold grade and thickness are as follows:



Zone

Average Grade (g/t )

Thickness (m)

V2-1

6.87

0.65

V2-2

22.68

1.06

V2-3

18.78

0.77



Two grab samples collected from zone V2-4 yield 9.25 g/t and 22.45g/t gold.



In 2007, exploration activities were focused on drilling and underground exploration tunneling within the GBM mining permit.  A sketch mapping, trenching and mapping for the widespread artisan adits were conducted in the GBM exploration permit.  Total completed exploration work included 3,987.5m drilling, 1,745.2m tunneling, 17km2 sketch mapping, 3,964.5m artisan adit investigation, and 3.64km2 geochemical soil sampling.  It is confirmed that the mineralization zone at GBM is highly uncontinuous along strike and dip directions and grade of gold is extremely unevenly distributed in mineralization zones because of significant nugget effect.



2008 Exploration Program



During 2008 the underground development work was completed on levels 87 and 47. Up to the end of May, 456m of underground development was completed. Some un-continuous minor gold mineralization zones were intersected in tunnels. The general range of the average gold grade in these veins is from 0.22 to 2.55g/t. No major mineable zone was delineated at Level 47.



In the process of managing and prioritizing cash flow needs, the Company made the decision to cease its exploration program at GBM in June 2008. As at December 31, 2008, the Company wrote off a total of RMB 2.5 million (approximately $358,500) recorded as the mineral interests. This is the cost of Gold Bull Montan mining license. Management decided to write off the license because there is a significant deterioration in the business environment and the Company did not manage to find any new minerals in the property.



VIII.   XIAOSHAN GOLD & POLYMETAL PROJECT



The Xiaoshan project is located in the Shanxian County of NW Henan Province and is 45 kilometres from the Shanxian county town. The project can be accessed by dirt road from Sanmenxia city. The Xiaoshan project consists of two exploration permits, the 17.1km2 Huluyu permit and the 12km2 Dafangshan permit and both permits are hold by the Henan Nonferrous Exploration and Mining Company (HNEM), a subsidiary of the Nonferrous Geological Exploration Bureau of Henan Province. On February 7, 2007, a JV agreement was signed between the Minco Mining (China) Corporation and the Henan Nonferrous Exploration and Mining Company (HNEM) to jointly explore and develop the precious and nonferrous resources in the Xiaoshan project area. Minco will earn 70% interest of the Xiaoshan project by making an instalment cash payment of RMB15 million and funding all the exploration and development activities.



47





---

The HNEM will hold a carried interest of 30% in the Xiaoshan project. All the exploration and development will be operated through the joint venture, Zhongjia-Minco Mining Company.  The project area is characterized with structurally denuded low to medium mountains from 869 to1387 meters above sea level. Strong dissection has resulted in deep valleys and steep slopes in the area. Annual precipitation is 586mm and most of them concentrate in the rain season from June to September. The annual evaporation is 1858.8mm. The area is covered with well developed vegetation.



The Company commissioned the preparation of a NI 43-101 report on the Xiaoshan Project. The technical report dated October 1, 2007 was prepared by Peter G. Folk, P. Eng., of 280 Wood Dale Drive, Comp. 47, Site 21, Mayne Island, B.C., Canada, V0N 2J2.  The full report can be found on SEDAR.



Exploration History



Most of the previous exploration has been focused on surface or near surface investigation, including 1:200,000 scale mapping, 1:50,000 scale mapping, 1:50,000 scaled stream sediment sampling and investigation on hundreds of ancient workings and quartz veins. The previous investigation has resulted in the delineation of some important geochemical gold and silver anomalies and tens of quartz veins and alteration zones. It has been concluded that the Xiaoshan project area is dominated with gold and silver near surface but increasing silver and lead has been noticed at depth. Almost no exploration has been conducted in the deep portion of the project area with modern exploration techniques.



Regional Geology



Tectonically, the Xiaoshan project area sits at the Xiaoshan uplift block on the southern rim of the North China Craton. The area is also located at the east section of the E-W trending Qinling metallogenic belt. Bedrock consists of highly metamorphosed Archean rocks in the core area and the adjacent Proterozoic intermediate volcanics, phyllites and schists. The Archaean metamorphics comprise plagioclase amphibolite, biotite amphibolite, chlorite mica schist and migmatite. The Archaean rocks form the core of the Xiaoshan uplift and Proterozoic rocks distributes around, which formed an anticline/dome structural feature. The axis of the Xiaoshan Dome is E-W orientated. The dipping angles of the stratigraphic bedding vary 30° to 60°.



Three sets of faults have been identified and they are striking to NEE, NNW and NWW respectively. Gold and silver mineralization is dominantly controlled by NNW and NWW faults.



Volcanic activities in northwest Henan mainly occurred in the early Middle Proterozoic and volcanics include Andesite and Andesitic porphyrite. Intrusive activities occurred in two episodes, the early Middle Proterozoic and the Early and Middle Mesozoic (Yanshanian). Intrusive rocks consist of the Middle Proterozoic diabase and diorite dykes, and the Mesozoic grano-porphyry, pegmatite and syenite dykes. No sizable intrusion has been observed at surface. However, geophysical data may indicate the presence of large-scaled acidic intrusion at depth.



The Archean metamorphosed rocks of Taihua Group are the dominant host for the large and giant gold-silver deposits in the east section of the Qinling metallogenic belt. High-grade lead and silver usually discovered at the deeper portion of the gold-silver system. The high potential Ying property of Sivercorp is located at a parallel zone to the south of the Xiaoshan project area. The largest gold mine within the property area is located to the west of the Xiaoshan project area at the same EW trending zone. All these important precious and nonferrous deposits in this area are hosted in the Archean metamorphosed rocks of Taihua Group.



Property Geology



Both permits are located within the uplifted core area at the Xiaoshan Uplift Block.  Bedrocks within the two permits are mainly Archean migmatite, schist and gneiss (Taihua Group) which were intruded by Proterozoic diabase dykes and Mesozoic acidic dykes.



Geology and mineralization characteristics of the two exploration permits will be described respectively in the following sections.





48





---

Alteration & Mineralization



(1) Alteration: Alteration associated with gold and silver mineralization includes silification, carbonatization, pyrite-sericite-quartz alteration, Kaolinization, sericitization, chloritization, epidotization, and ferritization.



(2) Mineralization: Mineralization types closely associated with gold and silver mineralization include pyrite, galena, sphalerite, chalcopyrite, and magnetite as well as a minor amount of limonite and malachite.



Characteristics of Gold and Silver Veins



13 gold and silver lodes were mapped out at surface within the Huluyu permit. Ore lodes occurred as thin veins in structural cataclastic belts and mainly controlled by NW- and NNW-trending faults. The most important lodes include K1, K3, K4, K5, K6, K7 and K8. The largest lode is 4150m in length and dips to 245° at 75°.



Metallic minerals include pyrite, galena, sphalerite, chalcopyrite, magnetite, hematite, limonite and malachite. Major non-metallic minerals are plagioclase, quartz, and muscovite.



According to structure and texture, ore can be divided into the following categories (1) densely massive ore; (2) veinlet banded ore; (3) brecciated ore; and (4) sporadically disseminated ore.



7 gold and silver lodes have been defined at surface in the Dafangshan area. Mineralized lodes occur as thin veins in structural cataclastic alteration belts and are controlled by NW-, NE- and EW-trending faults. Limonite, pyrite and galena are closely associated with gold mineralization.





Exploration Programs



Exploration target:

High-grade massive sulfide at depth of the major ore-control structures.



Exploration Focus in 2007 included (1) systematic mapping and sampling of available artisan mining tunnels; (2) surface mapping to trace the distribution of surface mineralization; and (3) test drilling along K3 vein system, the major ore-control structure at the Huluyu permit.



The major K3 ore-control structure was partially tested with seven holes and has been traced for more than 250m below surface. No encouraging results for the expected massive sulfide received from assay data of the four of the seven completed holes so far.



A comprehensive review on the available results from 2007 exploration programs shall be arranged before further exploration programs are carried out in the two areas.



The Company has completed a diamond drill program within the Huluyu exploration permit of the Xiaoshan project area consisting of seven holes for a total of 1,763 metres. The drill program has been designed to trace the dip and strike extensions of the southern portion of the K3 structural zone.



A total of 13 gold and silver veins have been identified on surface within the Huluyu permit. A general review on exploration data from exploration programs organized in 2007 was conducted in April and May 2008. It was concluded that there are no significant Ag-Pb-Zn mineralization intersected within the drilling below the K3 structure, which is the expected major ore-control structure. There is no further evidence for Mincos target model of high grade Ag-Pb-Zn with associated Au. Therefore, Minco has decided to suspend its funding on all exploration programs in the two exploration permits and will keep the interest earned so far in the joint venture.



ITEM 5

OPERATING AND FINANCIAL REVIEW AND PROSPECTS



This discussion and analysis of the operating results and the financial position of the Company for the three years ended



49





---

December 31, 2008, 2007 and 2006 should be read in conjunction with the consolidated financial statements and the related notes.  Financial amounts (other than per share amounts) in the following discussion have been rounded to the nearest thousand dollars.



A.

OPERATING RESULTS



General



The Company is in the exploration stage and had no operating revenue during the years ended December 31, 2008, 2007 and 2006.  Since the signing of the Companys first co-operative agreement in China in 1995, the Company has been active in mineral exploration, property evaluation and acquisition in China and plans to build a portfolio of precious  metals properties in China.  To date, the Company is in the exploration stage and has no operating revenue.



The Company has conducted exploration work on properties located in Sichuan, Xinjiang, Hebei, Inner Mongolia, Henan, Hunan, Guangdong and Gansu provinces of China, and investigated or evaluated many Chinese mineral properties.



Results of Operations (Canadian GAAP)



In the following discussion, for comparison, are the Company's results of operations. derived from the unaudited interim financial statements for the quarter ended March 31, 2009 and the audited financial statements for the years from 2006 to 2008 contained elsewhere in this document.



First Quarter ended March 31, 2009 Compared to First Quarter ended March 31, 2008

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007 and 2006



EXPLORATION COSTS



First Quarter ended March 31, 2009 compared to March 31, 2008



Gross exploration costs totaled $781,000 for the three months ended March 31, 2009 compared to $1,768,000 in 2008.



|                             |                |               
|---------------------------- | -------------- | --------------
|Minco Gold:                  | March 31, 2009 | March 31, 2008
|Gansu                        |                |               
|·
Yangshan, Anba             | -              | 2,000         
|·
Longnan                    | 533,000        | 114,000       
|Inner Mongolia               |                |               
|·
Gobi Gold                  | 14,000         | 32,000        
|·
BYC                        | -              | 3,000         
|Guangdong                    |                |               
|·
Changkeng                  | 125,000        | 1,412,000     
|Hunan                        |                |               
|·
Gold Bull Mountain         | 1,000          | 31,000        
|Henan                        |                |               
|·
Xiaoshan                   | 108,000        | 174,000       
|Gross exploration costs      | 781,000        | 1,768,000     
|Exploration cost recoveries  | (208,000)      | -             
|Expensed exploration permits | -              | (1,368,000)   
|Expensed exploration costs   | (573,000)      | (400,000)     



The decrease in exploration costs is mainly due to lower spending on Changkeng exploration in the first quarter of 2009 by about $1.28 million. More field work conducted on the Longnan Properties during the first quarter of 2009 increased spending about $419,000 compared $114,327 incurred in the same period of 2008.





50





---

Year Ended December 31, 2008 compared to Year Ended December 31, 2007 and 2006



For the year 2008, gross exploration costs totaled $10,547,000 compared to $2,948,000 in 2007. In 2008 the Company expensed exploration permits $6,612,000 (2007: 843,000); exploration costs $3,935,000 (2007: 2,105,000) and wrote off the mining license costs $359,000 (2007: nil).



|                                                       |                   |                   |            
|------------------------------------------------------ | ----------------- | ----------------- | -----------
|                                                       | 2008              | 2007              | 2006       
|Gansu                                                  |                   |                   |            
|·
Yangshan, Anba                                       | -                 | 13,000            | 4,000      
|·
Minco-Qinqi
(formerly Western Extension of Yangshan) | -                 | (163,000)         | 20,000     
|·
Longnan                                              | 1,414,000         | 887,000           | 416,000    
|Inner Mongolia                                         |                   |                   |            
|·
Gobi Gold                                            | 271,000           | 214,000           | 11,000     
|·
BYC                                                  | -                 | 34.000            | 135,000    
|Guangdong                                              |                   |                   |            
|·
Changkeng                                            | 8,351,000         | 176,000           | 56,000     
|·
Fuwan                                                | -                 | -                 | 943,000    
|Henan                                                  |                   |                   |            
|·
Xiaoshan                                             | 411,000           | 1,131,000         | -          
|Hunan                                                  |                   |                   |            
|·
Gold Bull Mountain                                   | 99,000            | 656,000           | 1,403,000  
|Gross exploration costs                                | 10,546,000        | 2,948,000         | 2,989,000  
|Exploration cost recoveries                            | -                 | 163,008           | (95,000)   
|Expensed exploration permits                           | (6,612,000)       | (843,000)         | (852,000)  
|Expensed mining license costs                          | (358,500)         | -                 | -          
|Expensed exploration costs                             | (3,935,000)       | (2,268,000)       | (1,683,000)
|Capitalized mining permit costs                        | $               - | $               - | $  358,400 





Most of the increase in exploration costs in 2008 is due to the increase of exploration permit costs.



a.

During 2008, the shareholders of MingZhong provided shareholder loans totalling RMB 30 million (approximately $5.39 million) to MingZhong. RMB 19 million (approximately $2.94 million), of the  RMB 30 million, was used to make the first payment for the ChangKeng Exploration Permit to the 757 Exploration Team. As at December 31, 2008, the Company recorded exploration permit costs for $3.66 million, interest expenses for $0.21 million and a $1.17 million of exchange loss for the remaining balance of RMB 29 million (approximately $5.04 million).



b.

On July 18, 2008 the Company signed an agreement with Long Da Fu (Beijing) Investment Co. Ltd to sell the interest in BYC project for RMB 7 million ($1.2 million).



c.

Activities on both Anba gold property and Minco Qinqi project were ceased in 2007. The total costs incurred for the AnBa project was $490,000, and $279,000 was for the Minco  Qinqi project.



d.

On April 30, 2007, a JV contract was signed between Minco China and the Henan Nonferrous Exploration and Mining Company (HNEM), a subsidiary of the Nonferrous Geological Exploration Bureau of Henan Province to jointly explore and develop the precious and nonferrous resources in the Xiaoshan project area. On June 11, 2007, a business license was issued to the JV, Henan Zhongjia Minco Mining Co. Ltd. (Zhongjia). The Company spent $1,131,000 to December 31, 2007 on exploration costs, including $842,788 (RMB 6,000,000) to acquire the exploration permits. The Company currently has a 70% interest in Zhongjia and therefore records a 30% non-controlling interest to reflect the minority owners interests in Zhongjia.





51





---

e.

In July 2006, Minco Chinas wholly owned subsidiary Yuanling Minco entered into a Gold Bull Mountain Mining License Transfer Agreement with Yuanling County Government.  On August 10, 2006, the Gold Bull Mountain Mining License was transferred to Yuanling Minco. In 2006, the Company hd paid a total of RMB 2,546,652 (approximately $358,400).



f.

On August 5 2006, the Company entered into a Shareholding and Enterprise Assets Transfer Agreement to acquire Huaihua Tiancheng in order to obtain exploration permits for the areas around the Gold Bull Mountain mining licensed area. The acquisition price was RMB 6,000,000 (approximately $852,000), which was paid as of December 31, 2006.



The Companys exploration costs represent expenditures to undertake and support exploration activities on the Companys properties.



Administrative Expenses



First Quarter ended March 31, 2009 Compared to March 31, 2008



The Companys administrative expenses include overhead associated with administering and financing the Companys exploration activities. In the three-month period ended March 31, 2009, after adjusting for a foreign exchange gain of $67,000  the Company spent a total of $706,000 on administrative expenses compared to $896,000 in the same period of 2008.



Significant changes in expenses are as follows:



·

The Company realized a foreign exchange gain of $67,000, as compared to a gain of $101,000 in the same period of 2008.



·

The Company recorded stock based compensation in the three-month period ended March 31, 2009 of $154,000 compared to $419,000 in the comparative period.



·

Personnel costs (comprising salaries, benefits and consulting fees) for the three-month period ended March 31, 2009 were $220,000, compared to $174,000 in the same period of 2008.  The amount increased due to an increase in employees.



·

The Company incurred investor relations expense of $54,000 in the three-month period ended March 31, 2009 compared to $148,000 in the same period of 2008.



In the three-month period ended March 31, 2009 the Company granted 1,582,000 stock options to its directors, officers, employees and consultants at the price of $0.48. In the first quarter of 2008, no stock options were granted to its employees and consultants





Year Ended December 31, 2008 Compared to Year Ended December 31, 2007



The Companys administrative expenses include overhead associated with administering and financing the Companys exploration activities. For the full year ended December 31, 2008 the Company incurred a total of $3.8 million (2007 - $4.6 million) administrative expenses, net off foreign exchange.



Significant changes in expenses are as follows:



·

Consulting fees increased to $284,000 (2007 - $76,000) as the Company incurred fees associated with a review of the internal controls and SOX compliance with a major accounting firm in 2008.  In addition, the Company recorded costs associated with consultants providing in-house legal counsel.

·

The Company recorded a foreign exchange loss of $1.0 million for the full year ended December 31, 2008 (2007 loss  $0.4 million).



52





---

·

The Company incurred investor relations expense of $0.4 million for the year ended December 31, 2008 (2007 - $0.6 million). The decrease reflects managements efforts to reduce expenditures so as to preserve cash for exploration activities.

·

The Company had reduced property investigation expenses in 2008 ($0.09 million) as the focus was on the Changkeng Gold property in relation to prior year (2007 - $0.2 million).

·

The Company recorded stock based compensation expense of $1.2 million for the full year ended December 31, 2008 (2007 - $2.0 million). The decrease in stock based compensation over prior year is due to the fact that there were less new options issued and the price at which the options were granted.



Year Ended December 31, 2007 Compared to Year Ended December 31, 2006



The Companys administrative expenses include overhead associated with administering and financing the Companys exploration activities. Minco Gold and Minco Silver share its Vancouver and China offices. Minco Gold allocates a portion of salaries, rent and office administration expenses at cost to Minco Silver.



In the year ended December 31, 2007, the Company spent a total of $5,026,000 on administrative expenses compared to $5,760,000 in 2006. Of these expenses, $2,023,000 was non-cash stock based compensation expenses compared to $2,820,000 in the same period of 2006.



Significant changes in expenses were:



·

A foreign exchange loss of $416,000 was incurred in 2007 as compared to a gain of $241,000 in 2006.



·

Most expenditures in 2007 were lower than in 2006 due to Minco Silver being equity accounted for all of 2007.  Minco Silver was consolidated into Minco Golds accounts until November 19, 2006.  The decrease of expenditures is due to the deconsolidation of MSV.





INTEREST AND SUNDRY INCOME



To date the Company has been in the exploration stage and has not earned significant revenue other than interest income, office sublease income, drilling tools rental income and management fees.



First Quarter ended March 31, 2009 Compared to March 31, 2008



In the three months ended March 31, 2009, interest and sundry income was $23,000 compared to $61,000 in the comparative period. The decrease was mainly due to a lower balance on deposit.



Year Ended December 31, 2008 Compared to Year Ended December 31, 2007



In the year ended December 31, 2008, interest and sundry income was $356,000 compared to $307,000 in 2007. The 2008 increase was mainly due to $150,000 debts forgiven recorded as sundry income.



As at December 31, 2008, short-term investments consisted of $851,000 cashable guaranteed investment certificates with terms of greater than ninety days but not greater than one year (2007 - $3,995,000) and $72,000 commercial notes (2007 - $2,066, 000).

As at December 31, 2008, the Company held 420,000 common shares of New Cantech Venture Inc. (New Cantech). The market value of the shares was $13,000 (2007- $88,000).





Year Ended December 31, 2007 Compared to Year Ended December 31, 2006



53





---



In the year ended December 31, 2007, interest and sundry income was $307,000 compared to $674,000 in 2006. The 2007 decrease was mainly due to decreased balances invested.



As at December 31, 2007, short-term investments consisted of cashable guaranteed investment certificates, commercial notes, and 420,000 common shares of New Cantech Venture Inc. (New Cantech). The market value of the shares was $88,000 as of December 31, 2007.

As at December 31, 2006, short-term investments consisted of: short term fixed deposits, cashable guaranteed investment certificates; two provincial bonds and a Canadian government bond (maturing from September 15, 2008 to April 1, 2015); a Canadian government treasury bill (maturing on April 5, 2007), and 420,000 common shares of New Cantech Venture Inc. (New Cantech). The market value of the shares was $277,000 on December 31, 2006.

At December 31, 2007, the yields on the cashable guaranteed investment certificates and commercial notes ranged  from 4.00% to  4.30% per year (December 31, 2006  1.08% to 4.35%)





NON CONTROLLING INTEREST



First Quarter ended March 31, 2009 Compared to March 31, 2008



The non-controlling interest represents the 30% interest of minority shareholders in Zhongjia JV, which holds the Xiaoshan project, and the 49% interest of the minority shareholders in Mingzhong, based on the amount of their investment adjusted for income or losses from operations since the date of their investment. During the first quarter of 2009, there is nil non-controlling interest compared to $62,000 in the same period of 2008 as total costs incurred have exceeded the contribution from minority shareholders.



Year Ended December 31, 2008 Compared to Year Ended December 31, 2007



The Companys non-controlling interest in the Zhongjia JV and in Mingzhong in 2008 amounted to $82,000 compared to a non-controlling interest in the loss of ZhongJia JV and Mingzhong of $429,000 in 2007. The Company recorded $nil NCI balance in 2008 as the amounts that would be allocated to the minority interest parties would have exceeded their NCI balance. The Company reduced their balance to zero as at December 31, 2008, compared to $82,000 in the comparative year of 2007.



Financial Position (Canadian GAAP)



First Quarter ended March 31, 2009 Compared to March 31, 2008



Compared to $17,404,000 total assets as at March 31, 2008, the Companys  total assets have decreased to  $9,440,000 at March 31, 2009.  None of the components of total assets changed significantly in that periods other than some of the short-term investments were converted to cash and used to fund operations and the Equity Investment in Minco Silver increased due to the Companys equity loss in the operations of Minco Silver.



Year Ended December 31, 2008 Compared to Year Ended December 31, 2007



The Companys total assets have changed from $16,786,000 on December 31, 2007 to $10,558,000 at December 31, 2008 due to the conversion of short term investments to fund operation.  $nil assets of discontinued operations was recorded as at December 31, 2008, compared to $10,000 as at December 31, 2007.



Year Ended December 31, 2007 Compared to Year Ended December 31, 2006



The Companys total assets changed from $19,585,000 at December 31, 2006 to $16,747,000 at December 31, 2007 due to conversion of short term investment to fund operation. $23,000 in total assets was recorded as  discontinued operations (December 31, 2007  $10,000).



54





---





Summary of Quarterly Results (Canadian GAAP  )



The following table summarizes selected financial information of the eight most recently completed quarters derived from the unaudited interim financial statements and audited financial statements contained elsewhere in this document:



|                              |             |             |             |             |             |              |              |             
|----------------------------- | ----------- | ----------- | ----------- | ----------- | ----------- | ------------ | ------------ | ------------
|                              | 2009        |             | 2008        |             |             |              | 2007         |             
|                              | Q1          | Q4          | Q3          | Q2          | Q1          | Q4           | Q3           | Q2          
|Interest income               | $  5,296    | $ 80,333    | $ 11,869    | $ 2,713     | $    43,335 | $     34,418 | $     67,137 | $     70,445
|Net loss*                     | (1,316,968) | (1,349,411) | (2,313,134) | (1,317,998) | (8,283,762) | (311,368)    | (2,880,632)  | (2,403,260) 
|Per share  basic and diluted | (0.03)      | (0.03)      | (0.05)      | (0.03)      | (0.19)      | (0.01)       | (0.07)       | (0.05)      

* As described in the consolidated financial statements for the year ended December 31, 2008, Minco Silver, an equity- accounted investee of the Company, retroactively changed its accounting policy to align its policies with those applied by other comparable mineral property exploration and development companies at a similar stage. Given the Companys 40.48% equity interest in Minco Silver there was a retroactive adjustment recorded to the Companys income statement, with a corresponding credit to the Companys investment in Minco Silver.

**The first three quarters of 2008 (2008-Q1, Q2, Q3) have been restated to give the effect of the new accounting policy and the operating results have been restated in the table above. The fluctuation of the interest income in each quarter of   2008 is due to the timing difference in accrued interest income.





During the most recent eight quarters, the Company had no extraordinary items.



Some period-to-period fluctuations are the result of specific exploration initiatives.



In the first quarter of 2008, the Company recorded the exploration permit costs of $1.368 million for Changkeng Gold exploration permit. .



In the fourth quarter of 2007, the Company recorded a gain on the sale of 1,000,000 Minco Silver shares of $2,978,000. This is the main contributor to the decrease in loss in the fourth quarter of 2007.





EXCHANGE RATES



The Company translates foreign currency transactions into its functional currency in the following manner:  At the transaction date, each asset, liability, revenue and expense is translated into Canadian dollars at the exchange rate in effect on that date.  At each period end, all monetary assets and liabilities are translated into the functional currency by using the exchange rate in effect at that date.  The resulting foreign exchange gains and losses are included in the consolidated statement of operations.  The Company funds its interest in Chinese joint ventures using Canadian funds which are then converted into Chinese RMB.  The Company does not believe that foreign currency fluctuations have had a material impact on its financial condition.  However, no assurance can be given that material foreign currency fluctuations will not occur in the future.  The Company does not engage in foreign currency hedging transaction.



INFLATION



The Company does not believe that inflation will have a materially adverse effect on its financial condition.  However, no assurance can be given that the Company will not experience a substantial increase in inflation.





CRITICAL ACCOUNTING ESTIMATES





55





---

The preparation of the Companys financial statements requires management to make various judgments with respect to estimates and assumptions. On an ongoing basis, management regularly reevaluates its estimates and assumptions; however actual amounts could differ from those based on such estimates and assumptions.   In the opinion of management, none of the accounting estimates reflect matters that are highly uncertain at the time the accounting estimate is made or that would have a material impact on the Companys financial condition, changes in financial condition or results of operations.



MINERAL PROPERTY COSTS



One of the most critical areas where estimates are used is in the area of the valuation of its carrying value of its mineral property costs. Under Canadian GAAP, the Company records its interests in mineral properties at cost.



Development of Mineral Interests



Prior to January 1, 2008, the Companys accounting policy was to commence capitalizing mineral property development costs only upon the establishment of proven and probable reserves based on results of final feasibility studies which indicate whether a property is economically feasible.  Prior to January 1, 2008, the Company had not previously identified any properties that it would take from exploration to development and through to production.



On January 1, 2008, the Company changed this policy to more appropriately align its policy with those applied by other comparable mineral property exploration and development companies at a similar stage.  The Companys new policy is to commence capitalization of mineral property development costs after a mineral resource having economic potential is identified on a property, from which time a property is considered to be a development project and such expenditures are capitalized as development costs. A mineral resource is considered to have economic potential when it is expected that documented resources can be legally and economically developed considering long-term metal prices.



Prior to January 1, 2008, the Company capitalized only mineral property and mineral exploitation rights acquisition costs.  Exploration permit acquisition, exploration and development costs were expensed as incurred, as  the Company did not have any properties that would qualify for capitalization to a mineral interest in accordance with its previous accounting policy. No properties met the criteria for capitalization under the new policy in 2008.





STOCK-BASED COMPENSATION



Another significant estimate relates to accounting for stock-based compensation. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in the subjective input assumptions can materially affect the fair value estimate, and therefore, the existing models do not necessarily provide a reliable single measure of the fair value of the companys stock options granted/vested during the year.  The Company has adopted the Canadian Institute of Chartered Accountants (CICA) Section 3870  Stock-based Compensation and Other Stock-based Payments, which requires an expense to be recognized in the financial statements for all forms of employee stock-based compensation, including stock options. Effective January 1, 2004, the Company adopted the accounting procedures recommended by the Canadian Institute of Chartered Accountants Handbook section on stock-based compensation and other stock-based payments.  Previously, the Company did not record any compensation cost on the granting of stock options to employees and directors as the exercise price was equal to or greater than the market prices at the date of the grant.



The Company expenses, over the vesting period, the fair value of the options at the date of grant.  As permitted by this Handbook section, the Company applied this change retroactively, without restatement, for options granted on or after January 1, 2003.



The Companys other significant accounting policies are described in the notes to the audited financial statements for the year ended December 31, 2008.







56





---



SIGNIFICANT CHANGES IN ACCOUNTING POLICIES



The Companys significant accounting policies are described in the note 3 to the audited financial statements of 2008.



B.

LIQUIDITY AND CAPITAL RESOURCES



Currently, none of the Companys projects are producing revenues.  See note 1 in the Companys consolidated financial statements for the year ended December 31, 2008 for further discussion. To provide working capital for its operations and project development, the Company plans to raise additional funds within 12 months.  Traditionally, the Company has raised capital through the issuance of common shares.  It is contemplated that it will continue to raise capital primarily through investors consisting of resource investment groups, senior mining companies, and public financing through the facilities of the Toronto Stock Exchange.  However, no assurance can be given that the Companys future capital requirements will be obtained.  The Companys access to capital is always dependent upon future financial market conditions, especially those pertaining to venture capital situations such as mining exploration companies.



First Quarter ended March 31, 2009 Compared to March 31, 2008



For the period ended March 31, 2009, the Company used $796,000 to support its operating activities compared to $2,588,000 in the same period of 2008. Non-cash expenses were amortization expenses of $29,000, stock based compensation of $154,000 and the equity loss on the investment in Minco Silver of $133,000. Its also necessary to consider cash used or generated by non-cash working capital items. In aggregate, non-cash working capital generated cash of $277,000.



For the period ended March 31, 2009, the Company generated $149,000 from financing activities, through an increase loan provided by a minority shareholder of ZhongJia JV  compared to $206,000 in the same period of 2008.



For the period ended March 31, 2009, the Company sold short- term investment securities to generate cash to support its exploration activities of $250,000 compared to $3,593,000 in the comparative period of 2008. The Company spent $68,000 to purchase new equipment and capital assets in this period compared to $6,000 in the comparative period of 2008. The Company spent $215,000 on the ChangKeng Silver Mineralization on Minco Silvers behalf, compared to $1,611,000 cash received from Minco Silver due to the settlement of intercompany transactions in the same period of 2008.





The Companys cash and short-term investment balance at March 31, 2009 amounted to $2,664,000.



The Company has an authorized capital of 100,000,000 common shares with no par value. As at March 31, 2009, the Company had 42,989,051 common shares outstanding compared to 42,928,385 common shares outstanding at March 31, 2007.  As at March 31, 2009, Minco Gold had no share purchase warrants outstanding (March 31, 2008  nil).



As at March 31, 2009, Minco Gold had 5,676,167 stock options outstanding, exercisable at varying prices between $1.06 and $3.00 per share.  The maximum number of shares that are potentially issuable for Minco Gold is 57,010,949.



As at March 31, 2009, none of the shares issued were held in escrow. Under the original escrow agreement, 4,880,000 escrow shares were to be released based on the Companys expenditures on exploration and development of a particular resource property. In July 2005, the Company released 1,473,264 escrow shares based on exploration expenditures. In June 2005, the Companys shareholders approved a new escrow agreement that will result in the remaining 1,518,058 escrow shares being released over a period of 18 months on a time release basis: (a) 379,514 escrow shares in January 2006; (b) 379,514 escrow shares on July 1, 2006; (c) 379,514 escrow shares in January 2007 and (d) 379,516 escrow shares on July 1, 2007.









57





---



Year Ended December 31, 2008 Compared to Year Ended December 31, 2007





For the year ended December 31, 2008, the Company used $11.3 million (2007 - $4.9 million) to support its operating activities. The net loss from continuing operations in 2008 was $14.43 million (2007 - $7.5 million). Cash provided by operating activities of discontinued operation activities was $0.7 million (2007 $2,000).



For the year ended December 31, 2008, the Company generated cash from proceeds on issuance of shares $46,000 (2007 - $0.1 million) and generated cash from the repayment of $2.88 million from the related party compared to $nil for the comparative period of 2007.



In 2008, the Company sold short term investment securities  to support its exploration activities of $5.1 million (2007 - $4.7 million) and to make of purchases of equipment with $0.1 million (2007 - $0.2 million). The Company did not  sell any  Minco Silver shares in 2008, compared to $3.2 million proceeds from the sales of Minco Silver shares in 2007. In addition, $3.4 million due from Minco Silver was received in 2008 (2007  net advance to Minco Silver of $1.9 million). Cash provided by investing activities of discontinued operation activities was $4,000 (2007 - nil ).



Year Ended December 31, 2007 Compared to Year Ended December 31, 2006



For the year ended December 31, 2007, the Company used cash of $5,293,000 to support continuing operating activities compared to $5,176,000 in 2006.  The net loss from continuing operations in 2007 was $7, 541,000. In order to reconcile the loss to cash flows, it is necessary to eliminate non-cash expenses, such as amortization of $56,000, stock-based compensation of $2,023,000 and equity loss on investment in Minco Silver of $3,240,000. In addition, certain other operating items need to be eliminated including the dilution gain of $191,000, write down of short-term investments $233,000 and the minority non-controlling interest in a loss of $429,000, as well as the gain on the sale of Minco Silver shares of $2,978,000. Its also necessary to consider cash used or generated by non-cash working capital items. In aggregate, non-cash working capital generated cash of $295,000 in 2007.



For the year ended December 31, 2007 the Company generated cash of $573,000 from financing activities, compared to $4,940,000 in 2006. The cash generated from financing included issuance of common shares in Minco Gold through the exercise of options and warrants, which generated $106,000 and cash generated by non-controlling interests of $512,000.  This was partially offset by the repurchase of 48,000 shares through a normal course issuer bid for $44,000.



In the year ended December 31, 2007, the Company generated $5,864,000 from investing activities compared to cash used of $177,000 in 2006. In the current year there was an increase of $1,904,000 in the cash advanced from Minco China to Minco Silver, $3,248,000 in proceeds from the sale of 1,000,000 Minco Silver shares and $4,746,000 was generated from short-term investments. $226,000 was spent to purchase new equipment and capital assets.



COMMITMENTS



Refer to Tabular Disclosure of Contractual Obligations below.



C.

RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES



The Company does not engage in research and development activities and does not have any patents or licenses.



D.

TREND INFORMATION



As the Company is an exploration company with no producing properties, information regarding trends in production, sales and inventory and similar are not meaningful. The Company has recently acquired interests in properties and it is likely that it will expand its exploration activities. As a result, the Company expects that its operating losses will increase over the next 12 months.

E.

OFF-BALANCE SHEET ARRANGEMENTS





58





---

The Company does not have any off-balance sheet arrangements.



F.

Tabular Disclosure of Contractual Obligations



(a)

The Company has commitments in respect of office leases requiring minimum payments of $1,451,329, as follows:

|     |            
|---- | -----------
|     |            
|2009 | $ 200,174  
|2010 | 205,533    
|2011 | 219,393    
|2012 | 226,323    
|2013 | 240,183    
|2014 | 247,113    
|2015 | 112,613    
|     |            
|     | $ 1,451,329



The Company has entered into sub-lease agreements for a portion of its leased premises and the office lease payments will be shared with these companies.



G.

SAFE HARBOR



Statements included here, which are not historical in nature, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including without limitation, statements as to management's beliefs, strategies, plans, expectations or opinions in connection with the Company's performance, which are based on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate and may differ materially from actual future events or results.



Readers are referred to the documents filed by the Company with the pertinent security exchange commissions, specifically the most recent quarterly reports, annual report and material change reports, each as it may be amended from time to time, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.



ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES



A.

DIRECTORS AND SENIOR MANAGEMENT



The following table sets forth all current directors and executive officers of the Company as of June 15, 2009, with each position and office held by them in the Company, their terms of office and the period of service as such.  Each directors term of office expires at the next annual general meeting of shareholders.







59





---



|                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                           |                                    
|--------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------- | -----------------------------------
|                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                           |                                    
|NAME AND
PRESENT POSITION
WITH THE COMPANY                      | PRINCIPAL
OCCUPATION AND POSITIONS
DURING LAST FIVE YEARS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | DIRECTOR OR OFFICER
SINCE | NUMBER OF
COMMON
SHARES
HELD (2)(3)
|Ken Z. Cai (13)
President,
Chief Executive Officer
and Director | President and CEO of Minco Gold Corporation (formerly Minco Mining & Metals Corporation) from February 1996 to present; CEO and Director of Minco Silver Corporation from 2004 to present; Director of Pacific Link Mining Corp. from 2001 to present; Director of East Energy Corp. (formerlyGobi Gold Inc.). from August 2005 to present and past Acting President from January 2006 to July 2006;  Director of Linear Metals Corporation from July 2006 to present; Director & President of Aquasol Envirotech Ltd, from March 2000 to present; Director of Dragon Pharmaceuticals Inc. from September 1998 to January 2005. | February, 29 1996         | 6,860,231(4)                       
|Robert M. Callander
(1) (7) (8) (13)
Director                   | Vice President of Caldwell Securities Ltd. from 1995 to present and joined Caldwell Securities in 1992.  Director of Pacific Canada Resources Inc. and Member Savings Credit Union.                                                                                                                                                                                                                                                                                                                                                                                                                                                 | August 23, 1996           | 420,000(5)                         
|Michael Doggett(1) (7)(8) (13)
Director                         | Professor/Researcher at Queens University from 1997 to 2007; Michael Doggett & Associates from 1990 to present; President of PCDEP Inc. from 1997 to present; Director of InterCitic Minerals from February 2008 to present; Director of Murgor Resources from March 2004 to present; Director of Pacific Link Mining Corp. from April, 2007 to present; Director of Riverside Resources Inc.                                                                                                                                                                                                                                       | July 16, 2007             | 375,000(6)                         
|Malcolm F. Clay
(1) (7) (8) (12)(13)
Director                   | Mr. Clay is a Chartered Accountant (FCA) and was a partner of KPMG and its predecessor firms for 27 years, retiring in 2002. Self-employed consultant from 2002 to present;  Director of Versatile Systems June 2003  present; Director of Abode Mortgage, Feb. 2003  present; Director  of Zongshen Pem Power Systems Inc., June 2004  present.                                                                                                                                                                                                                                                                                 | November 16, 2007         | 300,000(11)                        
|Dwayne Melrose
Director and VP Exploration                      | VP, Exploration for Minco Gold Corporation from May 2007 to present; VP, Exploration for Minco Silver Corporation from May 2007 to present;Exploration Manager for Kumtor Operating Company (subsidiary of Cameco Corp) from 1998 to 2007; Project Geologist for Cameco Corp./ Cameco Gold Inc. from 1986  1998.                                                                                                                                                                                                                                                                                                                   | July, 2007                | 675,000(9)                         



60





---



|                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                 |            
|----------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------------- | -----------
|Paul Zhang
Chief Financial Officer and VP Finance(13) | Chief Financial Officer and VP Finance of Minco Gold Corporation from June 8, 2009  to present; Chief Financial Officer and VP Finance of Minco Silver Corporation from June 8, 2009 to present; Chief Financial Officer and VP Finance of Minco Base Metals Corporation from June 8, 2009- to present; Mr. Zhang is a Canadian Chartered Accountant, a Certified Public Accountant of Illinois, USA, and has a Bachelor of Business Administration from Simon Fraser University.  Mr. Zhang was the CFO of Migao Corporation (TSX: MGO) from 2005 until April 2008, CFO of Melco China Resorts (Holding) Limited (TSXV: MCG) from May 2008 until January 2009, CFO and director of China One Corporation (TSX-V:IND), while it was a capital pool company until it completed its qualifying transaction in December 2008, and director of Asian Resource Global Strategies Inc. (TSX-V: GSI.P), a capital pool company.  Mr. Zhang was the founder and Managing Partner of Zhang & Du LLP, Chartered Accountants, a public practice firm in Toronto, from 2003 to 2005. | June 8, 2009    | Nil        
|Ellen Wei (13)
Controller                             | Ms. Wei serves as the Company's Controller. Her qualifications include an AICPA designation in the United States and a CPA designation in China. Ms. Wei has 10 years experience with a major Chinese auditing firm and 3 years with Ernst & Young respectively. Ms. Wei has worked with the Minco Group for 4 years in the capacity of CFO for Minco Mining (China) ltd. She was the former Controller of Dragon Pharmaceuticals Inc., a listed Company in the United States, for 2.5 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | January 9, 2009 | 185,000(12)



Notes:



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Current member of the Audit Committee of the Company.                                                                                                                                                                                                                                                                                                                                                                                  
|(2) | Common shares and options beneficially owned, directly and indirectly, or over which control or direction is exercised, at the date hereof, based upon the information furnished to the Company by individual directors and officers.  Unless otherwise indicated, such shares are held directly.                                                                                                                                      
|(3) | The directors, nominees, officers and other members of management of the Company, as a group beneficially own, directly or indirectly, 8,815,231 common shares of the Company, representing 20% of the fully diluted issued and outstanding common shares of the Company.  Of the 8,815,231 a total of 3,450,000 are pursuant to stock options granted but not exercised and 5,360,731 are held by Pacific Canada Resources (Note (4)).
|(4) | Includes 5,360,731 common shares held by Pacific Canada Resources, a private company, of which Dr. Ken Cai has more than a 10% interest.  Also includes 1,450,000 common shares subject to options.                                                                                                                                                                                                                                    
|(5) | Includes 420,000 common shares subject to options.                                                                                                                                                                                                                                                                                                                                                                                     
|(6) | Includes 375,000 common shares subject to options.                                                                                                                                                                                                                                                                                                                                                                                     
|(7) | Current member of the Nominations Committee of the Company.                                                                                                                                                                                                                                                                                                                                                                            



61





---



|     |                                                                                                                                           
|---- | ------------------------------------------------------------------------------------------------------------------------------------------
|(8)  | Current member of the Compensation Committee of the Company.                                                                              
|(9)  | Includes 675,000 common shares subject to options.                                                                                        
|(10) | Includes 185,000 common shares subject to options.                                                                                        
|(11) | Includes 200,000 common shares subject to options.                                                                                        
|(12) | Mr. Clay was appointed as a Director of the Company on November 16, 2007.  Mr. Clay was also appointed as Chairman of the Audit Committee.
|(13) | Resident of Canada                                                                                                                        





Other positions currently held by the Companys directors and officers presently other than with other reporting issuers are as follows:



|                                                      |                                                                                                                                                                                                                                                                                                                                                                       
|----------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name of Director
or Officer                           | Positions Held                                                                                                                                                                                                                                                                                                                                                        
|Ken Cai
President, Chief
Executive Officer
& Director | President & Director of Sinowin Investments Inc.
President & Director of MLK Capital Corp.
President & Director of Pacific Canada Resources Inc.
Director of Pacific Link Mining Corp.
President, CEO & Director of Minco Silver Corporation
President & Director of Minco Base Metals Corporation
Director of East Energy Corp.
Director of Linear Metals Corporation
|Robert Callander
Director                             | Director of Pacific Canada Resources Inc.
Director of Member Savings Credit Union                                                                                                                                                                                                                                                                                     
|Malcolm Clay
Director                                 | Director Versatile Systems Inc.
Director Zongshen PEM Power Systems Inc.
Director Abode Mortgage Corporation
Director Powertech Uranium Corp.                                                                                                                                                                                                                         
|Michael Doggett
Director                              | Director of Pacific Link Mining Corp.
Director Murgor Resources Inc.
Director Inter-Citic Minerals Inc.
Director Riverside Resources Inc.                                                                                                                                                                                                                             
|Paul Zhang
Chief Financial Officer and VP Finance     | Chief Financial Officer and VP Finance of Minco Silver Corporation
Chief Financial Officer and VP Finance of Minco Base Metals Corporation
Director of Asian Resource Global Strategies Inc.                                                                                                                                                                          
|Dwayne Melrose
Director and VP Exploration            | VP Exploration of Minco Silver Corporation
VP Exploration of Minco Base Metals Corporation                                                                                                                                                                                                                                                                            
|Ellen Wei
Controller                                  | Controller of Minco Silver Corporation
Controller of Minco Base Metals Corporation                                                                                                                                                                                                                                                                                    



The business background and principal occupations of the Companys officers and directors are as follows:



Ken Z. Cai

President, Chief Executive Officer and Director



Dr. Cai has served as president, chief executive officer and a director of the Company since February 29, 1996. Dr. Cai, age 45,devotes approximately 40% of his time to the Companys business.  Dr. Cai holds a Ph.D. in mineral economics from Queens University in Kingston, Ontario.  Dr. Cai, a Chinese national now living in Canada, has 20 years' experience in mineral exploration, project evaluation, corporate financing and company management. He has been the driving force behind the Company and responsible for negotiating the property agreements in China. He has a wide range of high-level contacts in the Chinese mining communities and this has allowed Minco to access data on a large



62





---

number of projects throughout China.  Dr. Cai serves as a director and/or officer of the following publicly-traded companies: Minco Silver Corporation, a TSX listed company (Director, President and CEO); Pacific Link Mining Corp., a TSX Venture listed company (Director and Chairman); Linear Metals Corporation (Director) a TSX Venture listed company and East Energy Corp. (formerly Gobi Gold Inc.), a TSX Venture listed company (Director).



Robert Callander

Director



Mr. Callander has been a director since August 1996.  Mr. Callander, age 64, devotes approximately 5% of his time to the Companys business.  He holds an MBA from York University, Toronto, Ontario, Canada, as well as a CFA from the Institute for Investment Management, Charlotte, Virginia.  Mr. Callander has worked for Caldwell Securities Ltd. since 1992 and currently serves as a vice-president with that firm.  Prior to his engagement with Caldwell Securities Ltd., Mr. Callander served as a corporate finance analyst with Nesbitt Burns.



Dwayne Melrose

Director and Vice-President, Exploration



Mr. Melrose, age 52, has been a director since July, 2007 and as Vice-President, Exploration since May, 2007.  Mr. Melrose is a graduate from the University of Waterloo, Ontario and has over 25 years experience as an exploration and mine geologist.  He has been involved in all aspects of exploration and mine exploration from grass roots to mine definition/feasibility stage and open pit mine geology.  Mr. Melrose has worked with the Cameco/Centerra Gold companies exploration departments for the past 21 years in Canada, USA and Kazakhstan with the last nine years as the Exploration Manager at the Kumtor Gold Mine in the Krygyz Republic.  Prior to Kumtor, Mr. Melrose has worked in a variety of gold and base metals geological environments in Eastern-Western Canada, Western USA and Kazakhstan.



Michael Doggett

Director



Dr. Doggett, age 49, has been a director since July, 2007.  Dr. Doggett is the Director of the Mineral Exploration Masters Program and Associate Professor in the Department in Geological Sciences and Geological Engineering at Queens University.  He holds degrees in geology and mineral economics from Mount Allison University and Queens University.  Dr. Doggett has taught professional development seminars in exploration and project evaluation to more than 600 industry participants in a dozen countries and has carried out a range of consulting activities with mining companies, governments and international agencies.  He currently sits as a Director of Murgor Resources Inc., Pacific Link Mining Corp., Inter-Citic Minerals, the Prospectors and Developers Association of Canada, and on the Committee for Earth Resources for the United States National Academy of Sciences.



Malcolm F. Clay

Director



Mr. Clay, age 68, was appointed a Director of the Company and Chairman of the Audit Committee on November 16, 2007.  He devotes approximately 10% of his time to the Companys business.  Mr. Clay is a Chartered Accountant (FCA) and was a partner of KPMG and its predecessor firms for 27 years, retiring in 2002.  As a public accountant, he served as lead audit or concurring partner for public companies listed on AMEX, NYSE and Canadian Stock Exchanges.  He was the Partner-in-Charge of the KPMG Vancouver Audit practice for ten years.  In 1997, he was elected as the non-executive Chairman of KPMG Canada.  During his career he acted as an accountant and advisor for numerous private companies and is currently the Chairman of the audit committee for four TSX Venture Exchange listed companies.



Paul Zhang

Chief Financial Officer and VP Finance



Mr. Zhang, age 40, was appointed as the Companys Chief Financial Officer and Vice President of Finance in June 2009.  A Chartered Accountant and a Certified Public Accountant of Illinois USA, Mr. Zhang brings over 15 years of



63





---

accounting/finance experience in various industries since graduated from Simon Fraser University, Canada with a degree in Business Administration.  Mr. Zhang served as the inaugural CFO of Migao Corporation (TSX:MGO), a specialty potash fertilizer producer based in China, from 2005 to April 2008.  He was the managing partner of Zhang, Du LLP, a public practice firm in Toronto from 2003 to 2005.  Most recently before joining the Company, he served as the CFO for a ski resorts developer and operator based in China.  A resident and citizen of Canada, Mr. Zhang came to Canada from China in 1988 to study at Simon Fraser University.  He is bi-lingual in English and Chinese with an in-depth understanding of the unique Chinese culture and business practices.



Ellen Wei

Controller



Ms. Wei, age  47  , has served as the Company's Controller since January 9, 2009. Her qualifications include an AICPA designation in the United States and a CPA designation in China. Ms. Wei has 10 years experience with a major Chinese auditing firm and 3 years with Ernst & Young respectively. Ms. Wei has worked with the Minco Group for 4 years in the capacity of CFO for Minco Mining (China) ltd. She was the former Controller of Dragon Pharmaceuticals Inc., a listed Company in the United States, for 2.5 years





B.

COMPENSATION



Certain information about payments to the Companys executive officers is set out in the following table:



SUMMARY COMPENSATION



|                                                    |                                  |                                  |                     |                            |                                                 |                                                          |                         |                                    
|--------------------------------------------------- | -------------------------------- | -------------------------------- | ------------------- | -------------------------- | ----------------------------------------------- | -------------------------------------------------------- | ----------------------- | -----------------------------------
|                                                    | Annual Compensation              | Long Term Compensation
Awards   
|NEO
Name and
Principal Position




(a)             | Year






(b)                   | Salary
($)





(c)              | Bonus
($)





(d)  | Other
Ann.
Comp
($)



(e) | Securities
Under
Options/
SARs
Granted
(#)

(f) | Shares or Units Subject to Resale Restrictions
($)


(g) | LTIP
Payout
($)




(h) | All Other
Compen-
sation
($)



(i)
|Ken Z. Cai
President, CEO
& Director                | Dec. 31/08
Dec. 31/07
Dec. 31/06 | 137,500(1)
114,275(1)
114,675(1) | 30,000
4,687
55,625 | Nil
Nil
Nil                | Nil
925,000
175,000                             | N/A
N/A
N/A                                              | N/A
N/A
N/A             | N/A
N/A
N/A                        
|Garnet Clark(2)
Former Chief Financial Officer      | Dec. 31/08
Dec. 31/07
Dec. 31/06 | 45,000
16,552
Nil                | Nil
Nil
Nil         | Nil
Nil
Nil                | Nil
150,000
Nil                                 | N/A
N/A
N/A                                              | N/A
N/A
N/A             | N/A
N/A
N/A                        
|Dwayne Melrose
Director and VP,
Exploration         | Dec. 31/08
Dec. 31/07
Dec. 31/06 | 180,000
120,000
Nil              | Nil
7,500
Nil       | Nil
Nil
Nil                | Nil
Nil
Nil                                     | N/A
N/A
N/A                                              | N/A
N/A
N/A             | N/A
N/A
N/A                        
|William Meyer (3)
Former Chairman &  Director       | Dec. 31/08
Dec. 31/07
Dec. 31/06 | Nil
8,000
Nil                    | Nil
Nil
41,700      | Nil
Nil
Nil                | Nil
100,000
Nil                                 | N/A
N/A
N/A                                              | N/A
N/A
N/A             | N/A
N/A
N/A                        
|Matthew Kavanagh
Former Chief Financial Officer (4) | Dec. 31/08
Dec. 31/07
Dec. 31/06 | Nil
38,500
11,897                | Nil
Nil
625         | Nil
Nil
Nil                | Nil
150,000
Nil                                 | N/A
N/A
N/A                                              | N/A
N/A
N/A             | N/A
N/A
N/A                        



64





---



|                                                             |                                  |                   |               |             |                 |             |             |            
|------------------------------------------------------------ | -------------------------------- | ----------------- | ------------- | ----------- | --------------- | ----------- | ----------- | -----------
|Mark Orsmond Former Vice President Corporate
Development (5) | Dec. 31/08
Dec. 31/07
Dec. 31/06 | Nil
12,500
61,171 | Nil
Nil
3,000 | Nil
Nil
Nil | Nil
Nil
300,000 | N/A
N/A
N/A | N/A
N/A
N/A | N/A
N/A
N/A
|Robert S. Tyson
Former Vice- President Corporate Development | Dec. 31/08
Dec. 31/07
Dec. 31/06 | Nil
Nil
13,939    | Nil
Nil
Nil   | Nil
Nil
Nil | Nil
Nil
Nil     | N/A
N/A
N/A | N/A
N/A
N/A | N/A
N/A
N/A
|Paul J. Johnston Former VP Exploration                       | Dec. 31/08
Dec. 31/07
Dec. 31/06 | Nil
Nil
4,209     | Nil
Nil
Nil   | Nil
Nil
Nil | Nil
Nil
Nil     | N/A
N/A
N/A | N/A
N/A
N/A | N/A
N/A
N/A
|Simon Anderson
Former Chief Financial Officer                | Dec. 31/08
Dec. 31/07
Dec. 31/06 | Nil
Nil
9,340     | Nil
Nil
Nil   | Nil
Nil
Nil | Nil
Nil
Nil     | N/A
N/A
N/A | N/A
N/A
N/A | N/A
N/A
N/A



Notes:



(1)

Fees paid to MLK Capital Corporation, pursuant to a consulting agreement.  Dr. Cai serves as president and chief executive officer of MLK Capital Corporation providing consulting, management and supervision services in connection with the development of overall corporate strategy.

(2)

Mr. Clark was Chief Financial Officer from October 10, 2007 to January 11, 2009.

(3)

Mr. Meyer was a Member of the Audit Committee from November 1, 1999 to October 3, 2005.  Mr. Meyer received $8,000 in directors fees during 2007.  He did not stand for re-election and resigned as a director and Chairman of the Audit Committee on July 16, 2007.

(4)

Mr. Kavanagh resigned on September 30, 2007.

(5)

Paid to Mercantile Consulting Limited, a company controlled by Mr. Orsmond.  Mr. Orsmond resigned on April 25, 2007.



C.

BOARD PRACTICES



The current directors of the board were elected to their position at the annual meeting of shareholders held on June 27, 2006.



Each director will continue to serve as such until the next meeting of the shareholders.  The officers of the Company are elected by the board and serve at the boards pleasure. Directors are elected annually at the annual general meeting of shareholders, whereas officers appointments are approved by the board of directors and terminate upon resignation or termination by the board.   The Company has no contract with any of its officers or directors that provide for payments upon termination.



Audit Committee



The Company has an audit committee consisting of Messrs. Clay, Doggett and Callander.  The following is the Companys Charter of the Audit Committee.



Independence



65





---



The members of the Audit Committee must be "independent" of the Company as defined in Canadian National Instrument 58-101 - Disclosure of Corporate Governance Practices.



Mandate



The primary function of the audit committee (the "Committee") is to assist the board of directors in fulfilling its financial oversight responsibilities by reviewing the financial reports and other financial information provided by the Company to regulatory authorities and shareholders, the Company's systems of internal controls regarding finance and accounting and the Company's auditing, accounting and financial reporting processes. The Committee's primary duties and responsibilities are to:



·

Serve as an independent and objective party to monitor the Company's financial reporting and internal control system and review the Company's financial statements.

·

Review and appraise the performance of the Company's external auditors.

·

Provide an open avenue of communication among the Company's auditors, financial and senior management and the Board of Directors.



Composition



The Committee shall be comprised of three independent directors as determined by the Board of Directors, the majority of whom shall be free from any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of his or her independent judgment as a member of the Committee.



At least one member of the Committee shall have accounting or related financial management expertise. All members of the Committee that are not financially literate will work towards becoming financially literate to obtain a working familiarity with basic finance and accounting practices. For the purposes of the Audit Committee Charter, the definition of financially literate is the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can presumably be expected to be raised by the Company's financial statements.



The members of the Committee shall be elected by the Board of Directors at its first meeting following the annual shareholders' meeting. Unless a Chair is elected by the full Board of Directors, the members of the Committee may designate a Chair by a majority vote of the full Committee membership.



Meetings



The Committee shall meet a four times annually,or more frequently as circumstances dictate. As part of its job to foster open communication, the Committee will meet at least annually with the Chief Financial Officer and the external auditors in separate sessions.



Responsibilities and Duties



To fulfill its responsibilities and duties, the Committee shall:



Documents/Reports Review



(a)

Review and update the Charter annually.

(b)

Review the Company's financial statements, MD&A and any annual and interim earnings, press releases before the Company publicly discloses this information and any reports or other financial information (including quarterly financial statements), which are submitted to any governmental body, or to the public, including any certification, report, opinion, or review rendered by the external auditors.



External Auditors



66





---



(a)

Review annually, the performance of the external auditors who shall be ultimately accountable to the Board of Directors and the Committee as representatives of the shareholders of the Company.

(b)

Recommend to the Board of Directors the selection and, where applicable, the replacement of the external auditors nominated annually for shareholder approval.

(c)

Review with management and the external auditors the audit plan for the year-end financial statements and intended template for such statements.

(d)

Review and pre-approve all audit and audit-related services and the fees and other compensation related thereto, and any non-audit services, provided by the Company's external auditors.



Provided the pre-approval of the non-audit services is presented to the Committee's first scheduled meeting following such approval such authority may be delegated by the Committee to one or more independent members of the Committee.



Financial Reporting Processes



(a)

In consultation with the external auditors, review with management the integrity of the Company's financial reporting process, both internal and external.

(b)

Consider the external auditors' judgments about the quality and appropriateness of the Company's accounting principles as applied in its financial reporting.

(c)

Consider and approve, if appropriate, changes to the Company's auditing and accounting principles and practices as suggested by the external auditors and management.

(d)

Following completion of the annual audit, review separately with management and the external auditors any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information.

(e)

Review any significant disagreement among management and the external auditors in connection with the preparation of the financial statements.

(f)

Review with the external auditors and management the extent to which changes and improvements in financial or accounting practices have been implemented.

(g)

Review any complaints or concerns about any questionable accounting, internal accounting controls or auditing matters.

(h)

Review certification process.

(i)

Establish a procedure for the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.



Other



Review any related-party transactions.



Compensation Committee



The Company has a Compensation Committee consisting of Messrs. Callander, Doggett and Clay.  The primary purpose of the Compensation Committee is to:



(a)

establish, review and recommend to the Board of Directors of Minco Gold Corporation compensation and incentive plans and programs; and

(b)

review and approve compensation and awards under compensation and incentive plans and programs for the CEO and senior officers;



with the intention of attracting, retaining and appropriately rewarding employees in order to motivate their performance in the achievement of the Companys business objectives and align their interests with the long-term interests of the Companys shareholders.



Independence





67





---

The members of the Compensation Committee must be "independent" of the Company as defined in Canadian National Instrument 58-101 - Disclosure of Corporate Governance Practices.  The duties and responsibilities of the Compensation Committee include:

·

reviewing and making recommendations to the Board of Directors with respect to the compensation, including compensation criteria and incentives and annual performance review, of the Chief Executive Officer, for final approval by the Board of Directors;

·

reviewing and providing guidance to the Board of Directors with respect to the compensation, including compensation criteria and incentives, of the executive officers of the Company, as recommended by the Chief Executive Officer, for final approval by the Board of Directors;

·

reviewing and providing guidance to the Board of Directors with respect to the compensation, including compensation criteria and incentives, of the directors of the Company;

·

reviewing and making recommendations to the Board of Directors regarding other plans that are proposed for adoption or adopted by the Company for the provision of compensation to employees of, directors of and consultants to the Company;

·

advising on the development of management succession plans by the Board;

·

preparing an annual report on executive compensation to the shareholders of the Company for the management information circular for the annual and general meeting of the Companys shareholders;

·

reviewing and assessing, annually, the Compensation Committee charter and submitting any changes deemed necessary or advisable for approval of the Board of Directors; and

·

performing other functions as requested by the Board of Directors.



Nominations Committee



The Company has a Nominations Committee consisting of Messrs. Callander, Doggett and Clay.  The following is the Companys Charter of the Nominations Committee.



Purpose



The purpose of the Nominating Committee shall be to:



a)

assist the Board of Directors of Minco Gold Corporation, on an annual basis, by identifying individuals qualified to become Board members, and to recommend to the Board the director nominees for the next annual meeting of shareholders;

b)

assist the Board in the event of any vacancy on the Board by identifying individuals qualified to become Board members, and to recommend to the Board qualified individuals to fill any such vacancy; and

c)

recommend to the Board, on an annual basis, director nominees for each Board committee.



Committee Membership



The members of the Nominating Committee must be "independent" of the Company as defined in Canadian National Instrument 58-101 - Disclosure of Corporate Governance Practices.  A Nominating Committee member is independent if he or she has no direct or indirect material relationship with the Company.  A "material relationship" includes a relationship which could, in the view of the Company's Board of Directors, be reasonably expected to interfere with the exercise of a member's independent judgment.



Independence



The members of the Nominations Committee must be "independent" of the Company as defined in National Instrument 58-101 - Disclosure of Corporate Governance Practices.  A Nominating Committee member is independent if he or she has no direct or indirect material relationship with the Company.  A "material relationship" includes a relationship which could, in the view of the Company's Board of Directors, be reasonably expected to interfere with the exercise of a member's independent judgment.



Meetings



68





---



The Nominating Committee will meet as often as the Chair shall determine to be necessary or appropriate.

Authority



The Committee may request any officer or employee of the Company to attend a Committee meeting.  The Committee shall have the authority to retain and terminate any search firm to be used to identify director candidates and shall have authority to approve the search firm's fees and other retention terms, at the Company's expense.



Nominating Committee Duties and Responsibilities



Duties and responsibilities of the Nominating Committee include:



·

reviewing on a periodic basis, the composition of the Board to ensure that an appropriate number of unrelated directors sit on the Board of Directors;

·

analyzing the needs of the Board of Directors when vacancies arise on the board and recommending nominees who meet such needs;

·

ensuring that an appropriate selection process for new nominees to the Board of Directors is in place;

·

recommending to the Board, on an annual basis, nominees for election as directors for the next annual meeting of shareholders;

·

recommending to the Board the nominees for appointment to Committees of the Board on at least an annual basis;

·

reviewing and assessing, annually, the Nominating Committee charter and submitting any changes deemed necessary or advisable for approval of the Board of Directors; and

·

performing other functions as requested by the Board of Directors.



D.

EMPLOYEES



As at July 20, 2009, the Company shares 8 full time employees with Minco Silver Corporation, of which 5 employees are located in Vancouver, British Columbia and the other 74 are located in China.



E.

SHARE OWNERSHIP



During the fiscal year ended December 31, 2008, no amounts were set aside or accrued by the Company or its subsidiaries during such year to provide pension, retirement or similar benefits for directors and officers of the Company, pursuant to any existing plan provided or contributed to by the Company or its subsidiaries.  As at December 31, 2008, the Company had 4,725,834 stock options outstanding and exercisable (as at December 31, 2007 5,236,667) at varying prices between $0.46 and $2.55 per share, which were granted to directors, officers, consultants and employees of the Company.  The following table sets forth, as of June 15, 2009, common stock held by the Companys officers and directors and all outstanding options and warrants to purchase common shares of the Company.



Common Shares Owned by Officers and Directors



|                                                         |                    |                                                            
|-------------------------------------------------------- | ------------------ | -----------------------------------------------------------
|Name and Title                                           | Common
Shares Held | Percentage of Common Shares Outstanding at June 15, 2009(2)
|Ken Cai, President, Chief Executive Officer and Director | 5,497,064(1)       | 12.77%                                                     
|Robert Callander, Director                               | 31,000             | 0.07%                                                      
|Michael Doggett, Director                                | Nil                | N/A                                                        
|Malcolm Clay, Director                                   | 30,000             | 0.07%                                                      
|TOTAL                                                    | 5,558,064          | 12.91%                                                     



Note:





69





---



|    |                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------
|(1) | 5,497,064 common shares held by Pacific Canada Resources, a private company, of which Dr. Ken Cai has more than a 10% interest.



Outstanding Options



The Company has implemented a stock option plan that provides for the issuance of up to 15% of outstanding common shares to directors, employees and consultants under TSX approval.  The stock option plan was approved by the shareholders of the Company at the Annual General Meeting held on June 23, 2007.  As at July 20, 2009 the Company has granted options to purchase up to 5,676,167 common shares to directors, officers, employees and contractors.  The following table sets forth, as of July 20, 2009 granted and outstanding incentive stock options which have been granted to directors, officers, employees and contractors.



|                   |                                 |                                     |                    |                   
|------------------ | ------------------------------- | ----------------------------------- | ------------------ | ------------------
|Date of Grant      | Number of
Stock Options
Granted | Number of
Stock Options
Outstanding | Exercise
Price ($) | Expiry Date       
|April 1, 2005      | 150,000                         | 75,000                              | 1.35               | April 1, 2010     
|May 19, 2005       | 100,000                         | 66,667                              | 1.08               | May 19, 2010      
|January 9, 2006    | 1,015,000                       | 457,000                             | 1.64               | January 9, 2011   
|May 1, 2006        | 100,000                         | 100,000                             | 2.55               | May 1, 2011       
|July 7, 2007       | 200,000                         | 200,000                             | 1.44               | May 17, 2012      
|July 20, 2007      | 100,000                         | 100,000                             | 1.44               | May 17, 2012      
|July 20, 2007      | 100,000                         | 100,000                             | 1.79               | February 12, 2012 
|July 20, 2007      | 100,000                         | 100,000                             | 1.54               | June 1, 2012      
|September 28, 2007 | 2,010,000                       | 1,653,000                           | 0.79               | September 28, 2012
|November 14, 2007  | 475,000                         | 400,000                             | 0.97               | November 13, 2012 
|November 16. 2007  | 200,000                         | 200,000                             | 1.08               | November 15, 2012 
|November 17, 2007  | 75,000                          | 75,000                              | 0.97               | November  17, 2012
|April 15, 2008     | 200,000                         | 200,000                             | 1.44               | April 15, 2013    
|August 20, 2008    | 50,000                          | 50,000                              | 0.81               | August 20, 2013   
|September 9, 2008  | 7,500                           | 7,500                               | 0.66               | September 9, 2013 
|September 10, 2008 | 100,000                         | 100,000                             | 0.66               | September 10, 2013
|December 16, 2008  | 125,000                         | 125,000                             | 0.46               | December 16, 2013 
|January 16, 2009   | 1,582,000                       | 1,582,000                           | 0.48               | January 16, 2014  
|                   |                                 | 5,676,167                           |                    |                   



ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS



A.

MAJOR SHAREHOLDERS



As of July 20, 2009 the Company believes that 4,640,520 of the issued and outstanding common shares were held by 43 registered shareholders with addresses in the United States.



As far as known to the Company, and except as disclosed herein, the Company is not directly or indirectly owned or controlled by another corporation(s) or by any foreign government.  As disclosed below, Pacific Canada Resources Inc., a private company controlled by a director of the Company, as at June 15, 2009, owned 5,360,731 common shares or 12.4% of the issued and outstanding shares of the Companys common stock.  The following table sets forth, as of June 15, 2009, information with respect to (i) any person who is known to the Company to be the owner of more than 5% of any class of the Companys outstanding voting securities and (ii) the total amount of any class of the Companys voting securities owned by the officers and directors as a group.



|               |                    |              |                    
|-------------- | ------------------ | ------------ | -------------------
|Title of Class | Identity of Holder | Amount Owned | Percent of Class(1)



70





---



|              |                                                      |                  |      
|------------- | ---------------------------------------------------- | ---------------- | -----
|Common shares | Pacific Canada Resources Inc.                        | 5,360,731        | 12.4%
|Common shares | Ken Cai                                              | 6,810,731 (2)(3) | 15.8%
|Common shares | All directors, Officers & deemed insiders as a group | 8,102,898(3)(4)  | 20.7%

Notes:



(1)

Based on the issued and outstanding shares of the Company.

(2)

Dr. Ken Cai, a director and officer of the Company, beneficially owns more than 10% of Pacific Canada Resources Inc., a private company.  Also includes options to purchase 1,450,000 common shares.

(3)

Includes Dr. Ken Cai's beneficial interest in 5,360,731 common shares owned by Pacific Canada Resources, Inc. and direct holdings of directors.  The total does include stock options granted.

(4)

Of the 8,102,898 common shares of which a total of 2,631,667 are pursuant to stock options granted but not exercised.



Escrow Securities



As at July 20, 2009 there were no escrow shares outstanding.



Table of Escrow Shares



|                                         |                              
|---------------------------------------- | -----------------------------
|                                         | Pacific Canada Resources Inc.
|Balance December 31, 1996                | 4,880,000                    
|Released at $1.20 per share, June 1998   | (949,561)                    
|Released at $1.50 per share, August 1999 | (508,736)                    
|Released at $0.97 per share, March 2001  | (430,381)                    
|Released at $1.81 per share, August 2005 | (1,473,264)                  
|Balance December 31, 2005                | 1,518,058                    
|Released January 2006                    | (379,514)                    
|Released July 2006                       | (379,514)                    
|Released January 2007                    | (379,514)                    
|Released July 2007                       | (379,516)                    
|Balance as at July 20, 2009              | -                            



B.

RELATED PARTY TRANSACTIONS



In April, 2004, Dr. Cai formed a consulting enterprise known as Sinowin Investments Inc. (Sinowin) and the Company entered into a consulting agreement with Sinowin, which replaced the previous agreement with Kaisun Investment.  Under the terms of the Sinowin agreement, Sinowin receives $9,375 per month in exchange for Dr. Cai serving as president and chief executive officer of the Company and providing consulting, management and supervision services in connection with the development of overall corporate strategy.



During the years ended December 31, 2008, 2007 and 2006, the Company paid to Sinowin Investments Inc. (a consulting company controlled by Dr, Ken Cai,  a total of $143,229, $119,063 and $334,375, respectively, for management services, property investigation, geological consulting, and bonus for arranging financing.  The Company believes that the consulting agreement with Sinowin Investments Inc. and Dr. Cai, are on terms as favorable as could be obtained from an unaffiliated third party.





ITEM 8.

FINANCIAL INFORMATION



Consolidated Statements and Other Financial Information



The following financial statements of the Company are attached to this Annual Report:





71





---



| |                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Consolidated audited financial statements for the Company for the year ended December 31, 2008 (in Canadian dollars) with comparative figures for the years ended December 31, 2007 and December 31, 2006.
Consolidated audited financial statements of Minco Silver Corporation for the year ended December 31, 2008 (in Canadian dollars) with comparative figures for the years ended December 31, 2007 and 2006.





Dividend policy



The Company has never paid any dividends and does not intend to pay any dividends in the near future.





Significant Changes



Minco Gold elected to sell its interest in the Inner Mongolia Huayu-Minco Mining Co., Ltd. (the HYMK JV or BYC) BYC project for RMB7.0 million (approximately $1.2 million). The Company recorded this transaction in the fourth quarter and received three installments, with the final installment of RMB 2.8 million ($0.4 million) received February 28, 2009.





ITEM 9.

THE OFFER AND LISTING



Since February 24, 1998, the Companys common shares have been listed on the Toronto Stock Exchange.  Previously, the Companys common shares were dual listed on the CDNX (formerly the Vancouver Stock Exchange and now the TSX Venture Exchange) and Toronto Stock Exchange.  On January 29, 1999, the Company voluntary delisted its common shares from the CDNX.    The Companys common shares were listed in the United States on the Over The Counter market (OTC) under the symbol MMAXF.  On November 11, 2005 the Company received listing approval on The American Stock Exchange (AMEX).  The Company began trading on the AMEX on November 22, 2005 with its trading symbol on the AMEX as MMK.  The following tables set forth the reported high and low prices for the five most recent fiscal years (Table A), each quarterly period for the past two fiscal years and for the first quarter of 2009 (Table B) and each month for the past six months (Table C).



Table A



High and low price for the five most recent fiscal years.



|                       |                 |                |                 |                
|---------------------- | --------------- | -------------- | --------------- | ---------------
|YEAR                   | TSX
(CDN$)
HIGH | TSX
(CDN$)
LOW | AMEX
(US$)
HIGH | AMEX
(USD$)
LOW
|December 31, 2008      | 0.64            | 0.24           | 0.56            | 0.19           
|December 31, 2007      | 2.40            | 0.67           | 2.07            | 0.65           
|December 31, 2006      | 3.07            | 1.35           | 2.68            | 1.20           
|December 31, 2005  (*) | 1.71            | 1.54           | 1.58            | 1.35           
|December 31, 2004      | 1.90            | 1.58           | N/A             | N/A            





(*)

On November 11, 2005 the Company received listing approval on The American Stock Exchange (AMEX).  The Company began trading on the AMEX on November 22, 2005 with its trading symbol on the AMEX as MMK.  The November 2005 high and low is for the period between November 22, 2005 to December 31, 2005.  On February 1, 2007 the symbol for the Company was changed from MMK to MGH.





72





---



Table B



High and low prices for each quarterly period for the past two fiscal years ended December 31, 2008 and 2007 and the first quarter of 2009.



|                           |                 |                |                      |                    
|-------------------------- | --------------- | -------------- | -------------------- | -------------------
|MONTH/YEAR                 | TSX
(CDN$)
HIGH | TSX
(CDN$)
LOW | AMEX
(USD$)
HIGH (*) | AMEX
(USD$)
LOW (*)
|Quarter 1  March 2007     | 2.40            | 1.38           | 2.07                 | 1.29               
|Quarter 2  June 2007      | 2.18            | 1.35           | 1.88                 | 1.23               
|Quarter 3  September 2007 | 1.47            | 0.69           | 1.42                 | 0.65               
|December 2007              | 1.37            | 0.67           | 1.49                 | 0.68               
|Quarter 1  March 2008     | 1.72            | 0.70           | 1.71                 | 0.70               
|Quarter 2- June 2008       | 128             | 1.00           | 1.30                 | 0.99               
|Quarter 3-September 2008   | 0.89            | 0.40           | 0.84                 | 0.65               
|December 2008              | 0.64            | 0.24           | 0.56                 | 0.19               
|Quarter 1  March 2009     | 0.71            | 0.47           | 0.59                 | 0.38               



(*)

On November 11, 2005 the Company received Listing approval on The American Stock Exchange (AMEX).  The Company began trading on the AMEX on November 22, 2005 with its trading symbol on the AMEX as MMK.  The November 2005 high and low if for the period between November 22, 2005 to December 31, 2005.  On February 1, 2007 the symbol for the Company was changed from MMK to MGH.



ITEM 10.

ADDITIONAL INFORMATION



A. Share Capital



Table C



High and low prices for each month for the past six months.



|              |                  |                 |                       |                     
|------------- | ---------------- | --------------- | --------------------- | --------------------
|MONTH/YEAR    | TSX
(CDN $)
HIGH | TSX
(CDN $)
LOW | AMEX
(USD $)
HIGH (*) | AMEX
(USD $)
LOW (*)
|May 2009      | 0.93             | 0.62            | 0.85                  | 0.52                
|April 2009    | 0.71             | 0.55            | 0.60                  | 0.46                
|March 2009    | 0.71             | 0.47            | 0.59                  | 0.38                
|February 2009 | 0.86             | 0.52            | 0.69                  | 0.42                
|January 2009  | 0.66             | 0.46            | 0.60                  | 0.35                
|December 2008 | 0.64             | 0.24            | 0.56                  | 0.19                



The Company has 100,000,000 common shares authorized, without par value, of which 43,037,051 common shares were issued and outstanding as of July 20, 2009.  Each of the common shares has equal dividend, liquidation and voting rights.  Voters of the common shares are entitled to one vote per share on all matters that may be brought before them.  Holders of the common shares are entitled to receive dividends when declared by the board of directors from funds legally available for that purpose.  The common shares are not redeemable, have no conversion rights and carry no pre-emptive or other rights to subscribe for additional shares.  The outstanding common shares are fully paid and non-assessable.  Of the Companys common shares outstanding, none are currently held in escrow, subject to release or cancellation upon certain conditions.  See Item 7 - Escrow Securities. The transfer agent and registrar for the common shares is Computershare Trust Company of Canada, 510 Burrard Street, Vancouver, British Columbia, Canada, V6B 5A1.  The following table sets forth a history of the share capital for the Company for the last three fiscal years, and through July 20, 2009.



73





---



|                   |                                   |           |                     
|------------------ | --------------------------------- | --------- | --------------------
|                   |                                   | Issuance  | Common Share
Balance
|December 31, 2005  | Issued and Outstanding            |           | 38,633,992          
|January 3, 2006    | Options Exercised                 | 45,000    |                     
|January 20, 2006   | $1.40 Broker Options Exercised    | 162,500   |                     
|February 7, 2006   | Exercise of Warrants @ $1.70      | 10,500    |                     
|February 15, 2006  | $1.40 Broker Options Exercised    | 38,885    |                     
|February 18, 2006  | $1.40 Broker Options Exercised    | 48,615    |                     
|February 23, 2006  | $0.55 options Exercised           | 321,500   |                     
|March 7, 2006      | Exercise of Warrants @ $1.70      | 10,500    |                     
|March 14, 2006     | Exercise of Warrants @ $1.50      | 15,000    |                     
|March 17, 2006     | Exercise of Warrants @ $1.70      | 21,000    |                     
|March 17, 2006     | Exercise of Warrants @ $1.50      | 22,000    |                     
|March 22, 2006     | Exercise of Warrants @ $1.70      | 25,000    |                     
|March 24, 2006     | Exercise of Stock Options @ $0.50 | 40,000    |                     
|April 3, 2006      | Exercise of Warrants @ $1.70      | 25,000    |                     
|April 4, 2006      | $1.50 options Exercised           | 8,333     |                     
|April 17, 2006     | Exercise of Warrants @ $1.50      | 50,000    |                     
|April 25, 2006     | Exercise of Warrants @ $1.50      | 20,000    |                     
|April 26, 2006     | Exercise of Warrants @ $1.50      | 10,000    |                     
|April 27, 2006     | $1.80 options Exercised           | 13,300    |                     
|May 1, 2006        | Exercise of Warrants @ $1.50      | 15,000    |                     
|May 3, 2006        | $1.50 options Exercised           | 10,000    |                     
|May 3, 2006        | $1.35 options Exercised           | 10,000    |                     
|May 8, 2006        | $0.83 options Exercised           | 50,000    |                     
|May 8, 2006        | Exercise of Warrants @ $1.50      | 10,000    |                     
|May 9, 2006        | Exercise of Warrants @ $1.70      | 8,928     |                     
|May 10, 2006       | Exercise of Warrants @ $1.50      | 37,000    |                     
|May 15, 2006       | Exercise of Warrants @ $1.50      | 125,500   |                     
|May 16, 2006       | Exercise of Warrants @ $1.50      | 78,100    |                     
|May 17, 2006       | Exercise of Warrants @ $1.50      | 50,000    |                     
|May 23, 2006       | Exercise of Warrants @ $1.50      | 11,000    |                     
|May 24, 2006       | Exercise of Warrants @ $1.50      | 31,000    |                     
|May 25, 2006       | Exercise of Warrants @ $1.50      | 10,000    |                     
|May 25, 2006       | Exercise of Warrants @ $1.50      | 1,672,900 |                     
|May 25, 2006       | $1.08 options Exercised           | 33,333    |                     
|June 6, 2006       | Exercise of Warrants @ $1.50      | 12,000    |                     
|June 6, 2006       | $0.83options Exercised            | 100,000   |                     
|June 16, 2006      | $1.13options Exercised            | 33,333    |                     
|July 12, 2006      | $0.55 options Exercised           | 150,000   |                     
|September 26, 2006 | Exercise of Warrants @ $1.70      | 50,000    |                     
|October 2, 2006    | Exercise of Warrants @ $1.70      | 125,000   |                     
|November 28, 2006  | $0.20options Exercised            | 596,000   |                     
|November 28, 2006  | $0.55options Exercised            | 100,000   |                     
|December 7, 2006   | $1.60options Exercised            | 25,000    |                     
|December 31, 2006  | Issued and Outstanding            |           | 42,865,219          
|June 1, 2007       | $1.35 options Exercised           | 45,000    |                     
|June 1, 2007       | $1.07 options Exercised           | 8,333     |                     
|June 21, 2007      | $0.55 options Exercised           | 49,500    |                     
|July 12, 2007      | $1.07 options exercised           | 8,333     |                     
|August 17, 2007    | Normal course issuer bid          | (40,000)  |                     
|August 20, 2007    | Normal course issuer bid          | (3,500)   |                     



74





---



|                  |                          |         |           
|----------------- | ------------------------ | ------- | ----------
|August 21, 2007   | Normal course issuer bid | (4,500) |           
|December 31, 2007 | Issued and Outstanding   |         | 42,928,385
|April 10, 2008    | $0.79 options exercised  | 33,333  |           
|May 5, 2008       | $0.79 options exercised  | 13,333  |           
|May 8, 2008       | $0.79 options exercised  | 10,000  |           
|May 29, 2008      | $0.79 options exercised  | 4,000   |           
|December 31, 2008 | Issued and Outstanding   |         | 42,989,051
|July 20, 2009     | Issued and Outstanding   |         | 42,989,051



Except for finders fees, all issuances noted above were for cash. No shares issuances in the period covered by the above table were subject to discounts, special terms or installment payments.  In addition, the Company has raised funds by issuing special warrants that may be converted into common shares of its subsidiary Minco Silver as described in Item 5B "Liquidity and Resources".



Normal Course Issuer Bid

(Share Buy-Back Program)



On November 20, 2006, the Company announced that it had received approval from the Toronto Stock Exchange (TSX) for the Companys Notice of Intention to Make a Normal Course Issuer Bid.  Under the terms of the Normal Course Issuer Bid, the Company may acquire up to 2,107,210 common shares of the Company (the Shares) between November 22, 2006 and November 21, 2007.  As of the date of the acceptance, the Company had not acquired any of its shares in the last 12 months.  All Shares purchased by the Company under the Normal Course Issuer Bid will be effected through the facilities of the TSX.



The Company is limited, pursuant to the policies of the TSX on issuer bids, to purchase not more than 842,884 shares (2% of the Companys 42,144,219 issued and outstanding Shares as of October 31, 2006) during any 30-day period to a maximum of 2,107,210 Shares (5% of the Companys 42,144,219 issued and outstanding Shares) during the 12 month period.  The price at which the Shares will be purchased pursuant to the Normal Course Issuer Bid by the Company will be the market price of the Shares at the time of acquisition and will be at a price that is not higher than the last independent trade of a board lot of Shares of the Company.  In August 2007, the Company acquired and cancelled a total of 48,000 shares under a Normal Course Issuer Bid at an average purchase price of $0.90. No other shares were acquired pursuant to the Normal Course Issuer Bid.



B.

MEMORANDUM AND ARTICLES OF ASSOCIATION



On July 8, 1996, the Company adopted revised its Articles of Incorporation under the laws of the Province of British Columbia Company Act.  On March 29, 2004, the new British Columbia Business Corporations Act (BCA) was proclaimed, replacing the pre-existing British Columbia Company Act.  Accordingly, the Company is now subject to the BCA, and no longer governed by the Company Act.  The BCA is a more modern corporate statute, and is designed to provide greater flexibility and efficiency for British Columbia companies.  For example, the new BCA does not impose any British Columbia or Canadian residency requirements on the members of the Board of Directors of the Company.



In accordance with the BCA, the Company has filed a transition application with the Registrar of Companies, the principal element of which involved replacing the Companys Memorandum with a new form designated a Notice of Articles.  The Company filed its transition application as of May 11, 2005.  As a result of the Company having filed its transition application, it may alter its Notice of Articles and adopt a new form of Articles to take advantage of the greater flexibility and efficiency inherent in the BCA, and to make its Articles consistent with the terminology and certain provisions of the BCA.  At the Companys Annual General and Special Meeting of Shareholders held on June 27, 2005,



Shareholders approved a Special Resolution approving the alteration of The Notice of Articles of the Company be altered to remove the application of the pre-existing company provisions, as provided for in the British Columbia Business Corporations Act, and the Companys Notice of Articles be altered accordingly.  In addition to deleting the



75





---

PCPs, the Shareholders of the Company approved the deletion of the Companys existing Articles in their entirety and replaced them with a new set of Articles.  The new set of Articles makes the Companys Articles consistent with the terminology and provisions of the BCA.  Most of the changes in the new form of Articles are minor in nature, and will not affect the Shareholders or the day-to-day administration of the Company.  However, there are several changes of note:  i)  The directors will be able to approve a change of name of the Company without the necessity of obtaining shareholder approval; ii) The directors will be able to increase the authorized capital of the Company, or create one or more classes or series of shares, without the necessity of obtaining shareholder approval; and iii) The requirement that the Company purchase or redeem its shares on a pro-rata basis will be deleted.



Common Shares



All issued and outstanding common shares are fully paid and non-assessable.  Each holder of record of common shares is entitled to one vote for each common share so held on all matters requiring a vote of shareholders, including the election of directors.  The holders of common shares will be entitled to dividends on a pro-rata basis, if and when as declared by the board of directors. There are no preferences, conversion rights, preemptive rights, subscription rights, or restrictions or transfers attached to the common shares.  In the event of liquidation, dissolution, or winding up of the Company, the holders of common shares are entitled to participate in the assets of the Company available for distribution after satisfaction of the claims of creditors.



Powers and Duties of Directors



The directors are to manage or supervise the management of the affairs and business of the Company and have authority to exercise all such powers of the Company as are not, by the Business Corporations Act, or by the memorandum or the articles of incorporation, required to be exercised by the Company in a general meeting.  Directors will serve as such until the next annual meeting.  In general, a director who is, in any way, directly or indirectly interested in an existing or proposed contract or transaction with the Company whereby a duty or interest might be created to conflict with his duty or interest director, is to declare the nature and extent of his interest in such contract or transaction or the conflict or potential conflict with his duty and interest as a director.



Such director may not vote in respect of any such contract or transaction with the Company in which he is interested and if he does so, his vote will note be counted, but he will be counted in the quorum present at the meeting at which such vote is taken.  However, notwithstanding the foregoing, directors have the right to vote on determining the remuneration of the directors.  The directors may from time to time on behalf of the Company; (a) borrow money in such manner and amount from such sources and upon such terms and conditions as they think fit; (b) issue bonds, debentures and other debt obligations; or (c) mortgage, charge or give other security on the whole or any part of the property and assets of the Company.  There is a minimum share ownership requirement for the Company's directors.



Shareholders



An annual general meeting is to be held once in every calendar year at such time and place as may be determined by the directors.  A quorum at an annual general meeting and special meeting is two shareholders or one or more proxy holder representing two shareholders, or one shareholder and a proxy holder representing another shareholder.



There is no limitation imposed by the laws of Canada or by the charter or other constituent documents of the Company on the right of a non-resident to hold or vote the common shares, other than as provided in the Investment Canada Act, (the Investment Act) discussed below under Item 10. Additional Information, D. Exchange Controls..  In accordance with British Columbia law, directors are elected by an ordinary resolution which means (a) a resolution passed by the shareholders of the Company in general meeting by a simple majority of the votes cast in person or by proxy, or (b) a resolution that has been submitted to the shareholders of the Company who would have been entitled to vote on it in person or by proxy at a general meeting of the Company and that has been consented to in writing by such shareholders of the Company holding shares carrying not less than three-quarters of the votes entitled to be cast on it.



Under British Columbia law certain items such as an amendment to the Companys articles or entering into a merger, requires approval by a special resolution which means (a) a resolution passed by a majority of not less than 3/4 of the votes cast by the shareholders of the Company who, being entitled to do so, vote in person or by proxy at a general



76





---

meeting of the Company (b) a resolution consented to in writing by every shareholder of the Company who would have been entitled to vote in person or by proxy at a general meeting of the Company, and a resolution so consented to is deemed to be a special resolution passed at a general meeting of the Company.



C.

MATERIAL CONTRACTS



The only material contracts not in the ordinary course of business entered into by the Company during thefinancial year ended December 31, 2008, or in prior years that are still in effect are:



|                                   |                                 |                                                                                                                                                                                   |                                                                   
|---------------------------------- | ------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------
|Date                               | Document                        | Party                                                                                                                                                                             | Reference to:                                                     
|January 1, 2007                    | Cost Sharing
Agreement          | Between Minco Silver Corporation, Minco Gold Corporation, Tranzcom China Security Networks Inc. and Aquasol Envirotech (Canada) Inc.                                              |                                                                   
|June 6, 2007                       | Arrangement Agreement           | Between the Company, Minco Base Metals Corporation and 0791852 B.C. Ltd.                                                                                                          | Plan of Arrangement and spin-off of White Silver Mountain project.
|November 7, 2007                   | Arrangement Agreement Amendment | Between the Company and Minco Mining & Metals Corporation (formerly Minco Base Metals Corporation) and Minco Base Metals Corporation (formerly 0791852 B.C. Ltd.)                 | Plan of Arrangement and spin-off of White Silver Mountain project.
|January 1,2005  December 31, 2008 | Various Stock Option Agreements | Various stock option agreements dated between January 1, 2005 and December 31, 2008 between the Company and certain directors, officer, consultants and employees of the Company. |                                                                   



D.

EXCHANGE CONTROLS



There is no law, governmental decree or regulation in Canada that restricts the export or import of capital or affects the remittance of dividends, interest or other payments to a non-resident holder of common shares other than withholding tax requirements.  Any such remittances to United States residents are subject to withholding tax.  See Taxation.  There is no limitation imposed by the laws of Canada or by the charter or other constituent documents of the Company on the right of a non-resident to hold or vote the common shares, other than as provided in the Investment Act.



The following discussion summarizes the principal features of the Investment Act for a non-resident who proposes to acquire the common shares.  The Investment Act generally prohibits implementation of a reviewable investment by an individual, government or agency thereof, corporation, partnership, trust or joint venture (each an entity) that is not a Canadian as defined in the Investment Act (a non-Canadian), unless after review, the Director of Investments appointed by the minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada.  An investment in the common shares by a non-Canadian other than a WTO Investor (as that term is defined by the Investment Act, and which term includes entities which are nationals of or are controlled by nationals of member states of the World Trade Organization) when the Company was not controlled by a WTO Investor, would be reviewable under the Investment Act if it was an investment to acquire control of the Company and the value of the assets of the Company, as determined in accordance with the regulations promulgated under the Investment Act, was $5 million or more, or if an order for review was made by the federal cabinet on the grounds that the investment related to Canadas cultural heritage or national identity, regardless of the value of the assets of the Company.  An investment in the common shares by a WTO Investor, or by a non-Canadian when the Company was controlled by a WTO Investor, would be reviewable under the Investment Act if it was an investment to acquire control of the Company and



77





---

the value of the assets of the Company, as determined in accordance with the regulations promulgated under the Investment Act was not less than a specified amount, which for 1996 was any amount in excess of $168 million.



A non-Canadian would acquire control of the Company for the purposes of the Investment Act if the non-Canadian acquired a majority of the common shares.  The acquisition of one third or more, but less than a majority of the common shares would be presumed to be an acquisition of control of the Company unless it could be established that, on the acquisition, the Company was not controlled in fact by the acquirer through the ownership of the common shares.  Certain transactions relating to the common shares would be exempt from the Investment Act, including:  (a) an acquisition of the common shares by a person in the ordinary course of that persons business as a trader or dealer in securities; (b) an acquisition of control of the Company in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions of the Investment Act; and (c) an acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of the Company, through the ownership of the common shares, remained unchanged.



Chinese Currency



The Renminbi currently is not a freely convertible currency.  Although the Chinese central government's policies were introduced in 1996 to reduce restrictions on the convertibility of Renminbi into foreign currency for current account items, conversion of Renminbi into foreign exchange for capital items, such as foreign direct investment, loans or security, requires the approval of the State Administration of Foreign Exchange and other relevant authorities.  The People's Bank of China, or PBOC, sets and publishes daily a base exchange rate with reference primarily to the supply and demand of Renminbi against a basket of currencies in the market during the prior day.



The PBOC also takes into account other factors, such as the general conditions existing in the international foreign exchange markets. Since 1994, the conversion of Renminbi into foreign currencies, including Hong Kong dollars and U.S. dollars, has been based on rates set by the PBOC, which are set daily based on the previous day's interbank foreign exchange market rates and current exchange rates in the world financial markets.  From 1994 to July 20, 2005, the official exchange rate for the conversion of Renminbi to U.S. dollars was generally stable.



On July 21, 2005, the PRC government introduced a managed floating exchange rate system to allow the value of the Renminbi to fluctuate within a regulated band based on market supply and demand and by reference to a basket of currencies. On the same day, the value of the Renminbi appreciated by 2% against the U.S. dollar.  The PRC government has since made and in the future may make further adjustments to the exchange rate system. The PBOC announces the closing price of a foreign currency traded against the Renminbi in the inter-bank foreign exchange market after the closing of the market on each working day, and makes it the central parity for the trading against the Renminbi on the following working day.



E.

TAXATION



Canadian Federal Income Tax Consequences



The following summarizes the principal Canadian federal income tax consequences applicable to the holding and disposition of common shares in the capital of the Company by a United States resident, and who holds common shares solely as capital property (a US Holder as defined below).  This summary is based on the current provisions of the Income Tax Act (Canada) (the Tax Act), the regulations there under, all amendments thereto publicly proposed by the government of Canada, the published administrative practices of Canada Revenue Agency, and on the current provisions of the Canada-United States Income Tax Convention, 1980, as amended (the Treaty).



Except as otherwise expressly provided, this summary does not take into account any provincial, territorial or foreign (including without limitation, any US) tax law or treaty.  It has been assumed that all currently proposed amendments will be enacted substantially as proposed and that there is no other relevant change in any governing law or practice, although no assurance can be given in these respects.  Each US Holder is advised to obtain tax and legal advice applicable to such US Holders particular circumstances.  Every US Holder is liable to pay a Canadian withholding tax



78





---

on every dividend that is or is deemed to be paid or credited to the US Holder on the US Holders common shares.  The statutory rate of withholding tax is 25% of the gross amount of the dividend paid.  The Treaty reduces the statutory rate with respect to dividends paid to a US Holder for the purposes of the Treaty.  Where applicable, the general rate of withholding tax under the Treaty is 15% of the gross amount of the dividend, but if the US Holder is a company that owns at least 10% of the voting stock of the Company and beneficially owns the dividend, the rate of withholding tax is 5% for dividends paid or credited after 1996 to such corporate US Holder.  The Company is required to withhold the applicable tax from the dividend payable to the US Holder, and to remit the tax to the Receiver General of Canada for the account of the US Holder.



Pursuant to the Tax Act, a US Holder will not be subject to Canadian capital gains tax on any capital gain realized on an actual or deemed disposition of a common share, including a deemed disposition on death, provided that the US Holder did not hold the common share as capital property used in carrying on a business in Canada, and that neither the U. S. Holder nor persons with whom the US Holder did not deal at arms length (alone or together) owned or had the right or an option to acquire 25% or more of the issued shares of any class of the Company at any time in the five years immediately preceding the disposition.



United States Tax Consequences



The following summarizes the principal U.S. federal income tax consequences to the holding and disposition of common shares in the capital of the Company by US Holders (defined below) and who holds their shares as capital assets within the meaning of Section 1221 of the U.S. Internal Revenue Code (Code).





US Holders



As used herein, a US Holder includes a holder of Common Shares who is a citizen or resident of the United States, a corporation (including any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States or of any political subdivision thereof, and an estate whose income is subject to U.S. federal income taxation regardless of its source, or a trust (a) if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (b) that has elected to be treated as a U.S. person under applicable U.S. Treasury Regulations .If a partnership (including for this purpose any entity treated as a partnership for U.S. federal income tax purposes) holds common shares, the tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. If a U.S. Holder is a partner in a partnership that holds the common shares, the U.S. Holder should consult its tax advisor regarding the specific tax consequences of owning and disposing of its shares.  A US Holder does not include (1) those who own (directly, or indirectly by attribution) 10% or more of the share capital or voting power of the Company; (2) are persons subject to the alternative minimum tax; (3) persons holding the shares as part of a straddle, hedging or conversion transaction and (4)persons subject to special provisions of federal income tax laws, such as tax exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals or foreign corporations whose ownership of common shares is effectively connected with the conduct of a trade or business in the United States and shareholders who acquired their stock through the exercise of employee stock options or otherwise as compensation.



The following discussion is based upon the sections of the Code, Treasury Regulations, published Internal Revenue Service rulings, published administrative positions of the Internal Revenue Service and court decisions that are currently applicable, any or all of which could be materially adversely changed, possibly on a retroactive basis, at any time.  In addition, this discussion does not consider the potential effects, both adverse and beneficial, of recently proposed legislation which, if enacted could be applied, possibly on a retroactive basis, at any time.  This discussion does not address all U.S. federal income tax matters that may be relevant to a US Holder in light of its particular circumstances, and it does not address any state, local and non-U.S. tax consequences of purchasing, owning and disposing of the common shares of the Company.  Each US Holder should consult with his or her own tax advisor with respect to the tax considerations relevant to such US Holder and its particular circumstances.

Dividends and Other Distributions on the Common Shares



79





---



Subject to the passive foreign investment company rules discussed below under Passive Foreign Investment Company, the gross amount of all our distributions to a U.S. Holder with respect to the common shares (including any Canadian taxes withheld there from) will be included in the U.S. Holders gross income as foreign source ordinary dividend income on the date of receipt by the U.S. Holder, but only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). To the extent that the amount of the distribution exceeds our current and accumulated earnings and profits, it will be treated first as a tax-free return of a U.S. Holders tax basis in its common shares, and to the extent the amount of the distribution exceeds the U.S. Holders tax basis, the excess will be taxed as capital gain. We do not currently, and we do not intend to, calculate our earnings and profits, if any, under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution, if any, will be treated as a dividend. The dividends will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.



With respect to non-corporate U.S. Holders for taxable years beginning before January 1, 2011, dividends may constitute qualified dividend income that is taxed at the lower applicable capital gains rate provided that (1) the common shares are readily tradable on an established securities market in the United States or we are eligible for the benefits of the income tax treaty between the United States and Canada, (2) we are not a passive foreign investment company (as discussed below) for either our taxable year in which the dividend was paid or the preceding taxable year, (3) certain holding period requirements are met and (4) the U.S. Holder is not under an obligation to make related payments with respect to positions in substantially similar or related property. U.S. Treasury guidance indicates that our common shares, which are listed on the American Stock Exchange, are readily tradable on an established securities market in the United States. There can be no assurance that our common shares will be considered readily tradable on an established securities market in later years. U.S. Holders should consult their tax advisors regarding the availability of the lower rate for dividends paid with respect to our common shares.  There can be no assurance that the Companys dividends will be qualifying dividend income because there can be no assurance of the Companys PFIC status in either the year of the distribution or the year preceding the distribution.





Subject to certain limitations, Canadian taxes withheld from a distribution to a U.S. Holder will be eligible for credit against such U.S. Holders U.S. federal income tax liability. If a refund of the tax withheld is available to the U.S. Holder under the laws of Canada or under the income tax treaty between the United States and Canada, the amount of tax withheld that is refundable will not be eligible for such credit against the U.S. Holders U.S. federal income tax liability (and will not be eligible for the deduction against the U.S. Holders U.S. federal taxable income). If the dividends are qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will in general be limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by us with respect to common shares generally will constitute passive category income but could, in the case of certain U.S. Holders, constitute general category income. The rules relating to the determination of the U.S. foreign tax credit are complex, and U.S. Holders should consult their tax advisors to determine whether and to what extent a credit would be available. A U.S. Holder that does not elect to claim a foreign tax credit with respect to any foreign taxes for a given taxable year may instead claim an itemized deduction for all foreign taxes paid in that taxable year.



Subject to the PFIC rules discussed below, upon the sale, exchange or other disposition of the Companys Common Shares, a US Holder generally will recognize capital gain or loss equal to the difference between the amount realized upon the sale, exchange or other disposition of the Common Shares and the US Holders adjusted tax basis in the Common Shares.  The capital gain or loss generally will be long-term capital gain or loss if, at the time of sale, exchange or other disposition, the US Holder has held the Common Shares for more than one year.  Net long-term capital gains of non-corporate US Holders, including individuals, are eligible for reduced rates of taxation.  The deductibility of capital losses is subject to limitations.  Any gain or loss that a US Holder recognizes generally will be treated as gain or loss from sources within the United States for purposes of the U.S. foreign tax credit limitation discussed above.



If the Company pays distributions on the Common Shares in Canadian dollars, the U.S. dollar value of such



80





---

distributions should be calculated by reference to the exchange rate prevailing on the date of actual or constructive receipt of the distributions, regardless of whether the Canadian dollars are converted into U.S. dollars at that time.  If Canadian dollars are converted into U.S. dollars on the date of actual or constructive receipt of such distributions, a US Holders tax basis in such Canadian dollars will be equal to their U.S. dollar value on that date and, as a result, the US Holder generally will not be required to recognize any foreign currency exchange gain or loss.  Any gain or loss recognized on a subsequent conversion or other disposition of the Canadian dollars generally will be treated as U.S. source ordinary income or loss for purposes of the U.S. foreign tax credit limitation discussed above.



Passive Foreign Investment Companies



We believe we were not a passive foreign investment company (PFIC) for U.S. federal income tax purposes for our taxable year ended December 31, 2008. A non-U.S. corporation is considered to be a PFIC for any taxable year if either:



§

at least 75% of its gross income is passive income which includes dividends, interest, royalties, rents (other than rents and royalties derived in the active conduct of a trade or business and not derived from a related person), certain gains from the sales of commodities, annuities and gains from assets that produce passive income, or

§

at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income (the asset test).



There can be no assurance that in any given year 75% or more of the Company's gross income will not be passive income and we will not become a PCIF in this or any future taxable year.





We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock.



A determination of the Companys PFIC status should be done on an annual basis (assuming that we can continue to be a publicly traded entity) . As a result, our PFIC status may change. In particular, because the total value of our assets for purposes of the asset test will be calculated using the market price of our common shares (assuming that we continue to a publicly traded corporation for purposes of the applicable PFIC rules), our PFIC status will depend in large part on the market price of our common shares. Accordingly, fluctuations in the market price of our common shares may result in our being a PFIC for any year. If we are a PFIC for any year during which a U.S. Holder holds common shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds common shares, absent a special election. For instance, if we cease to be a PFIC, a U.S. Holder may avoid some of the adverse effects of the PFIC regime by making a deemed sale election with respect to the common shares. If we are a PFIC for any taxable year and any of our non-U.S. subsidiaries is also a PFIC, a U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. U.S. Holders are urged to consult their tax advisors about the application of the PFIC rules to any of our subsidiaries. For purposes of the PFIC provisions, passive income generally includes dividends, interest, royalties, rents (other than rents and royalties derived in the active conduct of a trade or business and not derived from a related person), certain gains from the sales of commodities, annuities and gains from assets that produce passive income.



If we are a PFIC for any taxable year during which a U.S. Holder holds common shares, such U.S. Holder will be subject to special tax rules with respect to any excess distribution that it receives and any gain it realizes from a sale or other disposition (including a pledge) of the common shares, unless the U.S. Holder makes a mark-to-market election as discussed below. Distributions received by a U.S. Holder in a taxable year that are greater than 125% of the average annual distributions such U.S. Holder received during the shorter of the three preceding taxable years or its holding period for the common shares will be treated as an excess distribution. Under these special tax rules:



§

the excess distribution or gain will be allocated ratably over the U.S. Holders holding period for the common shares,

§

the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we became a PFIC, will be treated as ordinary income, and



81





---

§

the amount allocated to each other year will be subject to the highest tax rate for the US Holder in effect for that year and the interest charge generally applicable to underpayments of tax will be imposed on the resulting tax attributable to each such year.



The tax liability for amounts allocated to years prior to the year of disposition or excess distribution cannot be offset by any net operating losses for such years, and gains (but not losses) realized on the sale of the common shares cannot be treated as capital, even if the U.S. Holder holds the common shares as capital assets.



Alternatively, a U.S. Holder of marketable stock (as defined below) in a PFIC may make a mark-to-market election with respect to shares of a PFIC to elect out of the tax treatment discussed above. If a U.S. Holder makes a valid mark-to-market election for the common shares, the U.S. Holder will include in income each year an amount equal to the excess, if any, of the fair market value of the common shares as of the close of its taxable year over its adjusted basis in such common shares. The U.S. Holder is allowed a deduction for the excess, if any, of the adjusted basis of the common shares over their fair market value as of the close of the taxable year. However, deductions are allowable only to the extent of any net mark-to-market gains on the common shares included in the U.S. Holders income for prior taxable years. Amounts included in a U.S. Holders income under a mark-to-market election, as well as gain on the actual sale or other disposition of the common shares, are treated as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-market loss on the common shares, as well as to any loss realized on the actual sale or disposition of the common shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included for such common shares. A U.S. Holders basis in the common shares will be adjusted to reflect any such income or loss amounts. If a U.S. Holder makes such an election, the tax rules that ordinarily apply to distributions by corporations that are not PFICs would apply to distributions by us, except that the lower applicable capital gains rate for qualified dividend income discussed above under Dividends and Other Distributions on the Common Shares would not apply.



The mark-to-market election is available only for marketable stock, which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter on a qualified exchange, including the American Stock Exchange, or other market, as defined in applicable U.S. Treasury regulations. We expect that our common shares will continue to be listed on the American Stock Exchange and, consequently, the mark-to-market election would be available to U.S. Holders of common shares were we to be a PFIC.



If a non-U.S. corporation is a PFIC, a holder of shares in that corporation can avoid taxation under the rules described above by making a qualified electing fund election to include its share of the corporations ordinary earnings and net capital gain income on a current basis. However, a U.S. Holder can make a qualified electing fund election with respect to its common shares only if we furnish the U.S. Holder annually with certain tax information, and we do not intend to prepare or provide such information.



A U.S. Holder that holds common shares in any year in which we are a PFIC will be required to file IRS Form 8621 regarding distributions received on the common shares and any gain realized on the disposition of the common shares.



U.S. Holders are urged to consult their tax advisors regarding the application of the PFIC rules to the ownership and disposition of common shares.



Other Consequences



To the extent a shareholder is not subject to the tax regimes outlined above with respect to foreign corporations that are PFICs, the following discussion describes the United States federal income tax consequences arising from the holding and disposition of the Companys Common Shares.



Foreign Tax Credit



A US Holder may be entitled to claim a U.S. foreign tax credit for, or deduct, Canadian taxes that are withheld on distributions received by the US Holder, subject to applicable limitations in the Code.  Dividends paid on the common shares will be passive category income or general category income for U.S. foreign tax credit purposes. The amount of foreign income taxes that may be claimed as a credit in any year is subject to complex limitations and



82





---

restrictions, which must be determined on an individual basis by each US Holder.  A US Holder that does not elect to claim a foreign tax credit with respect to any foreign taxes paid for a given taxable year may instead claim a deduction for all foreign paid in that taxable year.  US Holders are urged to consult their tax advisors regarding the availability of the U.S. foreign tax credit in their particular circumstances.



Information Reporting and Backup Withholding



Dividends on common shares and the proceeds of a sale or redemption of a common share may be subject to information reporting to the IRS and possible U.S. backup withholding at a current rate of 28%, unless the conditions of an applicable exemption are satisfied. Backup withholding will not apply to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification or who is otherwise exempt from backup withholding. U.S. Holders who are required to establish their exempt status can provide such certification on IRS Form W-9. U.S. Holders should consult their tax advisors regarding the application of the U.S. information reporting and backup withholding rules.



Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a U.S. Holders U.S. federal income tax liability, and a U.S. Holder may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information.



U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS ABOUT THE APPLICATION OF THE U.S. FEDERAL TAX RULES TO THEIR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE AND LOCAL AND FOREIGN TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF COMMON SHARES.





F.

DIVIDENDS AND PAYING AGENTS



There are no restrictions on the payment of dividends by the Company. While dividends may be declared at the discretion of the Companys board of directors, the Company has not declared any dividends as of the date of this Registration Statement, nor does it intend to do so in the foreseeable future. Accordingly the Company has not appointed any financial organization to act as paying agents of the Company.



G.

STATEMENT BY EXPERTS



We have included in Item 4. Information on the Company information about the Fuwan Silver Project from an updated technical report prepared by P & E Mining Consultants Inc., of 2 County Court Blvd., Suite 202, Brampton. Ontario, Canada, L6W 3W8. The authors of the report are Eugene Puritch P.Eng. and Tracy Armstrong P.Geo. The technical report was prepared under the guidelines of Canadian National Instruments 43-101.  The Company filed the Updated 43-101 technical report on November 2, 2006 via SEDAR.  P&E Mining Consultants Inc. has consented to the inclusion of this information and has authorized the relevant contents of Item 4. Information on the Company.



We have included in Item 4. Information on the Company information about the Jinniushan Gold Project from a technical report prepared by Peter G. Folk, P. Eng., of 280 Wood Dale Drive, Comp. 47, Site 21, Mayne Island, B.C., Canada, V0N 2J0. The technical report was prepared under the guidelines of Canadian National Instruments 43-101.  The Company filed the Updated 43-101 technical report on January 3, 2007 via SEDAR.  Peter G. Folk has consented to the inclusion of this information and has authorized the relevant contents of Item 4. Information on the Company.



We have included in Item 4. Information on the Company information about the Changkeng Gold Project from a technical report by P & E Mining Consultants Inc., of 2 County Court Blvd., Suite 202, Brampton. Ontario, Canada, L6W 3W8. The authors of the report are Eugene Puritch P.Eng., Antoine Yassa, P. Geo. and Tracy Armstrong P.Geo. The technical report was prepared under the guidelines of Canadian National Instruments 43-101.  The Company filed the Updated 43-101 technical report on April 24, 2008, an amended and restated technical report on October 6, 2008



83





---

and an updated technical report on May 11, 2009 via SEDAR.



H.

DOCUMENTS ON DISPLAY



The Company files annual reports and furnishes other information with the SEC. You may read and copy any document that we file at the SEC's Public Reference Room at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 or by accessing the Commissions website (http://www.sec.gov). The Company also files its annual reports and other information with the Canadian Securities Administrators via SEDAR (www.sedar.com).  Copies of the Companys material contracts are kept in the Companys administrative headquarters.



I.

SUBSIDIARY INFORMATION



The Company incorporated three separate Companies with current or planned business operations, which are all created for the exploration and acquisition of mineral projects in China as described below.



·

Minco Base Metals Corporation, incorporated on August 20, 2004, under the laws of British Columbia.  This company was formed to segregate its base metal projects as part of a long term plan to build the Companys base metals assets in China.  The White Silver Mountain project will form the asset base of this company.  This company is currently searching for other projects to acquire and develop in China.



On November 15, 2007 the Company completed a Plan of Arrangement pursuant to which the Company spun off its White Silver Mountain project in Gansu Province, PRD to Minco Base Metals.  The Company now holds no shares of Minco Base Metals.



·

Minco Mining (China) Corporation, incorporated in China on May 12, 2004, for the purposes of  managing Minco Golds projects in China, enhancing the Companys management team in China, and expanding upon certain mining activities (such as staking) in China.  This company currently has eight full time and part time employees.



·

Minco Silver Corporation, incorporated on August 20, 2004, under the laws of British Columbia.  Minco Silver was a 100% owned subsidiary of the Company.  This company was incorporated to acquire and develop silver projects in China and is currently involved with the development of the Fuwan silver property in Guangdong Province, China.



At December 31, 2004, the Company owned a 70% interest in Minco Silver but following a subsequent financing by Minco Silver, Minco Golds interest decreased to 55.56%.  On December 2, 2005, Minco Silver became a report issuer listed on the Toronto Stock Exchange (TSX) under the trading symbol MSV.  The Company currently owns 13,000,000 common shares of Minco Silver or a 40.48% of the issued and outstanding common shares of Minco Silver.  Minco Silver and GGB agreed pursuant to the Amending Contract that, subject to the payment of the applicable purchase price, Minco Silver (through Minco China) would hold a 100% interest in the Fuwan Permits, subject to GGB retaining a 10% net profit interest in the properties subject to the Fuwan Permits.



Minco Silver became involved in a number of litigations to collect and release on a loan made to Sterling Mining Company (Sterling) in the amount of USD$5,000,000 as a part of Minco Silvers business transactions.



ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK



The Company is exposed to market risk, primarily related to foreign exchange.  The Company uses the Canadian dollar as its reporting currency and is therefore exposed to foreign exchange movements in China where the Company is conducting exploration activities.  The following table sets forth the principal components of the balance sheet at December 31, 2008 showing the sensitivity to exchange risk:



84





---



Year Ended December 31, 2008





|                                                                    |                |                  |                                              |        
|------------------------------------------------------------------- | -------------- | ---------------- | -------------------------------------------- | -------
|                                                                    | Denominated in | Total Value
in $ | Effect of a 10% Change in Exchange Rate
in $
|$                                                                   | RMB           
|Cash and Cash equivalents                                           | 101,858        | 14,036,818       | 2,604,411                                    | 227,505
|Temporary investments                                               | 939,159        | -                | 939,159                                      | -      
|Receivables (including due from Minco Silver and Minco Base Metals) | 827,482        | 10,220,159       | 2,649,582                                    | 165,645
|Prepaid expenses and deposits                                       | 93,562         | 199,327          | 129,113                                      | 3,232  
|Accounts payable and accrued liabilities                            | 166,698        | 47,800,509       | 8,688,807                                    | 774,737



The following table sets forth the principal components of statement of operations for the year ended December 31, 2008 showing the sensitivity to exchange risk:



|                         |                |                  |                                         |        
|------------------------ | -------------- | ---------------- | --------------------------------------- | -------
|                         | Denominated in | Total Value
in $ | Effect of a 10% Change in Exchange Rate
|$                        | RMB           
|Exploration costs        | 467,862        | 66,347,082       | 10,553,381                              | 916,865
|Administrative expenses  | 2,813,830      | 13,370,124       | 4,846,258                               | 184,766
|Other income             | 356,359        | -                | 356,359                                 | -      
|Non-controlling interest | 82,685         | -                | 82,685                                  | -      



Year Ended December 31, 2007



|                                                                         |                |                  |                                         |         | 
|------------------------------------------------------------------------ | -------------- | ---------------- | --------------------------------------- | ------- | 
|                                                                         | Denominated in | Total Value
in $ | Effect of a 10% Change in Exchange Rate
|$                                                                        | RMB           
|Cash and equivalents                                                     | 87,034         | 9,029,705        | 1,307,892                               | 110,987
|Temporary investments                                                    | 5,344,290      | 6,000,000        | 6,149,044                               | 65,069 
|Receivables (including due from Minco Silver)                            | 374,408        | 34,096,684       | 5,192,779                               | 438,034
|Prepaid expenses and deposits                                            | 99,072         | 36,960           | 104,034                                 | 451    
|Accounts payable and accrued liabilities (including due to Minco Silver) | 2,292,383      | 3,548,066        | 2,819,893                               | 47,955 



The following table sets forth the principal components of statement of operations for the year ended December 31, 2007 showing the sensitivity to exchange risk:



|                         |                |                  |                                         |        
|------------------------ | -------------- | ---------------- | --------------------------------------- | -------
|                         | Denominated in | Total Value
in $ | Effect of a 10% Change in Exchange Rate
|$                        | RMB           
|Exploration costs        | 331,187        | 18,629,320       | 2,947,948                               | 237,887
|Administrative expenses  | 4,219,436      | 5,851,379        | 5,025,538                               | 73,282 
|Other income (loss)      | (39,260)       | 331,794          | 3,409                                   | 3,879  
|Non-controlling interest | -              | 3,057,293        | 429,442                                 | 39,040 



We believe that the selected rate change of 10% is reasonably possible in the near term.  The Company has not entered into any material foreign exchange contracts to minimize or mitigate the effects of foreign exchange fluctuations on the Companys operations.  The Company exchanges Canadian dollars to fund its Chinese operations.  The Company has no long-term debt, therefore, the Company does not believe that the interest rate market risk to be material.



ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES



Not applicable.



85





---

PART II



ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES

AND DELINQUENCIES



Not Applicable



ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF

SECURITY HOLDERS AND USE OF PROCEEDS



Not Applicable



ITEM 15.

CONTROLS AND PROCEDURES



(a)

Disclosure controls and procedures



Disclosure controls and procedures are designed to ensure that information required to be disclosed by the Company is collected and communicated to management, as appropriate, to allow timely decisions regarding required disclosure.



At the end of the period covered by this report, the fiscal year ended December 31, 2008, an evaluation was carried out under the supervision of, and with the participation of, the Companys management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operations of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")).



The Company did not meet the filing date specified for the filling of Form 20-F as an Annual Report, namely, June 30, 2009, and in fact completed the preparation of its Form 20-F on July 29, 2009.  Because of the failure to meet the filing date specified, a fact that comprises part of managements evaluation, the CEO and the CFO have concluded that, as of the end of the period covered by this report, the Companys disclosure controls and procedures were not adequately designed and effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms; and (ii) material information required to be disclosed in the Companys reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow for accurate and timely decisions regarding required disclosure.



(b)

Managements annual report on internal controls over financial reporting



Internal Control over Financial Reporting is a process designed under the supervision of the Companys Chief Executive Officer and Chief Financial Officer to provide reasonable assurance in the reliability of the Companys financial information and the preparation of the audited financial statements. The design includes policies and procedures that:



1. Pertains to the maintenance of records;



2. Provide reasonable assurance that the transactions are recorded accurately and that the receipts and expenditures are
made in accordance with the authorizations of management and directors; and



3. Provide reasonable assurance in the prevention and timely detection of material unauthorized acquisition, use or  disposal of the Companys assets.





Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may



86





---

deteriorate.  Management conducted an evaluation of the design and operation of the companys internal control over financial reporting as of December 31, 2008, based on the criteria set forth in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organization of the Treadway Commission.  This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation.





The Company has a limited number of staff and it is not always possible to achieve a complete segregation of incompatible duties. Management attempts to mitigate the risk of any material misstatement occurring through compensating controls and the hands-on involvement and knowledge of the senior management, however, a control system, no matter how well designed and functioning, can only provide reasonable, not absolute assurance the objectives of the control system are met.



Management's evaluation of the effectiveness of internal controls identified some material deficiencies in the financial reporting process as of December 31, 2008. Specifically, due to the smaller nature of the Company, there was a lack of effective segregation of duties where responsibilities for the preparation, entry and approval of accounting transactions were shared in some locations. In addition, there was a lack of consistency in the application of the Companys standardized, formal policies and procedures around the financial closing and reporting of financial results; the Company did not have the required complement of personnel throughout the year (with appropriate levels of accounting knowledge, experience and training in the application of Canadian generally accepted accounting principles).   The CFO is responsible for preparing, authorizing and reviewing information that is key to the financial reports.  The CFO is also responsible for reviewing the resulting financial reports.  These weaknesses have the potential to result in material misstatements in the Companys financial statements.



The Company has established a monthly review procedure for the financial reporting preparation that includes a detailed review by the Controller of the monthly financial statements submitted by the Companys subsidiaries in order to consolidate accurate data into financial statements, the retention of a new CFO and the initiation of a process to redesign entity wide authorization and approval policies.





(c)

Attestation report of the registered public accounting firm



This annual report does not include an attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys registered public accounting firm pursuant to current rules of the Securities and Exchange Commission that permit the Company to provide only managements report in this annual report.



(d)

Changes in internal controls



There were no significant changes, other than some improvement captioned above in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.



ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT



The Companys board of directors has determined that the Company has one audit committee financial expert serving on its audit committee and that the individual is independent.  Mr. Malcolm F. Clay, Chairman of the Audit Committee serves as the Audit Committees financial expert. He is a Chartered Accountant, with over 27 years experience in both public and private companies.



ITEM 16B.

CODE OF ETHICS - BOARD OF

DIRECTORS AND OFFICERS



The following is the Companys Code of Ethics for the Board of Directors.







87





---

Introduction



Our board of directors has adopted a code of ethics to provide principles for the purpose of promoting:



·

honest and ethical conduct, including the ethical handling of actual or apparent  conflicts of interest between personal and professional relationships;

·

full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications;

·

compliance with applicable governmental laws, rules and regulations;

·

the prompt internal reporting of violations of our code of ethics; and

·

accountability for adherence to our code of ethics.



Our code of ethics applies to our chief executive officer and other senior financial officers performing similar functions as these individuals are responsible for our financial management and satisfying our reporting requirements to securities commissions, stock exchanges and shareholders as well as reporting to our board of directors.  In our code of ethics these individuals are referred to as you.



Principles



1.

You shall act with honesty and integrity in the performance of your duties, shall comply with all laws, rules and regulations of federal, provincial, state and local governments and other private and public regulatory agencies that affect the conduct of our business and our financial reporting.

2.

You are responsible for full, fair, accurate, timely and understandable disclosure in the reports and documents that we file with, or submit to, the Securities and Exchange Commission and in our other public communications.  Accordingly, each of you is responsible for promptly bringing to the attention of the chairman of the board any material information of which you may become aware that affects our disclosure in our public filings.

3.

You shall promptly bring to the attention of the chairman of the board any information you may have concerning evidence of a material violation of the securities or other laws, rules or regulations applicable to us and the operation of our business or any violation of this Code of Ethics.  In either event, any reporting is confidential and you are protected from retaliation.

4.

You shall promptly bring to the attention of the chairman of the board any information you may have concerning (a) significant deficiencies in the design or operation of internal controls which could adversely affect our ability to record, process, summarize and report financial data or (b) any fraud, whether or not material, that involves management or other employees who have a significant role in our financial reporting, disclosures or internal controls.

5.

You must avoid any personal activity or association that could appear to influence your judgment or affect our best interests.  You shall promptly bring to the attention of the chairman of the board any information you may have concerning any actual or apparent conflicts of interest between personal and professional relationships, involving any management or other employees who have a significant role in our financial reporting, disclosures or internal controls.



Violations and Waivers



Our chairman of the board is to advise the board of directors in writing of all violations of this code of ethics reported to him.  Our board of directors is to determine, with or without the advice of others, appropriate actions to be taken in the event you violate this code of ethics.  These actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to this code of ethics and may include actions ranging from: (a) writing notices to the individual involved that the Board has determined that there has been a violation to (b) termination of the individuals employment.  In determining what action is appropriate in a particular case, the board of directors will take into account all relevant information, including the nature and severity of the violation, whether the violation was a single occurrence or repeated occurrences, whether the violation appears to have been intentional or inadvertent, whether the individual in question had been advised prior to the violation as to the proper course of action and whether or not the individual in question had committed other violation in the past.



88





---



No waivers of any provision of this code of ethics may be made except by the board of directors.  Only the board of directors may amend this code of ethics.  Any waiver or amendment shall be reported as required by law or regulation.



ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES



During the past two fiscal years, the Company has paid the following fees to its principal accountants, Ernst & Young, LLP:



|                   |          |           |         
|------------------ | -------- | --------- | --------
|                   | 2008     | 2007      | 2006    
|Audit fees         | $126,500 | $ 125,000 | $ 80,000
|Audit-related fees | -        | -         | -       
|Tax fees           | -        | 1,200     | 3,800   
|All other fees     | -        | -         | -       
|Total              | $126,500 | $ 126,200 | $83,800 
|                   |          |           |         





ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS

FOR AUDIT COMMITTEES



The Company believes that the majority of the members of the Audit Committee were independent.





ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY

THE ISSUER AND AFFILIATE PURCHASERS



None



ITEM 16F.

OTHER



CORPORATE GOVERNANCE CHARTER



The following is the Companys Corporate Governance Charter.



In accordance with the disclosure requirements of Toronto Stock Exchange and using the Corporate Governance Guidelines set out in Section 474 of the Toronto Stock Exchange Company Manual as a reference (the "Guidelines"), the Board of Directors of the Company has adopted the following statement of corporate governance practices:



1.

The Board acknowledges its responsibility for the stewardship of the Company in the following ways:



(i)

The Board participates in strategic planning by considering and, if deemed appropriate, adopting plans proposed and developed by management, with management having the primary responsibility for developing a strategic plan.

(ii)

The Board considers the risks inherent in the mining industry and receives periodic assessments from management as to these risks and the Company's strategies to manage these risks.

(iii)

The Board reviews the personnel needs of the Company from time to time, having particular regard to succession issues relating to senior management.  The training and development of personnel is generally left to management.

(iv)

The Board assesses from time to time how effectively the Company communicates with shareholders, but does not have a formal communication policy.



89





---

(v)

The Board, through the Audit Committee and in conjunction with its auditors, assesses the adequacy of the Company's internal control and management information systems.



The foregoing does not and is expressly not intended to alter, affect or expand in any way the legal duties of the directors to manage or supervise the management of the affairs and business of the Company.



2.

The Guidelines define an "unrelated director" as a director who is independent of management and is free from any interest and any business or other relationship which could, or could be perceived to, materially interfere with the director's ability to act with a view to the best interests of a corporation, other than interests and relationships arising from shareholdings. The Guidelines further state that if the Company has a "significant shareholder", the board should include a number of directors who do not have interests in or relationships with either the corporation or the significant shareholder.  The Company does not have a "significant shareholder" which, as defined by the Guidelines, is a shareholder with the ability to exercise a majority of votes for the election of the board of directors. The entrepreneurial nature of the Company, and the current stage of the Company's development, make it appropriate for the Board to be composed of the present number and composition of directors, and the Board believes that when balanced against the attendant increase in cost to the Company and possible reduction in the efficiency with which decisions are made, it would not be warranted to significantly increase the size of the Board or change the Board's composition at this time.

3.

The Board has not constituted a nominating committee to propose new Board nominees and for assessing directors' performance as the Company is too small to justify a formal process in this regard.  However, the Board as a whole from time to time discusses potential candidates for the Board.

4.

For the reasons cited in 3 above, the Board has not constituted a committee to assess the effectiveness of the Board as a whole or the contribution of individual directors.

5.

The Company does not have a formal process of orientation and education for new members of the Board as some senior Board members currently have considerable experience as members of the boards of other public companies.

6.

The Board has considered its size with a view to the impact of size upon its effectiveness and has concluded that the number of directors as presently constituted is appropriate for the Company given the complexity and current stage of development of the Company's business.  The Board as presently constituted includes considerable experience in the mining industry and generally in the resource sector as well as financial experience.

7.

Board members are presently compensated in the manner described under "Executive Compensation" and the Board has determined that the level of compensation is appropriate having regard to the responsibilities and risks associated with Board membership and the compensation provided to Boards of similar companies.

8.

The Board of Directors has expressly assumed the responsibility for developing the Company's approach to governance issues and in responding to governance guidelines.

9.

The Company has not formally developed position descriptions for the Board and the Chief Executive Officer.  However, the Board is satisfied that senior management is fully aware of their responsibilities and those matters which are within their mandate.

10.

The Board has functioned, and is of the view that it can continue to function, independently of management as required.  The Board has not met without management present, given management representation on the Board and given that in view of the size of the Company and the nature of its business, it is essential that those having an intimate knowledge of the Company's operations be present during important Board discussions.  Notwithstanding the foregoing, if the Board believed it was appropriate and meaningful, it would formalize a process whereby the Board could meet in the absence of management for the handling of the Board's overall relationship with management.

11.

The Audit Committee is composed of two outside and unrelated directors and one inside and related director.  The roles and responsibilities of the Audit Committee have been specifically defined and include responsibility for overseeing management reporting on internal control.  The Audit Committee has direct communication channels with the external auditors.  The external auditors report directly to the Audit Committee.  Due to its size, the Company has no formal internal audit process.  The Audit Committee also recommends to the Board the external auditor to be nominated for the purpose of preparing or issuing an auditors report, as well as the compensation to be paid to the external auditor.

12.

The Board has not adopted a formal system which would enable an individual director to engage an outside



90





---

advisor at the expense of the Company.  If such an engagement were deemed appropriate, it is anticipated that such a request would be brought by the particular director to the Board for consideration.



IN ADDITION TO THE FOREGOING CORPORATE GOVERNANCE PRACTICES, THE COMPANY HAS ALSO ADOPTED A COMMUNICATIONS POLICY.  BOTH THE TORONTO STOCK EXCHANGE (THE TSX) AND THE VARIOUS PROVINCIAL SECURITIES COMMISSIONS ENCOURAGE COMPANIES TO ADOPT THEIR OWN INTERNAL COMMUNICATIONS POLICIES (THE COMMUNICATIONS POLICY). TO FACILITATE THIS, THE TSX AND THE CANADIAN SECURITIES ADMINISTRATORS (THE CSA) HAVE ISSUED SIMILARLY-WORDED GUIDELINES  THE FORMER IS FOUND IN PART IV(B) TIMELY DISCLOSURE OF THE TSX COMPANY MANUAL; THE LATTER IN NATIONAL POLICY 51-201, DISCLOSURE STANDARDS.  THE COMPANYS COMMUNICATIONS POLICY INCORPORATES THE AFOREMENTIONED TSX AND CSA GUIDELINES.



COMMUNICATIONS POLICY



The Communications Policy also explains the Company's policies with respect to confidentiality of information and rules that must be followed when buying or selling the Company shares.  The onus for complying with the Communications Policy and the relevant insider trading and other rules is on each director, officer, employee and insider of the Company.The Communications Policy also contains the Companys whistleblower policies.  Each employee is expected to report situations in which he or her suspects fraud or is aware of any internal control weaknesses.  In addition, weaknesses in the internal control procedures of the Company that may result in errors or omissions in financial information, or that create a risk of potential fraud or loss of the Companys assets, are expected to be brought to the attention of both management and the Board of Directors.



To facilitate the reporting of suspected fraud, it is the policy of the Board of Directors that employees have anonymous and direct access to the Chair of the Audit Committee.  In addition, it is the policy of the Board that employees concerned about reporting internal control weaknesses directly to management are able to report such weaknesses to the Board anonymously.  In this case, the employee should follow the same procedure detailed above for reporting suspected fraud.



The following is the Companys Communications Policy.



Overview



Both the Toronto Stock Exchange (the TSX) and the various provincial securities commissions encourage companies to adopt their own internal communications policies (the Policy). To facilitate this, the TSX and the Canadian Securities Administrators (the CSA) have issued similarly-worded guidelines  the former is found in Part IV(B) Timely Disclosure of the TSX Company Manual; the latter in National Policy 51-201, Disclosure Standards.  This Policy, which is current as of May 11, 2005, incorporates the aforementioned TSX and CSA guidelines.  This Policy has been approved by the Board of Directors of Minco Gold Corporation (the Company) and must be presented for reading by all directors, officers and employees of the Company and its subsidiaries with access to strategic or material non-public information involving the Company and its affairs.



The Policy covers all employees of the Company, its Board of Directors, those authorized to speak on its behalf and all other insiders.  It covers disclosures in documents filed with the securities regulators, financial and non-financial disclosure, including managements discussion and analysis (MD&A) and written statements made in the Companys annual and quarterly reports, press releases, letters to shareholders, presentations by senior management and information contained on the Companys web site and other electronic communications.



It extends to oral statements made in meetings and telephone conversations with analysts and investors, interviews with the media as well as speeches, press conferences and conference calls.  This document will explain the Company's policies with respect to confidentiality of information and rules that must be followed when buying or selling the Company shares. This document is only a summary of specific rules and regulations.  If you have any questions on any issues discussed in this Policy or how you may be affected by the various securities laws, please contact the Chief Financial Officer (CFO), or in his absence, the Chief Executive Officer (CEO).   The onus for complying with the Policy and the relevant insider trading and other rules is on each director, officer, employee and insider of the



91





---

Company.  It is fundamental to the reputation and ongoing success of the Company that its directors, officers, employees and insiders respect and adhere to the rules and procedures outlined in this Policy.



Members of the families of the directors, officers, employees and insiders of the Company and others living with them are expected to comply with this Policy, as if they themselves were directors, officers, employees or insiders of the Company. It is in your interest that the rules and procedures outlined in this Policy are complied with fully.  Failure to comply with these rules and procedures may result in disciplinary action up to and including immediate termination of employment.





DISCLOSURE OF MATERIAL INFORMATION



A.

Policy



To comply with the requirements of provincial securities regulators and the TSX, and in the interests of developing and maintaining the confidence of the investing public, and in assisting the public in making informed investment decisions based on equal access to information, it is the policy of the Company to promptly disclose to the investing public, and to its other public constituencies, all material information concerning the operations and financial results of the Company other than such information as may be lawfully withheld from disclosure and only for such time as it may be lawfully withheld from disclosure.



B.

Procedure



(I)

Information is deemed material and will require prompt disclosure when such information, if made public, would reasonably be expected to result in a significant change in the market price or value of any of the Company's listed securities.  It is also defined as anything that a reasonable investor would consider important in assessing the Company as a potential investment. Material information consists of both material facts and material changes.  Examples of material information would include quarterly results, acquisition of new assets, senior management changes, equity or debt issues, commencement or update of co-development programs, etc. In addition, the declaration of any dividend, conditional or unconditional, will be disclosed immediately upon the conclusion of the Board meeting at which the decision to declare the dividend was made and quarterly financial statements will be disclosed immediately after the Board meeting at which they were approved. The release of information pertaining to dividends and quarterly financial statements will be addressed by the CFO of the Company upon the Boards approval of such statements and dividends without further instructions or authority.  The Company shall endeavor to include, where appropriate, in its press releases and other disclosure documents (i) appropriate cautionary information, especially in reference to forward-looking statements, (ii) specific time references, e.g., ''as of (specific time and date rather than indefinite time references such as 'currently') no merger discussions have taken place" to minimize the duty to update, and (iii) information sufficient to answer likely questions to minimize further inquiry.

(II)

Except as mentioned in the preceding paragraph, the CEO shall determine whether or not any information pertaining to the Company is material, and whether and when it will be disclosed.  In making this determination, the CEO should obtain the advice and counsel of the Board of Directors and of the Companys securities counsel.  In the event of the absence or unavailability of the CEO, the responsibility for determining whether or not information is material, and whether and when it will be disclosed, will be assumed by the CFO with the advice and counsel of the Companys securities counsel.

(III)

The CEO and CFO (the Responsible Officers) may appoint designated spokespersons (the Designated Spokespersons) authorized to disclose or discuss information concerning the Company to specific groups such as the media, analysts, institutional investors and other market professionals.  All other directors, officers and employees approached by these, or other parties for such information shall refer such inquiries to one or more of the Responsible Officers.

(IV)

In the event that a Responsible Officer determines that material information should be disclosed, the Responsible Officer shall cause a news release to be issued disclosing all material facts and, if the TSX is open for trading, shall advise the Market Surveillance branch of the TSX (Market Surveillance) of the details of the release and the proposed method of dissemination.  In the event that a Designated Spokesperson believes that material information should be disclosed, he or she should inform a Responsible Officer immediately.



92





---

Where an announcement is to be made after the TSX has closed for trading, Market Surveillance should be advised of this information before trading opens the next trading day.  Market Surveillance shall determine whether a halt in trading is necessary.  After consulting with Market Surveillance, the Responsible Officer shall send the news release to Canada Stockwatch, Market News, Canada News Wire or other news distribution service, with a copy to Market Surveillance. Immediately following the issuance of the news release, the Responsible Officer shall seek the advice and counsel of the Companys securities counsel regarding possible filing requirements (i.e., material change reports) with the appropriate securities regulatory authorities.

(V)

In the event that material information which would otherwise be required to be promptly disclosed must, for any reason, is kept secret for any length of time, the Responsible Officer, on the advice and counsel of the Companys securities counsel, shall so advise Market Surveillance and explain the reasons for such request.  The Company should also discuss with securities counsel whether or not a confidential material change report should be filed.  Release of the information shall thereafter be made as soon as possible, consistent with the instructions of Market Surveillance. If material information is being withheld, the Company is under a duty to take precautions to keep such information confidential (see Item #2 of this Policy  Maintaining Confidentiality of Information).  In the event that such information or rumours thereof is divulged (other than in the necessary course of business), the Company shall immediately disclose the information to the general public in a news release prepared in accordance with this Policy.

(VI)

In making material disclosure and preparing the text and content of news releases and other disclosure documents, the Responsible Officer shall observe that:



(a)

Half-truths are misleading; disclosure must include any information which, if omitted, would make the rest of the disclosure misleading;

(b)

Unfavourable information must be disclosed as promptly and completely as favourable information;

(c)

No disclosure of previously undisclosed information should be made to selected individuals or groups such as analysts, major shareholders or other market professionals including members of the financial press. If such selective disclosure is made through inadvertence, immediate general disclosure should immediately be made of the subject information through a news release prepared in accordance with this Policy;

(d)

Disclosure must be updated if earlier disclosure has become misleading as a result of intervening events;

(e)

The CFO will determine in advance what information is to be disclosed at meetings with analysts, and shall brief those officers in attendance accordingly.  No material information concerning the finances or prospects of the Company is to be disclosed to analysts (in response to questioning or otherwise) before it has been released to the stock exchanges and to Canada Stockwatch, Market News, Canada News Wire or other news distribution service.  If material information is to be announced at an analyst or shareholder meeting or a press conference, its announcement must be coordinated with a general public announcement by a news release; and

(f)

The CFO shall maintain a record of all public records concerning the Company, including news releases, analyst research reports, reports in the press and debriefings following meetings, conference calls or other interactions with analysts.  The materials in the record shall be available to the management of the Company and will assist the Responsible Officers in determining whether any particular information is material.





2.

MAINTAINING CONFIDENTIALITY OF INFORMATION



A.

Policy



No director, officer or employee in possession of non-public information concerning the technology, finances, affairs and prospects of the Company that, if generally known, could be reasonably expected to cause a significant change in the market price of the Companys stock (Confidential Information) shall disclose such information to any person outside the Company, unless such person has been designated under this Policy, or by the CEO, to make such disclosure.





93





---

In addition, no director, officer or employee disclose any such information to any person within the Company whose job duties do not require the possession of such information.  Employees of the Company are permitted to disclose Confidential Information, if required to do so in the necessary course of business.  This exemption from the prohibition against disclosing material non-public information, however, is not available for communications made to the media, securities analysts, institutional investors or other market professionals.



B.

Procedure



(I)

If any ambiguity exists as to whether or not information should be confidential, it should be discussed with the Companys CEO, CFO or securities counsel.

(II)

To limit the number of people who know about Confidential Information, the Company should limit access to only those parties who, as a function of their employment with the Company, are required to know the information.  Documents containing confidential information should be clearly marked Confidential, be stored in a secure place and code words should be used where practicable for material projects that have not been generally disclosed to the public.

(III)

Confidential matters should not be discussed in places where the discussion may be overheard.  Confidential documents should not be read or displayed in public places and should be discarded via secure shredder service whenever practicable. Employees must ensure they maintain the confidentiality of information in their possession outside of the office as well as inside the office. Transmission of documents by electronic means, such as by fax or directly from one computer to another, should be made only where it is reasonable to believe that the transmission can be made and received under secure conditions.

(IV)

Before a meeting with other parties at which Confidential Information may be imparted, the other parties should be told that they must not divulge that information to any other party, other than in the necessary course of business, and that they may not trade in the Companys securities until the information is generally disclosed (see Item #3 of this Policy  Trading by Insiders and Employees).  In addition, other parties are required to sign a copy of the Companys Non-Disclosure and Non-Competition Agreement.

(V)

Confidential Information may be disclosed if this disclosure takes place as part of the necessary course of business with, and is pertinent to, the ongoing business relationship between the Company and such parties as:



(a)

vendors and suppliers;

(b)

employees, directors and officers;

(c)

lenders, legal counsel and auditors;

(d)

parties to negotiations;

(e)

labour unions and industry associations;

(f)

governmental and non-governmental regulators, and

(g)

credit-rating agencies.



In the event that there is an ambiguity as to whether or not the disclosure of certain Confidential Information is considered to be in the necessary course of business, the party responsible for the disclosure should consult the CEO or CFO, who may seek the further advice and counsel of the Companys securities counsel.

(VI)

All employees who are or who may be aware of Confidential Information (including clerical staff) must be explicitly warned to keep it confidential.  More specifically:

(a)

Employees are required to sign the Companys Non-Disclosure and Non-Competition Agreement upon commencement of their employment with the Company; and

(b)

Employees must not disclose Confidential Information to anyone, except in the necessary course of business; Employees must not discuss Confidential Information in situations where they may be overheard; and

(c)

Employees must not participate in discussions with others about investments in the Company.

(VII)

Directors, officers and employees of the Company should not comment on draft reports submitted to them by analysts other than identifying inaccuracies, omissions or publicly disclosed factual information that may affect an analysts model.  Those parties appointed to speak to the media, analysts, institutional investors and other market professionals should be briefed in advance to review what information is material and what information has not been publicly disclosed.  Voice recordings of quarterly analyst conference calls shall be kept available for public access on a call-in basis for seven days after the call in question.





94





---

TRADING BY INSIDERS AND EMPLOYEES



A.

Policy



Trading in the securities of the Company (including dealings with options, futures, rights and all other securities) or the provision to other parties of information to facilitate a possible trade (tipping) by any director, officer or employee with knowledge of undisclosed material information about the Company is strictly prohibited.  In addition, in circumstances where a director, officer or employee becomes aware of undisclosed material information concerning another public company as a result of their employment with the Company, trading in the securities of such other company is similarly prohibited.



B.

Procedure



(I)

It is an offence for any person in a special relationship with the Company to trade securities of the Company while in possession of material non-public information that, if made public, could reasonably be expected to cause a significant change in the price of the Companys stock.  Persons in a special relationship with the Company include all directors, officers and employees of the Company, plus all parties (tippees) who learn of material information from any director, officer or employee of the Company (tippers), where the tippee knows or reasonably ought to have known that the tipper was in a special relationship with the Company.  Directors, officers and employees are also deemed to be in a special relationship with another company (and are correspondingly prohibited from trading in the securities of said other company), if they become aware of undisclosed material information concerning the other company as a result of their employment with the Company.

(II)

Insiders are considered to have a special relationship with the Company on an ongoing basis.  For the purpose of this Policy, the definition of "Insider" includes all directors, senior officers and greater than 10% shareholders of the Company.  In order to prevent insider trading violations or any appearance of impropriety, any Insider that proposes to make a trade that may be prohibited under this Policy should obtain from the CEO or the CFO a determination as to whether or not the undisclosed information that he or she possesses is material or whether a trade may be made. If any ambiguity exists as to whether or not a director, officer or employee should be permitted to make a trade, the matter should be discussed with the Companys securities counsel. Insiders of the Company will be required to complete and file an insider trading report within 10 days of the date that such Insider purchased or sold securities of the Company.  These reports may be obtained from the CFO or the Corporate Secretary. Insiders are personally responsible for filing accurate and timely insider trading reports.  Insiders are required to provide a copy of all insider reports to the Corporate Secretary, or other designated person, concurrent with their filing to regulatory authorities.  There now exists a web-based on-line filing system for Insider reports (www.sedi.ca).  Failure of an Insider to file an insider trading report on a timely basis may result in a fine of up to $1 million, imprisonment for a term of upto three years, or both.  Any questions regarding filing insider trading reports should be taken up with the Corporate Secretary as early as possible.

(III)

Certain circumstances will give rise to periods of time (Black-out Periods) during which no trading of securities is to take place at all by directors, officers and employees who are routinely (or in the special circumstances at hand) in possession of undisclosed material information (Restricted Persons).  The imposition of Black-out Periods is to be determined and announced by the CFO and shall include periods from two weeks following the end of the first, second and third fiscal quarter, and four weeks following the end of the fourth quarter, and shall remain in effect until the second business day following release of the related financial information.  A Black-out Period shall also be declared by the CFO pending the announcement of any material undisclosed development affecting the Company or following the crystallization of a material transaction involving the Company. Black-out Periods shall remain in effect until the second business day following release of the material information concerned. In declaring a Black-out Period, the CFO may stipulate whether any particular class of Restricted Person is to be fully or partially excused from the application of the Black-out Period, and the CFO may determine whether any particular reason is to be given for the imposition of a Black-out Period.

(IV)

Persons involved in the negotiation of material transactions will be held to a higher standard than other Restricted Persons as a result of their more intimate knowledge of a particular transaction. Accordingly, such persons should cease trading in the Companys securities when any material transaction comes under serious



95





---

negotiation, rather than upon the imposition of a Black-out Period. If any ambiguity exists as to whether or when a transaction has come under serious negotiation, the matter should be discussed with the Companys securities counsel.

(V)

Breaches of this Policy may constitute violation of securities laws and can cause acute embarrassment to the Company. If the Company discovers that a director, officer or employee has violated applicable securities laws, it will refer the matter to the appropriate regulatory authorities. Disciplinary action may be brought against a party who violates this Policy, which could result in termination of employment with the Company.



4.

FORWARD-LOOKING INFORMATION



It is the Companys policy to provide forward-looking information to enable the investment community to better evaluate the Company and its prospects. The Company will make statements and respond to inquiries with respect to, for example: revenue projections, income or loss projections, pricing and profit margin trends, significant new developments, projected demand or market potential for products. In certain circumstances, however, the Company will refrain from making specific quantifiable projections or disclosing information with respect to, for example: pricing, margins, customer identities or other information for competitive reasons. Moreover, all statements will be accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the statement.  The Company will observe the following guidelines with respect to forward-looking statements:





The information will be clearly identified as forward looking;



The Company will identify the material assumptions used in the preparation of the forward-looking information;



The information will be accompanied by a statement that identifies, in specific terms, the risks and uncertainties that may cause the actual results to differ materially from those projected in the statement; and



The information will be accompanied by a statement that the information is stated as of the current date and subject to change after that date, and the Company disclaims any intention to update or revise this statement of forward-looking information, whether as a result of new information, future events or otherwise.



Example:



Certain information included in this news release is forward-looking and is subject to important risks and uncertainties.  The results or events predicted in these statements may differ materially from actual results or events.  Factors which could cause results or events to differ from current expectations include, among other things: the impact of price and product competition; the ability of the Company to make acquisitions and/or integrate the operations and technologies of acquired businesses in an effective manner; general industry and market conditions and growth rates; the impact of consolidations in the telecommunications industry and stock market volatility.



For additional information with respect to certain of these and other factors, see the reports filed by the Company with the B.C. Securities Commission.  The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



5.

ELECTRONIC DISCLOSURE



A.

Policy



All information disclosed by the Company electronically shall comply with the National Policy 51-201s electronic communications guidelines (sec. 6.12) to ensure that such information is timely, accurate and up-to-date.



B.

Procedure



(I)

The Company should ensure that its investor relations information is available through its website.  However, the Company must not disclose material information on its website, or distribute it by e-mail, or any other electronic manner, before it is disseminated in a news release in accordance with this Policy.  Information is not considered to be generally disclosed to the public, if it only appears on the Companys website.  The



96





---

Company shall furthermore review and update its electronic security systems on a regular basis and shall monitor the integrity of its website to ensure that the site is accessible and has not been altered and shall regularly review, correct and update information on its website over time.  It is not sufficient, for purposes of this Policy, if the information has been corrected or updated elsewhere.

(II)

The CFO is responsible for overseeing the Companys policies on electronic communications and should ensure that all information on the Companys website or published elsewhere electronically complies with applicable securities laws and the internal policies of the Company.  The Company should not post any information on its website that is authored by a third party unless the information was prepared on behalf of the Company or is of a general nature and is not specific to the Company.

(III)

Employees of the Company must not engage in internet chat rooms and news groups in discussions relating to the Company, its securities or any actions taken or proposed to be taken by the Company.  All employee e-mail addresses are considered, for purposes of this Policy, to be corporate addresses of the Company and all correspondence received and sent via e-mail is considered, for purposes of this Policy, to be corporate correspondence of the Company.

(IV)

The Company should not directly respond to rumors posted in news groups or chat rooms, but instead should issue a news release in accordance with the terms of this Policy.  If any director, officer or employee of the Company becomes aware of a rumor in a chat room or news group or other source that may have a material impact on the price of the Companys stock, he or she should immediately contact the CEO or the CFO who will, with the assistance of the Companys securities counsel, decide the appropriate course of action.



6.

PROCEDURE FOR REPORTING OF FRAUD OR CONTROL WEAKNESSES



Each employee is expected to report situations in which he or her suspects fraud or is aware of any internal control weaknesses. An employee should treat suspected fraud seriously, and ensure that the situation is brought to the attention of the Board of Directors. In addition, weaknesses in the internal control procedures of the Company that may result in errors or omissions in financial information, or that create a risk of potential fraud or loss of the Companys assets, should be brought to the attention of both management and the Board of Directors.  To facilitate the reporting of suspected fraud, it is the policy of the Board of Directors that the employee (the whistleblower) has anonymous and direct access to the Chair of the Audit Committee.  The current Chair, Mr. Malcolm Clay, can be reached at (604) 688-8002.  Should a new Chair be appointed prior to the updating of this document, current Chair will ensure that the whistleblower is able to reach the new Chair in a timely manner.  In the event that the Chair of the Audit Committee cannot be reached, the whistleblower should contact the Chair of the Board of Directors.  Access to the names and place of employment of the Companys Directors can be found in the Companys website.  In addition, it is the policy of the Board that employees concerned about reporting internal control weaknesses directly to management are able to report such weaknesses to the Board anonymously.  In this case, the employee should follow the same procedure detailed above for reporting suspected fraud.





NOMINATIONS COMMITTEE



The Nominations Committee is composed of three outside and unrelated directors, Messrs. Callander, Doggett and Clay. Below is the full disclosure of the Nominations Committee Charter.



NOMINATIONS COMMITTEE CHARTER



Purpose



The purpose of the Nominating Committee shall be to:



(a)

assist the Board of Directors of Minco Gold Corporation (the "Company"), on an annual basis, by identifying individuals qualified to become Board members, and to recommend to the Board the director nominees for the next annual meeting of shareholders;

(b)

assist the Board in the event of any vacancy on the Board by identifying individuals qualified to become Board members, and to recommend to the Board qualified individuals to fill any such vacancy; and

(c)

recommend to the Board, on an annual basis, director nominees for each Board committee.



97





---

Committee Membership



The members of the Committee shall be appointed by the Board of Directors.  The Committee shall be composed of not less than three members of the Board.   The Chairman of the Committee shall be designated by the Board of Directors.  Nominating Committee members serve at the pleasure of the Board, and Committee members may be replaced by the Board.



Independence



The members of the Nominating Committee must be "independent" of the Company as defined in Canadian National Instrument 58-101 - Disclosure of Corporate Governance Practices.  A Nominating Committee member is independent if he or she has no direct or indirect material relationship with the Company.  A "material relationship" includes a relationship which could, in the view of the Company's Board of Directors, be reasonably expected to interfere with the exercise of a member's independent judgment.



Meetings



The Nominating Committee will meet as often as the Chair shall determine to be necessary or appropriate.



Authority



The Committee may request any officer or employee of the Company to attend a Committee meeting.  The Committee shall have the authority to retain and terminate any search firm to be used to identify director candidates and shall have authority to approve the search firm's fees and other retention terms, at the Company's expense.



Nominating Committee Duties and Responsibilities



Duties and responsibilities of the Nominating Committee include:

·

reviewing on a periodic basis, the composition of the Board to ensure that an appropriate number of unrelated directors sit on the Board of Directors;

·

analyzing the needs of the Board of Directors when vacancies arise on the board and recommending nominees who meet such needs;

·

ensuring that an appropriate selection process for new nominees to the Board of Directors is in place;

·

recommending to the Board, on an annual basis, nominees for election as directors for the next annual meeting of shareholders;

·

recommending to the Board the nominees for appointment to Committees of the Board on at least an annual basis;

·

reviewing and assessing, annually, the Nominating Committee charter and submitting any changes deemed necessary or advisable for approval of the Board of Directors; and

·

performing other functions as requested by the Board of Directors.



COMPENSATION COMMITTEE



The Compensation Committee is composed of three outside and unrelated directors, Messrs. Callander, Doggett and Clay.  Below is the full disclosure of the Compensation Committee Charter.



COMPENSATION COMMITTEE CHARTER



Purpose



The purpose of the Compensation Committee shall be to:



(a)

establish, review and recommend to the Board of Directors of Minco Gold Corporation (the "Company") compensation and incentive plans and programs; and

(b)

review and approve compensation and awards under compensation and incentive plans and programs for the CEO and senior officers;



98





---



with the intention of attracting, retaining and appropriately rewarding employees in order to motivate their performance in the achievement of the Companys business objectives and align their interests with the long-term interests of the Companys shareholders.



Committee Membership



The members of the Committee shall be appointed by the Board of Directors.  The Committee shall be composed of not less than three members of the Board.   The Chairman of the Committee shall be designated by the Board of Directors.  Compensation Committee members serve at the pleasure of the Board, and Committee members may be replaced by the Board.



Independence



The members of the Nominating Committee must be "independent" of the Company as defined in Canadian National Instrument 58-101 - Disclosure of Corporate Governance Practices.  A Nominating Committee member is independent if he or she has no direct or indirect material relationship with the Company.  A "material relationship" includes a relationship which could, in the view of the Company's Board of Directors, be reasonably expected to interfere with the exercise of a member's independent judgment.



Meetings



The Compensation Committee will meet as often as the Chair shall determine to be necessary or appropriate.



Authority and Resources



The Committee may request any officer or employee of the Company or the Companys outside counsel to attend a Committee meeting.  The Committee has the right at any time to obtain advice, reports or opinions from internal and external counsel and expert advisors and has the authority to hire independent legal, financial and other advisors as it may deem necessary, at the Companys expense, without consulting with, or obtaining approval from, any officer of the Company in advance.



Compensation Committee Duties and Responsibilities



Duties and responsibilities of the Compensation Committee include:



·

reviewing and making recommendations to the Board of Directors with respect to the compensation, including compensation criteria and incentives and annual performance review, of the Chief Executive Officer, for final approval by the Board of Directors;

·

reviewing and providing guidance to the Board of Directors with respect to the compensation, including compensation criteria and incentives, of the executive officers of the Company, as recommended by the Chief Executive Officer, for final approval by the Board of Directors;

·

reviewing and providing guidance to the Board of Directors with respect to the compensation, including compensation criteria and incentives, of the directors of the Company;

·

reviewing and making recommendations to the Board of Directors regarding other plans that are proposed for adoption or adopted by the Company for the provision of compensation to employees of, directors of and consultants to the Company;

·

advising on the development of management succession plans by the Board;

·

preparing an annual report on executive compensation to the shareholders of the Company for the management information circular for the annual and general meeting of the Companys shareholders;

·

reviewing and assessing, annually, the Compensation Committee charter and submitting any changes deemed necessary or advisable for approval of the Board of Directors; and

·

performing other functions as requested by the Board of Directors.





99





---

PART III



ITEM 17.

FINANCIAL STATEMENTS



Attached hereto



Financial Statement



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |          
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------
|DOCUMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | PAGE     
|Consolidated Financial Statements of the Company as at December 31, 2008, 2007 and 2006 (in Canadian Dollars) including Report of Independent Registered Public Accounting Firm, Balance Sheet, Income Statement, Cash Flow and Notes
Consolidated Financial Statements of Minco Silver Corporation as at December 31, 2008, 2007 and 2006  (in Canadian Dollars) including Report of Independent Registered Public Accounting Firm, Income Statement, Balance Sheet, Cash Flow and Notes | 103


141





ITEM 18.

FINANCIAL STATEMENTS



Not Applicable



ITEM 19.

EXHIBITS



|               |                                                                                                                                                    
|-------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT
NUMBER | DESCRIPTION                                                                                                                                        
|12.1           | Certification of the President Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002              
|12.2           | Certification of the Chief Financial Officer Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|13.1           | Certification of the President Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002              
|13.2           | Certification of the Chief Financial Officer Pursuant to 18 USC, Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|14.1           | Consent of P & E Mining Consultants Inc.                                                                                                           
|14.2           | Consent of Peter G. Folk                                                                                                                           











100





---















MINCO GOLD CORPORATION

(Formerly Minco Mining & Metals Corporation)

(An exploration stage enterprise)



Consolidated Financial Statements

(EXPRESSED IN CANADIAN DOLLARS)



DECEMBER 31, 2008, 2007, AND 2006













Index





Report of Independent Registered Public Accounting Firm



Consolidated Balance Sheets



Consolidated Statements of Operations and Comprehensive Loss and Deficit



Consolidated Statements of Cash Flows



Notes to Consolidated Financial Statements















101





---



[minco20f073109002.gif]







Management's Responsibility for Financial Reporting





The consolidated financial statements and the information contained in the annual report are the responsibility of the Board of Directors and management. The consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles and include certain estimates that reflect managements best judgments on information currently available. In the opinion of management, the accounting practices utilized are appropriate in the circumstances and the consolidated financial statements fairly reflect the financial position and results of operations of the Company within reasonable limits of materiality.



The Audit Committee of the Board of Directors is composed of three Directors and meets periodically with management and the independent auditors to review the scope and results of the annual audit and to review the consolidated financial statements and related financial reporting matters prior to submitting the consolidated financial statements to the Board of Directors for approval.



The consolidated financial statements have been audited by Ernst & Young LLP, Chartered Accountants, who were appointed by the shareholders. The auditors report outlines the scope of their examination and their opinion on the consolidated financial statements.











Ken Cai

Paul Zhang

President and CEO

Chief Financial Officer



Vancouver, Canada

July 29, 2009







102





---









REPORT OF INDEPENDENT AUDITORS







To the Shareholders of

Minco Gold Corporation



We have audited the consolidated balance sheets of Minco Gold Corporation(the Company)as at December 31, 2008 and 2007, and the consolidated statements of operations and comprehensive loss and deficit, and cash flows for the years ended December 31, 2008, 2007 and 2006. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Companys internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2008 and 2007 and the results of its operations and its cash flows for the years ended December 31, 2008, 2007 and 2006 in accordance with Canadian generally accepted accounting principles.



As discussed in note 2 to the financial statements, the Company changed its method of accounting for the development of mineral interests during the year ended December 31, 2008.



[f08mmm3auditorsreport002.gif]

Vancouver, Canada,

April 14, 2009, except for Note 20

Chartered Accountants

as to which the date is July 29, 2009.





103





---



|                                                                                         |                |                   |                     |                   |              |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|---------------------------------------------------------------------------------------- | -------------- | ----------------- | ------------------- | ----------------- | ------------ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 
|MINCO GOLD CORPORATION                                                                   |                |                  
|(Formerly Minco Mining & Metals Corporation)                                             |                |                  
|(An exploration stage enterprise)                                                        |                |                  
|Consolidated Balance Sheets                                                              |                |                   |                     |                   |             
|(Expressed in Canadian Dollars)                                                          |                |                   |                    
|(See Nature of Operations and Going Concern Uncertainty  Note 1)                        |                | December 31,
2008 |                     | December 31,
2007
|                                                                                         |                |                   |                     |                   |             
|ASSETS                                                                                   |                |                   |                     |                   |             
|                                                                                         |                |                   |                     |                   |             
|Current assets                                                                           |                |                   |                     |                   |             
|Cash and cash equivalents                                                                |                |                   | 2,604,411           |                   | 1,302,483   
|Short-term investments (Note 4)                                                          |                |                   | 922,559             |                   | 6,149,044   
|Receivables                                                                              |                |                   | 896,731             |                   | 319,337     
|Due from Minco Silver Corporation (Note 14(b))                                           |                | 1,246,282         |                     | 4,639,788        
|Due from Minco Base Metals (Note 14(b))                                                  |                | 506,569           |                     | 271,999          
|Prepaid expenses and deposits                                                            |                | 129,113           |                     | 103,672          
|Assets of discontinued operations (Note 10)                                              |                | -                 |                     | 5,838            
|                                                                                         |                |                   |                     |                   |             
|                                                                                         |                |                   | 6,305,665           |                   | 12,792,161  
|                                                                                         |                |                   |                     |                   |             
|Long-term rental deposit                                                                 |                |                   | 51,523              |                   | 51,277      
|Long-term marketable securities(Note 5)                                                  |                |                   | 12,600              |                   | -           
|Mineral interests(Notes 6)                                                               |                |                   | -                   |                   | 358,500     
|Plant, property and equipment (Note 7)                                                   |                |                   | 513,521             |                   | 499,710     
|Equity investment in Minco Silver Corporation(Note 8)                                    |                |                   | 3,675,116           |                   | 3,079,412   
|Assets of discontinued operations(Note 10)                                               |                |                   | -                   |                   | 4,461       
|Total assets                                                                             |                |                   | 10,558,425          |                   | 16,785,521  
|                                                                                         |                |                   |                     |                   |             
|LIABILITIES                                                                              |                |                   |                     |                   |             
|                                                                                         |                |                   |                     |                   |             
|Current liabilities                                                                      |                |                   |                     |                   |             
|Accounts payable and accrued liabilities                                                 |                | 5,671,434         |                     | 889,863          
|Loans payable (Note 11)                                                                  |                | 2,881,237         |                     | -                
|Due to Minco Silver (Note 14(b))                                                         |                | -                 |                     | 1,929,893        
|Tax payable (Note 13)                                                                    |                | 136,136           |                     | -                
|Liabilities of discontinued operations (Note 10)                                         |                | -                 |                     | 38,549           
|Total liabilities                                                                        |                |                   | 8,688,807           |                   | 2,858,305   
|Non-controlling interest(Note 9)                                                         |                | -                 |                     | 82,685           
|                                                                                         |                |                   |                     |                   |             
|SHAREHOLDERS' EQUITY                                                                     |                |                   |                     |                  
|                                                                                         |                |                   |                     |                   |             
|Share capital(Note 12(a))                                                                |                |                   | 34,021,922          |                   | 33,941,510  
|                                                                                         |                |                   |                     |                   |             
|Contributed surplus(Note 12(c))                                                          |                | 4,930,097         |                     | 3,721,117        
|                                                                                         |                |                   |                     |                   |             
|Deficit accumulated during the exploration stage                                         |                |                   | (37,082,401)        |                   | (23,818,096)
|                                                                                         |                |                   |                     |                   |             
|Total shareholders equity                                                               |                |                   | 1,869,618           |                   | 13,844,531  
|Total liabilities and shareholders equity                                               |                |                   | 10,558,425          |                   | 16,785,521  
|See Subsequent Event Note 21
See accompanying notes to consolidated financial statements |                |                   |                     |                   |             
|                                                                                         |                |                   |                    
|On behalf of the Board                                                                   | Malcolm Clay" |                   | "Robert Callander "
|                                                                                         | Malcolm Clay   |                   | Robert Callander   
|Director                                          Director                              



104





---



| |                                                                               |  |                        |  |                        |  |                        |  |  |  |  |  |  |  |  |  |  |  |  |  | 
| | ----------------------------------------------------------------------------- |  | ---------------------- |  | ---------------------- |  | ---------------------- |  |  |  |  |  |  |  |  |  |  |  |  |  | 
| | MINCO GOLD CORPORATION                                                        |  |                        |  |                       
| | (Formerly Minco Mining & Metals Corporation)                                  |  |                        |  |                        |  |                       
| | (An exploration stage enterprise)                                             |  |                        |  |                        |  |                       
| | Consolidated Statements of Operations and Comprehensive Loss and Deficit      |  |                       
| | (Expressed in Canadian Dollars)                                               |  |                        |  |                        |  |                       
| |                                                                               |  | 2008
(See note  below) |  | 2007
(See note  below) |  | 2006
(See note  below)
| | Exploration permits (Note 6)                                                  |  | 6,611,918              |  | 842,788                |  | 852,000               
| | Exploration costs, net of recoveries (Note 6)                                 |  | 3,934,589              |  | 2,078,346              |  | 1,683,281             
| |                                                                               |  | 10,546,507             |  | 2,921,134              |  | 2,535,281             
| | Administrative expenses (Note 14)                                             |  |                        |  |                        |  |                       
| | Accounting and audit                                                          |  | 184,294                |  | 122,020                |  | 288,098               
| | Amortization                                                                  |  | 100,754                |  | 54,668                 |  | 46,556                
| | Consulting                                                                    |  | 284,006                |  | 76,368                 |  | 183,142               
| | Directors fees                                                               |  | 48,000                 |  | 62,500                 |  | 78,781                
| | Foreign exchange loss (gain)                                                  |  | 991,029                |  | 417,813                |  | (241,218)             
| | Investor relations                                                            |  | 353,862                |  | 579,498                |  | 842,555               
| | Legal                                                                         |  | 49,231                 |  | 47,408                 |  | 84,701                
| | Regulatory and filing                                                         |  | 105,838                |  | 91,948                 |  | 123,857               
| | Meals and entertainment                                                       |  | 75,845                 |  | 51,104                 |  | 58,958                
| | Office and miscellaneous                                                      |  | 169,644                |  | 201,038                |  | 213,230               
| | Property investigation                                                        |  | 88,353                 |  | 218,672                |  | 233,438               
| | Rent                                                                          |  | 222,044                |  | 233,011                |  | 259,698               
| | Salaries and benefits                                                         |  | 562,138                |  | 693,436                |  | 623,459               
| | Stock-based compensation  (Note 12(d))                                        |  | 1,242,953              |  | 2,022,850              |  | 2,820,000             
| | Telephone                                                                     |  | 28,165                 |  | 16,322                 |  | 29,790                
| | Interest expense (Note 6)                                                     |  | 211,402                |  | -                      |  | -                     
| | Travel and transportation                                                     |  | 109,691                |  | 127,380                |  | 114,838               
| |                                                                               |  | 4,827,249              |  | 5,016,036              |  | 5,759,882             
| | Operating loss                                                                |  | (15,373,756)           |  | (7,937,170)            |  | (8,295,163)           
| | Other income (loss)                                                           |  |                        |  |                        |  |                       
| | Gain on sale of exploration permit (Note 6)                                   |  | 425,632                |  | -                      |  | -                     
| | Equity loss on investment in Minco Silver (Note 8)                            |  | (948,750)              |  | (3,239,898)            |  | (521,095)             
| | Dilution gain (Note 8)                                                        |  | 1,544,454              |  | 191,000                |  | 5,213,000             
| | Write down of marketable securities                                           |  | (75,600)               |  | (232,546)              |  | 18,801                
| | Gain on sale of Minco Silver shares (Note 8)                                  |  | -                      |  | 2,978,034              |  | -                     
| | Write down of mineral interests                                               |  | (358,500)              |  | -                      |  | -                     
| | Gain on sales of commercial notes                                             |  | 3,790                  |  | -                      |  | -                     
| | Interest and sundry income                                                    |  | 356,359                |  | 306,771                |  | 673,570               
| | Loss for the year before discontinued operations and non-controlling interest |  | (14,426,371)           |  | (7,933,809)            |  | (2,910,887)           
| | Tax expenses (Note 13)                                                        |  | (85,349)               |  | -                      |  | -                     
| | Loss for the year before discontinued operations and non-controlling interest |  | (14,511,720)           |  | (7,933,809)            |  | (2,910,887)           
| | Non-controlling interest (Note 9)                                             |  | 82,685                 |  | 429,442                |  | 1,381,727             
| | Loss for the year from continuing operations                                  |  | (14,429,035)           |  | (7,540,367)            |  | (1,529,160)           
| | Earnings (Loss) for the year from discontinued operations(Note 10)            |  | 1,164,730              |  | (75,864)               |  | (60,164)              
| | Loss  for the year (under Canadian GAAP)                                      |  | (13,264,305)           |  | (7,580,231)            |  | (1,589,324)           
| | Loss per share from continuing operations basic                              |  | (0.34)                 |  | (0.18)                 |  | (0.04)                
| | Earnings per share from discontinued operations -basic                        |  | 0.03                   |  | -                      |  | -                     
| | Loss per share from discontinued operations diluted                          |  | 0.03                   |  | (0.00)                 |  | (0.00)                
| | Loss per share - basic and diluted                                            |  | (0.30)                 |  | (0.18)                 |  | (0.04)                
| | Weighted average number of common shares outstanding basic and diluted       |  | 42,970,813             |  | 42,908,809             |  | 41,193,591            

Note: The results of Minco Silver Corporation are consolidated in the above statement to November 16, 2006. Thereafter, the results of Minco Silver Corporation are accounted for on an equity basis (see Note 8).



















105





---



|                                                                            |  |              |  |                        |  |                        |  |  | 
|--------------------------------------------------------------------------- |  | ------------ |  | ---------------------- |  | ---------------------- |  |  | 
|MINCO GOLD CORPORATION                                                      |  |              |  |                        |  |                       
|(Formerly Minco Mining & Metals Corporation)                                |  |              |  |                        |  |                       
|(An exploration stage enterprise)                                           |  |              |  |                        |  |                       
|Consolidated Statements of Cash Flows                                       |  |              |  |                        |  |                       
|(Expressed in Canadian Dollars)                                             |  |              |  |                        |  |                       
|                                                                            |  | 2008         |  | 2007
(See note  below) |  | 2006
(See note  below)
|Cash flows from (used in) operating activities                              |  |              |  |                        |  |                       
|Net loss from continuing operations for the year                            |  | (14,429,035) |  | (7,504,367)            |  | (1,529,160)           
|Adjustment for items not involving cash:                                    |  |              |  |                        |  |                       
|- exploration permits                                                       |  |              |  |                        |  | -                     
|- amortization of equipment                                                 |  | 100,754      |  | 54,668                 |  | 46,556                
|- equity loss on investment in  Minco Silver                                |  | 948,750      |  | 3,239,898              |  | 521,095               
|- dilution gain                                                             |  | (1,544,454)  |  | (191,000)              |  | (5,213,000)           
|- stock-based compensation                                                  |  | 1,242,953    |  | 2,022,850              |  | 2,820,000             
|- gain on sale of exploration permit (Note 6)                               |  | (425,632)    |  | -                      |  | -                     
|- foreign exchange loss                                                     |  | 991,029      |  | 417,813                |  | -                     
|- non-controlling interest in loss                                          |  | (82,685)     |  | (429,442)              |  | (1,381,727)           
|- write down (up) of short-term investments                                 |  | 75,600       |  | 232,546                |  | (18,801)              
|- write down of mineral interests                                           |  | 358,500      |  | -                      |  | -                     
|- gain on sale of Minco Silver shares                                       |  | -            |  | (2,978,034)            |  | -                     
|Change in non-cash working capital items:                                   |  |              |  |                        |  |                       
|- (increase) in receivables                                                 |  | (87,111)     |  | (41,783)               |  | (15,746)              
|- due from Minco Base Metals                                                |  | (234,570)    |  | (271,999)              |  | -                     
|- decrease (increase) in prepaid expenses and deposits                      |  | (25,687)     |  | 81,134                 |  | (159,501)             
|- increase in long-term rental deposit                                      |  |              |  |                        |  | (51,277)              
|- payment of 2nd installment of Fuwan Exploration Permit                    |  |              |  |                        |  | (436,000)             
|- increase in accounts payable and accrued
liabilities                      |  | 1,693,433    |  | 483,224                |  | 241,366               
|- increase in tax payable                                                   |  | 85,349       |  | -                      |  | -                     
|Cash used for operating activities of continuing operations                 |  | (11,332,806) |  | (4,884,492)            |  | (5,176,195)           
|Cash provided by operating activities of discontinued operations (Note 10)  |  | 677,004      |  | 1,756                  |  | -                     
|Cash flows from financing activities                                        |  |              |  |                        |  |                       
|Proceeds from issuance of shares in Minco Gold                              |  | 46,439       |  | 105,808                |  | 4,852,958             
|Movement in loan payable                                                    |  | 2,881,237    |  | -                      |  | -                     
|Cost of share buyback                                                       |  | -            |  | (44,451)               |  | -                     
|Non-controlling interest (Note 9)                                           |  | -            |  | 512,128                |  | -                     
|Proceeds from issuance of shares in Minco Silver                            |  | -            |  | -                      |  | 87,375                
|                                                                            |  | 2,927,676    |  | 573,485                |  | 4,940,333             
|Cash flows from (used) in investing activities                              |  |              |  |                        |  |                       
|Acquisition of equipment                                                    |  | (114,565)    |  | (245,978)              |  | (213,669)             
|Acquisition of mineral interest                                             |  | -            |  | -                      |  | (358,400)             
|Cash disposed upon deconsolidation of Minco Silver Corporation              |  | -            |  | -                      |  | (6,539)               
|Decrease (increase) in short-term investments                               |  | 5,138,285    |  | 4,745,616              |  | 534,943               
|Proceeds from sales of mineral interest                                     |  | 425,632      |  | -                      |  | -                     
|Proceeds from sale of Minco Silver shares (Note 6)                          |  | -            |  | 3,248,416              |  | -                     
|(Increase) decrease in Due from Minco Silver Corporation                    |  | 3,393,506    |  | (1,903,602)            |  | (133,039)             
|Cash from investing activities of continuing operations                     |  | 8,842,858    |  | 5,844,452              |  | (176,704)             
|Cash from investing activities of discontinuing operations                  |  | 4,461        |  | -                      |  | (219,849)             
|Effect of exchange rate changes on cash and cash equivalents                |  | 182,735      |  | (417,814)              |  | -                     
|Increase (decrease) in cash and cash equivalents from continuing operations |  | 1,301,928    |  | 1,117,387              |  | (412,566)             
|Cash and cash equivalents, beginning of period                              |  | 1,302,483    |  | 185,096                |  | 821,164               
|Cash and cash equivalents, end of period                                    |  | 2,604,411    |  | 1,302,483              |  | 188,749               
|Interest in cash and cash equivalents                                       |  | 138,250      |  | 248,010                |  | 673,570               

Note: The results of Minco Silver Corporation are consolidated in the above statement to November 16, 2006. Thereafter, the results of Minco Silver Corporation are accounted for on an equity basis (see Note 8).



106





---

1.

Nature of Operations and Going Concern Uncertainty

(a)

Minco Gold Corporation (the Minco Gold and the Company) was incorporated in 1982 under the laws of British Columbia, Canada as Caprock Energy Ltd. Following a number of name changes the Company became Minco Gold in 2007. The principal business activities include the acquisition, exploration and development of gold properties.

(b)

Minco Gold is exploring and evaluating gold mineral properties and projects in the Peoples Republic of China (China) with the aim of bringing these properties to production. The ability of the Company to meet its commitments as they become payable, the exploration and development of mineral properties and projects, and the underlying value of the mineral properties are entirely dependent upon the existence of economically recoverable reserves, the ability of the Company to arrange appropriate financing to complete the exploration and development of its properties, the receipt of necessary permits and upon achieving future profitable production or receiving proceeds from the disposition of the properties. The timing of such events occurring, if at all, is not yet determinable. The Company is considered to be an exploration stage enterprise as it has not yet generated any revenue from operations.

These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. The Company does not generate revenues and has accumulated losses since inception, and as at December 31, 2008 had an accumulated deficit of $37,082,401 and is unlikely to generate earnings in the immediate future. The continuation of the Company as a going concern is dependant upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to achieve its operating and developing objectives, confirmation of the Companys interests in the underlying properties and the attainment of profitable operations. Management will continue, as appropriate, to seek other sources of financing on favourable terms; however, there are no assurances that any such financing can be obtained on favourable terms, if at all.  The outcome of these matters cannot be predicted at this time.  These financial statements do not reflect the adjustments to the carrying value of assets and liabilities, or the impact on the statement of operations and balance sheet classifications that would be necessary were the going concern assumption not appropriate.



107





---

2.

Change in Accounting Policy

Development of Mineral Interests



Prior to January 1, 2008, the Companys accounting policy was to commence capitalizing mineral property development costs only upon the establishment of proven and probable reserves based on results of final feasibility studies which indicate whether a property is economically feasible.  Prior to January 1, 2008, the Company had not previously identified any properties that it would take from exploration to development and through to production.



On January 1, 2008, the Company changed this policy to more appropriately align its policy with those applied by other comparable mineral property exploration and development companies at a similar stage.  The Companys new policy is to commence capitalization of mineral property development costs after a mineral resource having economic potential is identified on a property, from which time a property is considered to be a development project and such expenditures are capitalized as development costs. A mineral resource is considered to have economic potential when it is expected thatdocumented resources can be legally and economically developed considering long-term metal prices.



Prior to January 1, 2008, the Company capitalized only mineral property and mineral exploitation rights acquisition costs.  Exploration permit acquisition, exploration and development costs were expensed as incurred, as proven and probable reserves had not been established.  During 2008, the Company did not have any properties that would qualify for capitalization to a mineral interest. The adoption of this new accounting policy is to align the policy for consistent application with that of Minco Silver Corporation (Minco Silver) an equity investee that changed its accounting policy during 2008 (see Note 8), which as defined as part of a group, requires consistent application of policies.









---

3.

Significant Accounting Policies

(a)

Basis of Presentation and Consolidation

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles and are presented in Canadian dollars.



The consolidated financial statements include the accounts of Minco Gold, its wholly-owned China subsidiaries Minco Mining (China) Corporation (Minco China), Yuanling Minco Mining Ltd. (Yuanling Minco) and Huaihua Tiancheng Mining Ltd. (Huaihua Tiancheng); its wholly owned British Virgin Island subsidiary Triple Eight Mineral Corporation (Temco); its 65% interest in the joint venture company Inner Mongolia Damo Mining Co. Ltd. (Damo); its 70% interest in the joint venture company Henan Zhongjia Minco Mining Co., Ltd. (Zhongjia Minco), and its 51% interest in the joint venture company Guangzhou MingZhong Mining Co., Ltd. (MingZhong).

Effective October 31, 2008, the Company sold its 75% interest in the joint venture company Inner Mongolia Huayu-Minco Mining Co., Ltd. (HYMK) in an arms length transaction.  Please refer to the Companys balance sheet (see Notes 6 and 10).



As at December 31, 2008, Minco Gold beneficially owns 13,000,000 shares of Minco Silver, which represents approximately 40.48% (2007  41.75%) of Minco Silvers share capital. The Company uses the equity method to account for the investment in Minco Silver (see note 8).

All inter-company accounts and transactions have been eliminated.

(b)

Use of Estimates and measurement uncertainty

The preparation of consolidated financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the period reported. By their nature, these estimates are subject to measurement uncertainty and the effect on the consolidated financial statements of changes in such estimates in future periods could be significant. Accounts that require management to make material estimates and significant assumptions in determining the amounts recorded include amortization, mineral interests, accrued liabilities, income taxes and contingencies. Actual results could differ from those estimated.

(c)

Cash and cash equivalents

Cash and cash equivalents consist of short-term money market instruments which are highly-liquid investments and readily convertible into cash with a remaining term to maturity of 90 days or less when acquired. As of December 31, 2008 and 2007, cash and cash equivalents consisted of cash and cashable guaranteed investment certificates.













---

3.

Significant Accounting Policies(continued)

(d)

Short-term Investments

Short-term investments comprise marketable securities and guaranteed investment certificates with remaining terms to maturity of greater than 90 days when acquired. Marketable securities are valued at mark to market with a published price quotation at the balance sheet date. Short-term investments are classified as held-for-trading financial instruments in accordance with the requirements of Canadian Institute of Chartered Accountants (CICA) Handbook Section 3855 Financial Instruments, adopted by the Company on January 1, 2007. These investments are recorded at fair value with unrealized gains and losses being recorded in income in the current period.

(e)

Plant, Property and Equipment

Plant, property and equipment are recorded at cost less accumulated amortization, depreciation and depletion.



Other assets are depreciated using the declining-balance method based on their estimated useful lives as following:



Computer Equipment

30% per year declining-balance

Mining Equipment

30% per year declining-balance

Office Equipment and Furniture

20% per year declining-balance

Motor Vehicles

30% per year declining -balance

Leasehold Improvement

5 years straight line



Amortization is provided at half the annual rate in the year of acquisition.



(f)

Acquisition, Exploration and Development of Mineral Interests



During the year ended December 31 2008, the Company changed its accounting policy relating to mineral property development expenditures (see note 2).



Costs incurred for the acquisition of mineral property and mineral exploitation rights, including option payments under acquisition agreements, are capitalized until such time as the related interest is placed into production, sold, abandoned or where management has determined that conditions of impairment in carrying value have occurred.



Costs incurred for exploration permits are charged to expense as they do not convey a right to exploit any minerals found on the underlying properties.



Where a specific mineral interest property is identified as having a resource with economic potential, costs specific to the development of the particular project are capitalized as development costs and carried at cost until the properties to which they relate are placed into commercial production, sold, abandoned or determined by management to be impaired in value.



A mineral resource is considered to have economic potential when it is expected thatdocumented resources can be legally and economically developed considering long-term metal prices. Therefore, prior to capitalizing such costs, management determines that the following conditions have been met:

















---

3.

Significant Accounting Policies (continued)



i

There is a probable future benefit that will contribute to future cash  inflows;



ii

The Company can obtain the benefit and control access to it; and



iii

The transaction or event giving rise to the benefit has already occurred.



Costs of abandoned projects are charged to operations upon abandonment. Costs relating to any producing mineral interest would be amortized on the unit-of-production method based on the estimated life of the ore reserves, while costs for the prospects abandoned would be written-off. Costs incurred after the property is placed into production that increase production volume or extend the life of the mine are capitalized.



Common shares issued for mineral property acquisition are recorded when issued based on the fair value of the shares at the date of issuance.



The recoverability of the amount capitalized for the capitalized mineral interests is dependent upon the determination of economically recoverable ore reserves, confirmation of the Company's interest in the underlying mineral claims, the ability to farm-out its resource properties, the ability to obtain the necessary financing to complete their development and future profitable production or proceeds from the disposition thereof.



Costs incurred for new project evaluation and consulting where no acquisition or future benefits are expected to be derived and no specific mineral interest property development programs has been planned and budgeted by management are expensed as incurred.



(g)

Impairment



The carrying values of mineral interests and plant, property and equipment are reviewed on an annual basis and when changes in circumstances suggest their carrying value may become impaired.  Management considers assets to be impaired if the carrying value exceeds the estimated undiscounted future projected cash flows from the use of the asset or mineral interests and its eventual disposition. If impairment is deemed to exist, the assets or development property will be written down to fair value with a charge to operations.



(h)

Asset Retirement Obligations

The Company recognizes the fair value of liabilities for asset retirement obligations in the period in which they are incurred and in which a reasonable estimate of such costs can be made.  The asset retirement obligation is recorded as a liability with a corresponding increase to the carrying amount of the related asset and depreciated over the life of the asset. Over time, the liability is increased to reflect an interest element (accretion expenses) considered in its initial measurement at fair value. The amount of liability will be subject to re-measurement at each reporting period. It is possible that the Companys estimates of its ultimate reclamation and closure liabilities could change as a result of changes in regulations, the extent of environmental remediation required, and the means of reclamation or cost estimates. Changes in estimates are accounted for prospectively from the period the estimate is revised.



As at December 31, 2008 and 2007, the Company did not have any asset retirement obligations.

















---

3.

Significant Accounting Policies(continued)

(i)

Revenue/Income Recognition

The Company recognizes interest income on cash and cash equivalents and short-term investments and rental income on office space sub-let to related parties, as it is earned

(j)

Stock Based Compensation

The Company grants stock options to buy common shares of the Company to directors, officers, employees and service providers. The board of directors grants such options for periods of up to five years, with vesting periods determined at its sole discretion and at prices equal to or greater than the closing market price on the day preceding the date the options were granted.



The Company applies the fair-value method of accounting in accordance with the recommendations of CICA Handbook Section (CICA 3870), Stock-based Compensation and Other Stock-based Payments. Stock-based compensation expense is calculated using the Black-Scholes option pricing model with a corresponding credit to contributed surplus, on a straight-line basis over the vesting period. Warrants granted are recorded at estimated fair values using the Black-Scholes pricing model. If and when the stock options or warrants are ultimately exercised, the applicable amounts of contributed surplus are transferred to share capital.



(k)

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed using the weighted average number of common shares outstanding during the year. Diluted loss per share amounts are calculated giving effect to the potential dilution that would occur if securities or other contracts to issue common shares were exercised or converted to common shares using the treasury stock method.

As the Company incurred net consolidated losses in the current fiscal year no adjustment to the computation of loss per share is required for options or warrants as their inclusion would be anti-dilutive. The Company had net earnings from discontinued operations and the calculation of diluted earnings per share gave effect of the employee stock options over common shares were exercised to common shares using the treasury stock method.

(l)

Income Taxes

The Company follows the liability method of accounting for income taxes. Future income taxes are recognized for the future tax consequences attributable to differences between the carrying values of assets and liabilities and their respective income tax bases on the balance sheet date. Future income tax assets and liabilities are measured using substantially enacted income tax rates expected to apply in which temporary differences are expected to be recovered or settled. The effect on future tax assets and liabilities of a change in substantially enacted rates is included in operations. A future income tax asset is recorded when the probability of the realization is more likely than not.







---

3.

Significant Accounting Policies (continued)



(m)

Translation of Foreign Currencies

The Companys functional currency is the Canadian dollar as the Company has raised its treasury in Canadian funds and when funds are advanced to its Chinese subsidiaries, the investment is treated as registered capital. The Company follows the temporal method of accounting for the translation of its integrated foreign operations and for foreign currency transactions. Under this method, transactions denominated in foreign currencies are translated into Canadian dollars at the exchange rates prevailing at the transaction dates.  At year-end, monetary assets and liabilities are re-measured at the year-end exchange rates, and non-monetary assets and liabilities denominated in foreign currencies are translated to Canadian dollars at their historical exchange rates.  The exchange gains and losses on translation are charged to operations.

(n)

Equity investments

Investments in which the Company has a significant influence or owns between 20% and 50% are accounted for by the equity method, whereby the Company records its proportionate share of the investees income or loss.



(o)

Comprehensive Income and equity

The Company reports their comprehensive income, which is changes in equity, from transactions and other events and circumstances from non-owner sources. Other comprehensive income refers to items recognized in comprehensive income that are excluded from net income calculated in accordance with Canadian GAAP.



(p)

Financial Instruments



Financial assets and liabilities are recognized on the balance sheet when the Company becomes party to the contractual provisions of the instrument. Financial instruments     are initially recognized and subsequently measured based on their classification as held-for trading, available for sale financial assets, held-to-maturity, loans and receivables, or other financial liabilities as follows:



(i)

Held-for-trading financial instruments are purchased and incurred with the intentionof generating income in the near term. These instruments are measured at their fair value with changes in fair value recognized in net income for the period.



(ii)

Held-to-maturity investments are financial assets with fixed or determinable payments that the Company has the intention and ability to hold-to-maturity. These are initially recognized at fair value and are measured at amortized cost using the effective interest rate method.



(iii)

Loans and receivables are initially recognized at fair value including direct and incremental transaction costs and are subsequently measured at amortized cost, using the effective interest method.



(iv)

Other financial liabilities are initially recognized at fair value and are measured at amortized cost using the effective interest rate method.







---



3.

Significant Accounting Policies(continued)



(q)

Leases



Operating lease payments are recognized as an expense in the income statement over the lease term.



An operating lease is a lease in which the lessor does not transfer substantially all of the benefits and risks associated to ownership of the property.



(r)

Adoption of Recent Accounting Pronouncements

On January 1, 2008, the Company adopted six standards that were issued by the Canadian Institute of Chartered Accountants: Handbook Section 1400, General Standards of Financial Statement Disclosure (Section 1400), Handbook Section 1506, Accounting Changes (Section 1506), Handbook Section 1535, Capital Disclosures ("Section 1535"), Handbook Section 3031, Inventories  (Section 3031), Handbook Section 3862, Financial Instruments - Disclosures ("Section 3862") and Handbook Section 3863, Financial Instruments - Presentation ("Section 3863"). These standards were adopted on a prospective basis without restatement of prior periods.



(i)

General Standards of Financial Statement Disclosure - Section 1400

Section 1400,General Standards of Financial Statement Disclosure establishes standards for assessing a companys ability to continue as a going concern and disclosing any material uncertainties that cast doubt upon its ability to continue as a going concern. The Companys disclosure reflects such assessment and discussion (see Note 1).



(ii)

Accounting Changes  Section 1506

Section 1506, Accounting Changes, prescribes the criteria for changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and corrections of errors. This Section allows for voluntary changes in accounting policies only if they result in the consolidated financial statements providing reliable and more relevant information. In addition, this Section requires entities to disclose the fact that they did not apply a primary source of GAAP that have been issued but not yet effective. The adoption of this Section has had an impact on the financial position or results of operations for the year ended December 31, 2008 as the change in accounting policy, described in note 2 had to meet the standard of providing reliable and more relevant information of the Companys financial position and performance.



(iii)

Capital disclosures  Section 1535

Section 1535, Capital Disclosures, establishes disclosure requirements regarding an entitys capital, including:



(i)

an entitys objectives, policies, and processes of managing capital.

(ii)

quantitative data about what the entity regards as capital;

(iii)

whether the entity has complied with any externally imposed capital requirements; (iv) if it has not complied, the consequences of such non-compliance. The new standard has had no impact on the financial position or results of operations for the year ended December 31, 2008 (Note 19).





















---

3.

Significant Accounting Policies(continued)



(iv)

Financial instruments  Sections 3862 and 3863

Section 3862, Financial Instruments  Disclosures and Section 3863, Financial Instruments  Presentation replace Section 3861 Financial Instruments  Disclosure and Presentation. These new sections revise and enhance disclosure requirements while leaving presentation requirements unchanged. These new sectionsplace increased emphasis on disclosures about the nature and extent of risks arising from financial instruments and how the entity manages those risks. The new standards have had no impact on the financial position or results of operations for the year ended December 31, 2008.



(v)

Inventories  Section 3031

Section 3031, Inventories, provides more guidance on the measurement and disclosure requirements for inventories. Specifically the new pronouncement requires inventories to be measured at the lower of cost or net realizable value, and provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realizable value. The new standard has had no impact on the financial position or results of operations for the year ended December 31, 2008



(s)

Recent Accounting Pronouncements



(i)

Convergence with International Financial Reporting Standards

In 2006, Canadas Accounting Standards Board ratified a strategic plan that will result in Canadian GAAP, as used by public companies, being evolved and converged with International Financial Reporting Standards (IFRS) over a transitional period to be complete by 2011. The official changeover date from Canadian GAAP to IFRS is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The Company has not yet assessed the impact of the ultimate adoption of IFRS on the Company.



(ii)

Goodwill and Intangibles  Section 3064

The CICA issued the new Handbook Section 3064, Goodwill and Intangible Assets, which will replace Section 3062, Goodwill and Intangible Assets. The new standard establishes revised standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets. The new standard also provides guidance for the treatment of preproduction and start-up costs and requires that these costs be expensed as incurred. The new standard applies to the Companys annual and interim financial statements beginning January 1, 2009. The Company does not expect the adoption of this change to have an impact on its consolidated financial statements.



(iii)

Sections 1582, Business Combinations, 1601, Consolidations and 1602, Non-controlling Interests

In January 2009, the CICA issued these new sections to replace Section 1581, Business Combinations and Section 1600, Consolidated Financial Statements. Section 1582 will apply to a transaction in which the acquirer obtains control of one or more businesses (as defined in the Section). Most assets acquired and liabilities assumed, including contingent liabilities that are considered to be improbable, will be measured at fair value. A bargain purchase will result in the recognition of a gain.



Any non-controlling interest will be recognized as a separate component of shareholders equity and net income will be allocated between the controlling and non-controlling interests. These new standards will apply to fiscal years beginning on or after January 1, 2011. The Company is currently evaluating the impact of the adoption of these changes on its consolidated financial statements.







---

3.

Significant Accounting Policies(continued)



(iv)

EIC -173 Credit Risk and the Fair Value of Financial Assets and Liabilities

In January 2009 the Emerging Issues Committee (EIC) issued EIC-173. In this EIC the Committee reached a consensus that in determining the fair value of financial assets and financial liabilities an entity should take into account the credit risk of the entity and the counterparty. The EIC is effective for periods ending after the issuance date, the Company is evaluating the effect of EIC-173 and will adopt prospectively.



(v)

EIC  174 Mining Exploration Costs

On March 27, 2009 the EIC issued EIC-174. In this EIC the Committee reached a consensus that an enterprise that has initially capitalized exploration costs has an obligation in the current and subsequent accounting periods to test such costs for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The EIC is effective for periods ending after the issuance date and the Company believed that the impact of adoption is in line with the Companys existing accounting policies.



(k)

Comparative Figures



Certain comparative figures have been reclassified to conform to the presentation as at and for the year ended December 31, 2008.



4.

Short-term Investments



As at December 31, 2008, short-term investments consisted of $850,904 of cashable guaranteed investment certificates with terms of greater than ninety days but not greater than one year (2007  $3,995,269) and $71,655 in commercial notes (2007  $2,065,775). Included in the balance reported at December 31, 2007, the Company held 420,000 common shares of Nanika Resources Inc. (formerly known as New Cantech Venture Inc.) (Nanika). The market value of the shares was $88,000 as at December 31, 2007.



5.

Marketable Securities

As at December 31, 2008, the Company held 420,000 common shares of Nanika Resources Inc. The market value of the shares was $12,600. In 2008, Management assessed the Companys marketable security holdings and determined to reclassify the shares of Nanika as long-term for consistency with managements intentions.



6.

Mineral Interests

i.

Guangdong  Changkeng

On February 8, 2007, Minco China, Minco Golds wholly owned subsidiary, replaced Minco Gold as the controlling shareholder in MingZhong by signing a joint venture agreement with the JV partners (the minority shareholders) to form Guangzhou MingZhong Mining Co., Ltd (MingZhong) and on March 30, 2007 MingZhong received its business license.











---

6.

Mineral Interests(continued)

The original Changkeng exploration permit (owned by No. 757 Exploration Team of Guangdong Geological Exploration Bureau (757 Exploration Team)) which expired in September 2006, has been renewed until September 10, 2009. MingZhong signed an exploration permit transfer agreement with No. 757 Exploration Team and on January 5, 2008, MingZhong received the exploration permit. The value of the exploration permit was RMB 48 million (approximately $7.3 million).



The initial committed contribution to MingZhong by the five partners was established at RMB 100 million ($16.57 million). The contributions would be used to purchase the exploration permit for RMB 48 million ($7.3 million) and funds for exploration and development of RMB 52 million ($9.27 million). Minco China is to contribute at a rate of 51% and the other minority shareholders contributing 49% to registered capital, as and when funds are required for the purchase of the exploration permit and exploration activities.



During 2008, the shareholders of MingZhong contributed through shareholder loans totalling RMB 30 million (approximately $5.39 million) to MingZhong. Of this balance Minco China contributed 51% or RMB 15.3 million (approximately $2.72 million) and the minority shareholders contributed 49% or RMB 14.7 million (approximately $ 2.67 million).



Of the RMB 30 million (approximately $5.39 million) contributed by the shareholders of MingZhong RMB 19 million (approximately $2.94 million) was used to make the first payment of the ChangKeng Exploration Permit to 757 Exploration Team and RMB 11 million (approximately $1.7 million) was used on exploration and other operating expenses. A $0.7 million exchange loss was incurred as result of these transactions.

As at December 31, 2008, the remaining balance due on the payment for the exploration permit of RMB 29 million (approximately $ 5.04 million) has been accrued in the Companys financial statements. Minco China is responsible for its 51% shareholder contribution of RMB 14.8 million (approximately $ 2.57 million) and the minority shareholders are responsible for their 49% shareholder contribution RMB 14.2 million (approximately $ 2.47 million) to fund the final amount due on the exploration permit.

As at December 31, 2008, the Company recorded exploration permit costs of $3.66 million, interest expenses $0.21 million and a $1.17 million exchange loss for the remaining balance of RMB 29 million (approximately $5.04 million).

In 2007 and 2006, the Company recorded $nil exploration permit costs and relevant liabilities for ChangKengs exploration permit.

Subsequent to year end (see Note 20(c)), the MingZhong shareholders agreed to contribute RMB 51.7 million (approximately $9.2 million) to registered capital and to use the proceeds to pay back the shareholder loans RMB 30 million (approximately $5.39 million) and to fund on going exploration and permitting on the ChangKeng project.

ii.

Gansu  Longnan

Minco China presently holds twelve exploration permits in the Longnan region of south Gansu province in China. The Longnan region is within the southwest Qinling gold field.

The Longnan project has been divided into three sub-projects according to their geographic distribution, type and potential of mineralization:











---



6.

Mineral Interests(continued)



(1)

Yangshan: including five exploration permits located in the northeast extension of the Yangshan gold belt and its adjacent area; potential for gold

(2)

Yejiaba: including four exploration permits adjacent to Guojiagou exploration permit; potential for gold and antimony.

(3)

Xicheng East: including three exploration permits to the east extension of the famous Xicheng Pb-  Zn mineralization belt; potential for gold, silver, lead and zinc.

The Company has spent a cumulative total of $2.8 million to December 31, 2008 (2007 - $1.4 million, 2006  $0.5 million) on exploration costs.

During the year, the Company recorded the sale of an exploration permit for RMB 2.8 million ($425,632) and has received total proceeds.

Both Anba gold property and Minco  Qinqi project were ceased in 2007. Totalling costs incurred for the AnBa gold property were $490,422, and $278,576 were incurred for the Minco  Qinqi project.



iii.

Inner Mongolia - Gobi Gold

The project is located in Inner Mongolia Autonomous Region, China.  Pursuant to a co-operative joint venture agreement signed on March 12, 2004, Minco Gold can earn  a 75% interest (through shareholdings) in the project after spending RMB 18 million (approximately $2.7 million) over a four-year period ended  March 12, 2008.  The Damo joint venture company was formed to hold the above noted mineral interests.

The Company spent $270,532, $214, 319 and $11,151 on this project respectively in 2008, 2007 and 2006.



At December 31, 2008, the Company has spent a cumulative total of $1.9 million (2007 - $1.7 million, 2006  $1.5 million) and earned a 65% (2007  63%, 2006  58%) project interest.

iv.

Inner Mongolia - BYC

At December 31, 2007, the Company has spent a cumulative total of $869,533 (2006 - $835,437) on this project. During 2008 the Company spent nil on BYC project.

On July 18, 2008 the Company signed an agreement with Long Da Fu (Beijing) Investments Co. Ltd (LongDaFu) to sell the interest in HYMK for RMB 7 million ($1.2 million). There was a transition period from September 10, 2008 to October 31, 2008 while the companies awaited government approval. Following receipt of government approval, on October 31, 2008, Long Da Fu took over management control and daily operations. Of the total RMB 7 million ($1.2 million), the Company received RMB 4.25 million ($757,710) and has recorded RMB 2.75 million ($490,283) as receivable on December 31, 2008. This was received subsequent to the year end 2008.

v.

Hunan  Gold Bull Mountain

In July 2006, Minco Chinas wholly owned subsidiary Yuanling Minco entered into a Gold Bull Mountain Mining License Transfer Agreement with Yuanling County Government.  On August 10, 2006, the Gold Bull Mountain Mining License was transferred to Yuanling Minco. As of December 31, 2006, the Company had paid a total of RMB 2.5 million (approximately $358,500).









---



6.

Mineral Interests(continued)



On August 5, 2006, the Company entered into a Shareholding and Enterprise Assets Transfer Agreement to acquire Huaihua Tiancheng in order to obtain exploration permits for the areas around the Gold Bull Mountain mining licensed area. The acquisition price was RMB 6.0 million (approximately $852,000), which was paid and expensed as of December 31, 2006.



As at December 31, 2008, the Company wrote off a total of RMB 2.5 million (approximately $358,500) recorded as the mineral interests. This is the cost of Gold Bull Mountain mining license. Management decided to write off the license because there is a significant deterioration in the business environment and the Company did not manage to find any new minerals in the property. The Company does not possess any external valuation appraisal to support the value of the mining license.

As at December 31, 2008 the Company has incurred a cumulative total of $2.2 million (2007 - $2.1 million, 2006  $1.4 million) in exploration costs. The Company has determined that as part of its prioritization of its cash management, that the Gold Bull Mountain project no longer be funded.



Subsequent to year end, the Company decided explore the possibility of selling Yuanling Minco. Management continues to evaluate all of their properties, including Gold Bull Mountain in relation to commodity prices.



vi.         Henan Zhongjia - XiaoShan

The Xiaoshan project consists of two exploration permits(the Huluyu permit and the Dafangshan permit) and both permits are held by the Henan Nonferrous Exploration and Mining Company (HNEM), a subsidiary of the Nonferrous Geological Exploration Bureau of Henan Province.



On April 30, 2007, a JV contract was signed between Minco China and HNEM to jointly explore and develop the precious and nonferrous resources in the Xiaoshan project area. On June 11, 2007, a business license was issued to the JV, Henan Zhongjia Minco Mining Co. Ltd. (Zhongjia). The Company has spent accumulative costs of $1.5 million up to December 31, 2008 (2007 - $1.1 million, 2006 - nil) on exploration activities, including $842,788 (RMB 6.0 million) incurred in 2007 to acquire the exploration permits.



On December 4, 2008, the agreement with HNEM was amended to indicate that the Company will not be required to make any further investment for the XiaoShan project. Further investment will be funded by new shareholders; the Companys current 70% interest in Zhongjia will eventually be diluted to 20.59%. The new shareholder has not contributed as at December 31, 2008, therefore the dilution impact has not yet taken effect.







---

6.

Mineral Interests(continued)

The following is a summary of exploration costs incurred by the Company:

|                                                       |                   |                   |            
|------------------------------------------------------ | ----------------- | ----------------- | -----------
|                                                       | 2008              | 2007              | 2006       
|Gansu                                                  |                   |                   |            
|·
Yangshan, Anba (*)                                   | -                 | 12,941            | 32,061     
|·
Minco-Qinqi
(formerly Western Extension of Yangshan) | -                 | (163,088)         | 20,088     
|·
Longnan                                              | 1,414,127         | 886,375           | 416,215    
|Inner Mongolia                                         |                   |                   |            
|·
Gobi Gold                                            | 270,532           | 214,319           | 11,151     
|·
BYC (**)                                             | -                 | 34,098            | 135,374    
|Guangdong                                              |                   |                   |            
|·
Changkeng                                            | 8,351,719         | 176,365           | 56,034     
|·
Fuwan                                                | -                 | -                 | 943,207    
|Henan                                                  |                   |                   |            
|·
Xiaoshan                                             | 411,181           | 1,131,000         | -          
|Hunan                                                  |                   |                   |            
|·
Gold Bull Mountain                                   | 98,948            | 655,858           | 1,402,734  
|Gross exploration costs                                | 10,546,507        | 2,947,948         | 3,016,863  
|Exploration cost recoveries                            | -                 | 163,008           | (95,331)   
|Expensed exploration permits                           | (6,611,918)       | (842,788)         | (852,000)  
|Expensed mining license costs                          | (358,500)         | -                 | -          
|Expensed exploration costs                             | (3,934,589)       | (2,268,168)       | (1,711,132)
|Capitalized mining permit costs                        | $               - | $               - | $  358,400 



*  The projects were ceased.

** The project was sold.



7.

Plant, Property and Equipment



|                               |                   |              |            |  |  | 
|------------------------------ | ----------------- | ------------ | ---------- |  |  | 
|                               | December 31, 2008
|                               |                   | Accumulated  | Net Book  
|                               | Cost              | Amortization | Value     
|                               |                   |              |           
|Computer equipment             | $   235,885       | $  152,958   | $  82,927 
|Leasehold improvements         | 66,044            | 46,916       | 19,128    
|Mining equipment               | 358,909           | 213,067      | 145,842   
|Motor vehicles                 | 386,859           | 148,409      | 238,450   
|Office equipment and furniture | 134,597           | 107,423      | 27,174    
|                               | $1,182,294        | $  668,773   | $ 513,521 
|                               | December 31, 2007
|                               |                   | Accumulated  | Net Book  
|                               | Cost              | Amortization | Value     
|                               |                   |              |           
|Computer equipment             | $    193,843      | $  120,867   | $   72,976
|Leasehold improvements         | 63,980            | 38,683       | 25,296    
|Mining equipment               | 306,142           | 197,697      | 108,445   
|Motor vehicles                 | 368,874           | 109,766      | 259,107   
|Office equipment and furniture | 132,055           | 98,170       | 33,886    
|                               | 1,064,894         | 565,183      | 499,710   
|Discontinued operations        | 7,296             | 2,835        | 4,461     
|                               | $ 1,072,190       | $  568,018   | $ 504,171 









---

The Company recorded amortization of plant, property and equipment of $100,754,

$54,668 and $46,556 respectively for the years ended December 31, 2008, 2007 and 2006.





8.

Equity Investment in Minco Silver Corporation



As at December 31, 2008 the Company owns 13,000,000 common shares of Minco Silver (2007  13,000,000 common shares) that were acquired in 2004 in exchange for the transfer of the Fuwan property and the silver interest in the Changkeng property from Minco Gold to Minco Silver.



The Company did not participate in the public offerings by Minco Silver in 2005 and 2006 and as a result its ownership interest decreased from approximately 55.60% to 45.50% at December 31, 2006. The Companys ownership interest decreased further to 41.75% primarily due to the Companys sale of 1,000,000 shares of Minco Silver in 2007. During 2008, the Companys ownership decreased to 40.48% due to the exercise of options by Minco Silver option holders.



The Company is exposed to the transactions undertaken by Minco Silver through its equity accounting for the Companys investment in Minco Silver.



On November 17, 2006, Minco Silver completed a public offering, by way of a short form prospectus, of 5,000,000 units at a price of $3.00 per common share for gross proceeds of $15,000,000. Each unit consisted of one common share and one-half of one common share purchase warrant. Each warrant is exercisable at $3.45 per share until May 17, 2008. On December 1, 2006, Minco Silver completed an additional issuance of 528,200 common shares at a price of $2.80 per common share and an additional 375,000 common share purchase warrants at a price of $0.40 per warrant for gross proceeds of $1,628,960 pursuant to the exercise of an over-allotment option by the underwriters. Each warrant is exercisable at $3.45 per share until May 17, 2008.



Prior to November 17, 2006, the Company consolidated the accounts of Minco Silver. Effective November 17, 2006, the Company commenced accounting for its investment in Minco Silver on an equity basis and as a result the following assets and liabilities were deconsolidated at that date: cash of $6,539; short term investment of $5,578,000; current assets of $5,786,000; property and equipment of $80,000; current liabilities of $1,175,000 and non-controlling interest of $2,985,000.



Following the dilution of Minco Golds shareholding interest in Minco Silver, Minco Gold recognized a dilution gain and equity loss on investment in Minco Silver as follows:



2008                 20072006Dilution gain in Minco Silver$1,544,454$191,000$     5,213,000Equity loss of Minco Silver Corporation$(948,750)$(3,239,898)$      (521,095)Income (loss) from investment in Minco Silver$595,704$(3,048,898)$     4,691,905








---

8.

Equity Investment in Minco Silver Corporation(continued)



The carrying value and market value of the Minco Silver shares held by the Company and accounted for using the equity basis, are as follows:

December 31, 2008December 31, 2007Investment in Minco Silver Corporation on an equity basis$3,675,116$3,079,412Market value of Minco Silver shares$18,460,000$38,740,000






As at December 31, 2008 the closing share price for Minco Silvers shares on the Toronto Stock Exchange was $1.42 (2007 - $2.98).



As of December 31, 2008, Minco Silver had current assets of $5,398,758, non-current assets 12,330,727 (including $5,294,098 in capitalized mineral interest costs), current liabilities of $1,949,370 and shareholders equity of $15,780,115. Minco Silver incurred exploration costs of $1,814,641, administration costs of $1,369,282 and a loss of $2,295,138 during the year ended December 31, 2008.



As of December 31, 2007, Minco Silver had current assets of $19,013,085, property and equipment of $244,000, current liabilities of $5,608,085 and shareholders equity of $13,649,000. Minco Silver incurred exploration costs of $4,790,000, administration costs of $3,261,409 and a loss of $7,275,000 during the year ended December 31, 2007.



As of December 31, 2006, Minco Silver had current assets of $20,564,000, property and equipment of $80,000, current liabilities of $1,824,000 and shareholders equity of $18,820,000. Minco Silver incurred exploration costs of $758,000, administration costs of $493,000 and a loss of $1,145,000 during the period from November 17, 2006 to December 31, 2006.



On July 22, 2008, Minco Silver announced the potential acquisition of 100% of the issued and outstanding common shares of Sterling Mining Company (Sterling).  Among the terms of the deal is that Minco Silver has offered 0.51 of a Minco Silver share for each one of Sterlings share.  The Company extended a line of credit in the amount of US$15.0 million (the facility) to be advanced from time to time to meet general working capital and other operating expenses to carry on Sterlings business, of which US$5.0 million was advanced on July 30, 2008; bearing 10% simple interest plus fees and expenses.



On August 27, 2008 the Company terminated the obligation to acquire 100% of the outstanding common shares of Sterling and the obligation to advance the additional US$10.0 million under the line of credit, as provided in the facility.



Minco Silver is of the opinion that they will be successful in recovering all of the funds due to the Company, through the bankruptcy protection proceedings, which were initiated on March 3, 2009, by Sterling when it filed a voluntary petition under Chapter 11 bankruptcy code.



Further to the change in accounting policy related to the development of mineral interests (see note 2), Minco Silver has capitalized $5.3 million (2007 - $nil) of development costs and Minco Golds equity share of this amount is $2.1 million.









---



9.

Non-Controlling Interest (NCI)



The non-controlling interest represents the interest of minority shareholders in Zhongjia, and the interest of the minority shareholders in MingZhong, based on the amount of their investment adjusted by their share of income or losses from operations since the date of their investment. For the year ended December 31, 2008, the Company has recorded $Nil  NCI balance as the amounts that would be allocated to the minority interest parties would have exceeded their NCI balance. The Company reduced their balance to zero



The non-controlling interest in the Zhongjia JV was 30% and the non-controlling interest in Mingzhong was 49% as at December 31, 2008 and 2007.



10.

Discontinued Operations



Pursuant to CICA Handbook Section 3475 Disposal of Long-Lived Assets and Discontinued Operations, the consolidated financial statements of the Company have been reclassified to reflect discontinued operations of Minco Base Metals Corporation (Minco Base Metals) and of Inner Mongolia HuaYu-Minco Mining Co., Ltd. (HYMK). Accordingly, exploration costs and administrative expenses, assets and liabilities and cash flows of discontinued operations have been segregated in the Consolidated Statements of Operations and Comprehensive Loss and Deficit and Consolidated Balance Sheets. The net operating results, net assets and net cash flows have been reported as Discontinued Operations.



The following information summarizes the financial information for the Companys discontinued operations:



On November 15, 2007, the Company effected the reorganization and spin-off of Minco Base Metals, including its interest in Gansu Keyin Mining Co. Ltd. and the White Silver Mountain project. The Company issued 1 common share in Minco Base Metals Corporation for every 5 common shares of the Company (the assets disposed of consisted primarily of cash, receivables and payables).  The 2007 loss of Minco Base Metals prior to disposition was $39,596. The net liabilities of $112,674 of Minco Base Metals as of November 14, 2007 were credited to contributed surplus of the Company.









---

10.

Discontinued Operations(continued)



Below are two tables that summarize the financial information for the Companys discontinued operations:



Minco Base Metals Corporation

Balance Sheet

(Expressed in Canadian Dollars)November 14,
2007ASSETSCurrent assetsCash$      5,082Receivables4,504Current assets of discontinued operations9,586Plant, property and equipment16,534Total assets of discontinued operations26,120LIABILITIESCurrent liabilitiesAccounts payable and accrued liabilities138,794Total liabilities of discontinued operations138,794Net liabilities of Minco Base Metals disposed$(112,674)
















---

10.

Discontinued Operations(continued)



Minco Base Metals Corporation

Statement of Operations and Comprehensive Loss and Deficit

(Expressed in Canadian Dollars)Period from January 1, 2007 to November 14,
2007Exploration costs$   9,172Administration expenses30,424Net loss from discontinued operations$(39,596)








Minco Base Metals Corporation

Statement of Cash Flows

(Expressed in Canadian Dollars)Period from January 1, 2007 to November 14,
2007Cash used by operating activities of discontinued operations$(4,240)Cash used in investing activities of discontinued operations-Cash provided by financing activities of discontinued operations7.820Increase in cash3,580










---

10.

Discontinued Operations(continued)



On July 18, 2008, the Company entered into a sale agreement to dispose of its interest in HYMK. After completion of all legal requirements and approvals, the Company relinquished all managerial involvement and controls to the purchaser on October 31, 2008. Gross proceeds on disposal were RMB 7.0 million (approximately $1.2 million).



The table below indicates the assets associated with Inner Mongolia Huayu-Minco Mining, Co., Ltd. and discontinued operation:

| |  | 
| |  | 
| |  | 

Inner Mongolia Huayu-Minco Mining Co., Ltd

Balance Sheets

(Expressed in Canadian Dollars)December
31, 2008December 31, 2007ASSETSCurrent assetsCash$     -$ 5,409Receivables-67Prepaid-362Current assets of discontinued operations-5,838Plant, property and equipment-4,461Total assets of discontinued operations-10,299LIABILITIESCurrent liabilitiesAccounts payable and accrued liabilities-137Total liabilities of discontinued operations-137Net assets of Huayu-Minco disposed$   -$ 10,162














---

10.

Discontinued Operations(continued)



Inner Mongolia Huayu-Minco Mining Co., Ltd

Statements of Operations and Comprehensive Loss and Deficit

(Expressed in Canadian Dollars)Period from January 1, 2008 to October 31,
2008Year Ended December 31,
2007Exploration costs$   6,875$ 26,814Administration expenses24,0779,454Loss from discontinued operations(30,952)(36,268)Gain on disposition (net of tax -$35,268)1,195,682-Earnings from discontinued operations1,164,730-Earnings (loss) for the year from discontinued operations$ 1,164,730$ (36,268)




Inner Mongolia Huayu-Minco Mining Co., Ltd

Statements of Cash Flows

(Expressed in Canadian Dollars)Period from January 1, 2008 to October 31,Year Ended December 31,20082007Cash provided  by operating activities of  discontinued operations641,7363,258Cash provided by  investing activities of discontinued operations4,461-Increase  in cash and cash equivalents646,1973,258






11.

Loans payable



As at December 31, 2008, total loan payable of $ 2,881,237 (2007  Nil) consists of $ 2,667,296 of the minority shareholders loans in MingZhong and $ 213,941 of the minority shareholders loan in Henan Zhongjia Minco. The Company had this loan starting from 2008.



MingZhong signed loan agreements with its shareholders on December 10, 2008 for RMB 30 million ($5.39 million). The loans are unsecured, bear interest at 5.04% and are repayable on May 31, 2009. Subsequent to year end, the MingZhong shareholders have agreed to contribute RMB 51.7 million ($9.2 million) to registered capital and to use the proceeds to pay the shareholders loan and agreed to waive the interest in the shareholders loan.



























---



11.

Loans payable (continued)



The balance of loans payable includes a shareholder's loan in Henan Zhongjia Minco. This loan was originated by the minority shareholder of Henan Zhongjia Minco who provided funding to the total of RMB 1.2 million ($213,941) during the year to support the exploration activities in that company. The loan is unsecured, non-interest bearing and is repayable on demand.





12.

Share Capital



(a)

Common Stock



Authorized:

100,000,000 common shares without par value

Issued:

Balance, December 31, 200642,865,219$       33,809,903Stock options exercised ranging from $0.55 to $1.35 per share, including $63,750 contributed surplus attributed to stock-based compensation recognized111,166169,558Purchased and cancelled pursuant to normal course issuer bid(48,000)(37,951)Balance, December 31, 200742,928,38533,941,510Stock options exercised at $0.79 per share, including $33,973 contributed surplus attributed to stock-based compensation recognized60,66680,412Balance, December 31, 200842,989,051$        34,021,922




Under an original escrow agreement, 4,880,000 escrow shares were to be released based on the Companys expenditures on exploration and development of a particular resource property. In July 2005, the Company released 1,473,264 escrow shares based on exploration expenditures. In June 2005, the Companys shareholders approved a new escrow agreement that will result in the remaining 1,518,058 escrow shares being released over a period of 18 months on a time release basis: (a) 379,514 escrow shares on December 31, 2005 (the release was effected in January 2006); (b) 379,514 escrow shares on July 1, 2006; (c) 379,514 escrow shares on December 31, 2006 (the release was effected in January 2007); and (d) 379,516 escrow shares on July 1, 2007. As at December 31, 2007, all shares are released from escrow.



The Toronto Stock Exchange accepted a Notice of Intention by the Company to make a Normal Course Issuer Bid. Under the terms of the Normal Course Issuer Bid, the Company may acquire up to 2,107,210 common shares of the Company between November 22, 2006 and November 21, 2007. Prior to the expiry of the bid, the Company acquired and cancelled 48,000 common shares at a cost $44,450.  The cost to purchase the shares exceeded their carrying value by $6,499.  This excess has been charged to retained earnings.



(b)

Share purchase warrants and broker options



There were no share purchase warrants outstanding as at December 31, 2008 (2007  Nil).















---

12.

Share Capital (continued)



(c)

Contributed Surplus



Summary of contributed surplus is as follows:

Balance at December 31, 2006$  1,649,3432007 stock-based compensation2,022,850Transfer to share capital on exercise of stock options(63,750)Transfer of net liabilities to Minco Base Metals112,674Balance at December 31, 20073,721,1172008 stock-based compensation1,242,953Transfer to share capital on exercise of stock options(33,973)Balance at December 31, 2008$  4,930,097




(d)

Minco Gold Stock Options

Minco Gold may grant options to its directors, officers, employees and consultants under its stock option plan.  The number of common shares reserved for issuance is 4,725,834 based upon option granted and not exercised. The maximum number of common shares reserved for issuance is 15% of the issued and outstanding shares.

In 2008, Minco Gold granted 767,500 stock options to its directors, officers, employees and consultants at the price range from $0.46 to $1.44 per share. The stock options granted vest in various increments and have a maximum term of five years.

Minco Gold recorded $1.2 million in stock based compensation expense in 2008 (2007 - $2.0million, 2006 - $2.8 million).







---

12.

Share Capital(continued)

A summary of the status of options granted by Minco Gold is as follows:

Weighted AverageNumberExercise PriceOptions outstanding at December 31, 20062,945,334$ 1.61Granted3,865,0001.07Exercised(111,166)0.95Cancelled and Forfeited(1,197,501)1.71Expired(265,000)1.50Options outstanding at December 31, 20075,236,667$ 1.21Granted767,5001.03Exercised(60,666)0.79Cancelled and Forfeited(1,217,667)1.48Options outstanding at December 31, 20084,725,834$ 1.11






The weighted average fair value of options granted by Minco Gold during the period ended December 31, 2008 was $1.03. Each option entitles the holder to purchase one common share.





Options OutstandingOptions ExercisableRange of
Exercise
PricesNumber
OutstandingWeighted
Average
Remaining
Contractual
Life (yr)Weighted
Average
Exercise
PriceNumber
ExercisableWeighted
Average
Exercise
Price$0.00 - $1.062,682,1673.82$0.801,610,328$0.85$1.07 - $1.631,181,6673.49$1.32808,335$1.31$1.64 - $2.54762,0001.84$1.69762,000$1.69$2.55 - $3.00100,0002.33$2.55100,000$2.554,725,8343.39$1.113,280,663$1.21










---

12.

Share Capital(continued)



The Company used the Black-Scholes option pricing model to determine the fair value of the options with the following assumptions:

200820072006Risk-free interest rate1.69% - 3.10%3.95% - 4.59%3.83% - 4.5%Dividend yield0%0%0%Volatility64% - 77%86% - 104%114% - 134%Approximate expected lives5 years5 years5 years


Option pricing models require the use of highly subjective estimates and assumptions including the expected stock price volatility.  Changes in the underlying assumptions can materially affect the fair value estimates and therefore, in managements opinion, existing models do not necessarily provide a reliable measure of the fair value of the Companys stock options. As at December 31, 2008, 1,729,723 shares were available for stock options.



13.

Income Taxes



On March 16, 2007, the National Peoples Congress (NPC) of China approved the new Corporate Income Tax Law, which became effective on January 1, 2008.  The new law establishes a unified 25% tax rate for both domestic enterprises and foreign invested enterprises (FIEs).  This change of the Chinese tax law will have impact to the extent of the Companys business operation in China when the Company becomes profitable in China.



Income tax expense differs from the amount that would result from applying the Canadian federal and provincial income tax rates to earnings before income taxes. These differences result from the following items:



200820072006Loss before discontinued operations and non-controlling interest$(14,426,371)$(7,933,809)$(2,910,887)31%34.12%34.12%Income tax recovery at statutory rates$(4,472,175)$(2,707,016)$(1,013,723)Non-taxable capital gain-(553,530)-Non-taxable dilution gain(92,334)520,313(1,778,676)Non-deductible expenses(1,298,184)734,6771,220,990Non-deductible foreign exchange gain-(122,393)Difference in foreign tax rates1,043,006145,9999,946Impact of federal tax rate change179,848637,268636,021Expiry of non-capital loss carry forward196,776356,895389,542Business tax/China withholding tax85,349--Change in valuation allowance4,181,504865,394658,293Others261,559--Provision for tax expenses$85,349$-$-








---

13.

Income Taxes(continued)



Future income taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes. The significant components of future income tax assets and liabilities at December 31 are as follows:



2008200726.00%27.00%Future income tax assets:Non-capital losses$   4,050,990$  2,576,597Unclaimed resource expenditures4,365,0411,744,282Capital assets175,827142,273Marketable securities87-Equity investment in Minco Silver97,254-Share issue costs8,97053,5148,698,1694,516,666Future income tax liabilities:Less: valuation allowance(8,698,169)(4,516,666)Net future income tax assets$                 -$                -




No future income tax asset has been recognized as realization is not considered more likely than not, due to the uncertainty of future taxable income.

The Company has Canadian non-capital loss carry forwards of approximately $5,842,000 that may be available for tax purposes. The expiry for Canadian non-capital loss carry forwards is as follows:

Non-Capital Losses Canada2009774,0002010857,0002015117,00020261,442,00020271,530,00020281,122,0005,842,000




As at December 31, 2008 the substantively enacted and enacted Canadian future tax rate in 2012 and onwards is 26%

The Company also has $3.8 million (2007 - $4.4 million, 2006 - $4.1 million) of cumulative foreign resource expenses for Canadian income tax purposes which can be carried forward indefinitely and used to reduce future taxable income in Canada.







---

13.

Income Taxes(continued)



Such cumulative foreign resource expenses are related to the Companys exploration activities in China. Consequently, these resource expenses may also be currently deductible for Chinese tax purposes (subject to Chinese tax law deductibility limitations) which would result in tax losses in China.

The Company has approximately $ 10 million of operating losses and approximately $13.9 million of unclaimed exploration expenses for Chinese income tax purposes. Operating losses incurred in a year can be carried forward for five years, while unclaimed exploration expenses will be amortized to match with future sales.

In China, under the new Corporate Income Tax Law, which became effective on January 1, 2008, the Company is required to pay withholding income tax on deemed interest for intercompany loan in China which is not claimable against Canadian carried forward loss.



14.

Related Party Transactions

a.

The Company earned the rental income and incurred the following fees to its directors or corporations controlled by its directors:

200820072006Rental Income$   68,100$   58,761$45,250200820072006Exploration costs$   85,937$   80,625$ 206,680Management fees42,13517,344121,410Property investigation6,97921,09470,510Investor relations8,177-17,775Director's fees48,00062,50093,250$ 191,228$ 181,563$ 509,625




b.

Receivables of $166,872 (2007 - $239,260) are due from four companies related by two common directors.

At December 31, 2008, the Company has nil balance due to Minco Silver (2007 - $1,929,893). The Company owns 40.48% of the issued shares of Minco Silver and has one common director.

At December 31, 2008,  the Company has a $1,246,282  due from Minco Silver (2007  $4,639,788) in relation to expenditures on the Fuwan Silver Property, new silver project investigation cost, and shared office expenses for both offices in  Vancouver and Beijing. The amount due from Minco Silver is unsecured, non-interest bearing and repayable on demand.





---

14.

Related Party Transactions(continued)

At December 31, 2008, the Company has $506,569 (2007 - $271,999) due from Minco Base Metals in relation to expenditures on the White Silver Mountain project and shared office expenses.  The amount due from Minco Base Metals is unsecured, non-interest bearing and repayable on demand.

The Company is related to Minco Base Metals through two common directors and one common officer. The Company provided financial assistance to fund Minco Base Metals operation.

The above transactions were conducted in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the parties.



15.

Capital Risk Management



The Companys objectives in the managing the liquidity and capital are to safeguard the Companys ability to continue as a going concern and provide financial capacity to meet its strategic objectives. The capital structure of the Company consists of equity attributable to common shareholders, comprising issued share capital, common share purchase warrants, contributed surplus, accumulated and other comprehensive income and accumulated deficit.



The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, acquire or dispose of assets.



In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending upon various factors, including successful capital deployment and general industry conditions. The annual and updated budgets are approved by the Board of Directors.



The Company does not pay out dividends.



The Company expects that with the combination of its current on hand resources; its ability to raise capital, its ability to work with its minority partners and joint venture partners; and its ability to manage the timing of exploration expenses, that there will be sufficient to complete its planned exploration business plan and support basic operations for the next 12 months. While the Company believes it will be able to raise the additional financing when required, the impact of the current global economic downturn and uncertainty of global equity markets provide no guarantees that the Company can complete a financing.





---

16.

Commitments and Contingencies



(a)

The Company has commitments in respect of office leases requiring minimum payments of $1,451,329 as follows:

2009$   200,1742010205,5332011219,3932012226,3232013240,1832014247,1132015112,613$ 1,451,329




The Company has entered into sub-lease agreements for a portion of its leased premises.



17.

Geographic Information

The Companys business is considered as operating in one segment, mineral exploration and development. The Company conducts operations only in Canada and in China; therefore segregates its financial results by geographical division. The Companys total assets, liabilities and operating loss are as follows:

December 31December 3120082007Current AssetsCanada$            1,945,475$            7,932,446China4,360,1904,853,877Discontinued operation-5,838$            6,305,665$          12,792,161December 31December 3120082007Long-term AssetsCanada$            3,813,628$            3,119,479China439,132869,420Discontinued operation-4,461$            4,252,760$            3,993,360December 31December 3120082007Current LiabilitiesCanada$               192,831$            2,344,007China8,495,976475,749Discontinued operation-38,549$            8,688,807$            2,858,305












---

17.

Geographic Information(continued)



|                          |                        |                        |                   
|------------------------- | ---------------------- | ---------------------- | ------------------
|                          | 2008                   | 2007                   | 2006              
|                          |                        |                        |                   
|(Loss) /gain for the year |                        |                        |                   
|Canada *                  | $          (2,411,563) | $          (3,959,788) | $          167,378
|China                     | (12,015,472)           | (3,544,579)            | (1,696,538)       
|Discontinued operation    | 1,164,730              | (75,864)               | (60,164)          
|                          | $        (13,264,305)  | $          (7,580,231) | $    (1,589,324)  



|                         |          |      |     
|------------------------ | -------- | ---- | ----
|                         | 2008     | 2007 | 2006
|                         |          |      |     
|Tax expense for the year |          |      |     
|Canada *                 | -        | -    | -   
|China                    | (85,348) | -    | -   
|                         | (85,348) | -    | -   



*Included within the Canadian divisions income (loss) for the year is $595,704 (2007  loss of $ 3,048,898, 2006  $4,691,905) which included the adjustments from the Companys equity investment in Minco Silver. Refer to Note 8 for details of the Companys interest in Minco Silver.

.







---

18.

Earnings (Loss) per Share

The table below calculates the basic and diluted earnings and loss per share.

200820072006Loss per share from continuing operationsBasic(0.34)(0.18)(0.04)Diluted(0.34)(0.18)(0.04)Earnings per share from discontinued operationsBasic0.03--Diluted0.03--Loss per shareBasic(0.30)(0.18)(0.04)Diluted(0.30)(0.18)(0.04)Weighted average number of shares outstanding42,970,81342,908,80941,193,591Effect of dilutive securitiesStock options50,640--Diluted weighted average number of shares outstanding43,021,45342,908,80941,193,591Stock options are excluded from the computation of diluted earnings per share whenthe exercise prices exceeded the average market value of the common shares or has created an anti-dilutive effect




19.

Financial Risk Management

The Companys operations consist of the acquisition and exploration of properties in China. The Company examines the various financial risks to which it is exposed to. These risks may include credit risk, liquidity risk, currency risk and interest rate risk. Management reviews these risks on a periodic basis and when material, they are reviewed and monitored by the Board of Directors.

Credit risk  Credit risk is the risk that the financial benefits of contracts with a specific counterparty will be lost if the counterparty defaults on its obligations under the contract, This includes any cash amounts owed to the Company by these counterparties, less any amounts owed to the counterparty by the Company where a legal right to set-off exists and also includes the fair value contracts with individual counterparties which are recorded in the financial statements. The Company considers the following financial assets to be exposed to credit risk:





---



19.

Financial Risk Management(continued)



Financial Assets

Held for trading $3,539,570*

Loans/other receivable $2,649,582**

*Held for trading includes cash and cash equivalents, short term investment and long term marketable securities.

** Loans/other receivables include receivables, Due from Minco Silver and Due from Minco Base Metals.

The effective interest rate on financial assets (short term deposits and GICs) ranged up to 4.10%.

Cash and cash equivalents  In order to manage credit and liquidity risk by investing its funds with reputable financial institutions. The Company places its Canadian based short-term investment funds into fixed income securities with terms of 90 days or less when acquired and its China based funds invested in term deposits of 90 days or less. The fair value approximates the carrying value.

Short term investments  Consisting of marketable securities and guaranteed investment certificates with maturities greater than 90 days when acquired. The fair value approximates the carrying value as the marketable securities are marked to market with published price quotation at the balance sheet date.

Receivables and due from related parties  Credit risk with related parties is the risk of default. The Company manages this risk by continuously monitoring the financial position of the borrower. Balances with related parties are unsecured; non-interest bearing and due on demand (see Note 13).

Liquidity risk  The Company has in place a planning and budgeting process to help determine the funds required to support the Companys normal operating requirements and its exploration plans. The annual budget is approved by the Board of Directors. The Company insures that there are sufficient cash balances to meet its short-term business requirements or has the flexibility to delay certain corporate activities until funds become available. The Company believes that it has the ability to raise additional funds to meet its current obligations. The Companys exposure to liquidity risk is:

Financial Liabilities

Other Liabilities $8,688,807*

* Other Liabilities includes accounts payable, accrued liabilities and loan payable.

All other liabilities are due on demand except for balance of $5,047,161 which is due and payable in one year. $5,047,161 (discounted at 5% to carrying value) of the total balance is due in one year and has a contractual value of $5,170,262.







---





19.

Financial Risk Management(continued)



The effective interest rate on financial liabilities (accounts payable) ranged up to 5%.

Currency/Foreign exchange risk  The Companys functional currency is the Canadian dollar and therefore the Companys net earnings are impacted by fluctuations in foreign currencies. The Company raises funds in Canadian dollars and lends either Canadian dollar amounts to support the Chinese operations. As the Company operates in China and many of its exploration expenditures are payable in either U.S. dollars or the Chinese currency RMB, there exist foreign currency risks arising from changes in exchange rates with the Canadian dollar. The Company maintains its excess cash in Canadian based assets. The Company does not hedge its foreign currency fluctuations. A 1% strength in the Canadian dollar against the Chinese RMB will have a before tax effect of a $41,700 gain on the financial results.



Interest rate risk The interest rate risk is the risk that the fair value of future cash flows of a financial instrument fluctuates because of changes in market interest rates. Cash and short-term investments entered into by the Company bear interest at a fixed rate thus exposing it to the risk of changes in fair value arising from interest rate fluctuations.Short term investments are invested in high grade, highly liquid instruments and the Company exposes itself to variable interest rate fluctuations. A 1% increase in the interest rate in China will have a net (before tax) expense effect of $26,673 and a 1% increase in the interest rate in Canada will have a net (before tax) income effect of $9,226, assuming the foreign exchange rate remains constant.











---

20.

Reconciliation of Canadian and United States Generally Accepted Accounting Principles

The Company prepares its financial statements in accordance with Canadian generally accepted accounting principles (Canadian GAAP), which differ in certain material aspects from United States Generally Accepted Accounting Principles (US GAAP). The significant differences between Canadian GAAP and US GAAP affecting the Companys financial statements are summarized as follows:

Consolidated Balance sheetsDecember 31, 2008December 31, 2007Total assets under Canadian GAAP$10,558,425$16,758,521Adjustment for investment in Minco Silver (f)(2,139,073)-Total assets under US GAAP$8,419,352$16,758,521Share capital under Canadian GAAP$34,021,922$33,941,510Value of escrow shares under Canadian GAAP (d)(48,800)(48,800)Value of escrow shares under US GAAP (d)2,864,4562,864,456Share capital under US GAAP$36,837,578$36,757,166Contributed surplus under Canadian GAAP$4,930,097$3,721,117Adjustment for stock based compensation (a (1))(154,300)(154,300)Value of stock based compensation prior to 2003 (a (2))338,128338,128Dilution gain (c)12,032,81910,467,000Contributed surplus under US GAAP$17,146,744$14,371,945Deficit under US GAAP -beginning of year$(37,240,060)$(29,651,330)Normal Course Issuer Bid  cost in excess of value-(6,499)Loss for the year under US GAAP(16,893,597)(7,582,231)Deficit under US GAAP  end of year$(54,133,657)$(37,240,060)Shareholders' equity under US GAAPShare capital$36,837,578$36,757,166Contributed surplus17,146,74414,371,945Accumulated comprehensive Income (loss)(120,120)(44,520)Deficit(54,133,657)(37,240,060)Total shareholders' equity under US GAAP$(269,455)$13,844,531










---



Consolidated Statements of Operations200820072006Losses for the yearUnder Canadian GAAP$(13,264,305)$(7,580,231)$(1,589,324)Dilution gain not recognized under US GAAP (c)(1,544,454)(191,000)(5,213,000)Unrealized loss on available-for-sale securities under US GAAP (b)75,600189,000-Equity loss in MSV under US GAAP (f)(2,160,438)--Loss for the year under US GAAP$(16,893,597)$(7,582,231)$(6,802,234)Weighted average number of shares outstanding42,970,81342,908,80941,193,591Loss per share basic and diluted under US GAAP$(0.39)$(0.18)$(0.17)Loss of the yearUnder US GAAP$(16,893,597)$(7,582,231)$(6,802,234)Net increase (decrease) in market value of the available-for-sale securities (b)(75,600)(298,947)254,427Comprehensive income (loss)
under US GAAP$(16,969,197)$(7,881,178)$(6,547,897)




There were no reconciliation items for the Consolidated Statement of Cash Flows

(a)

Stock Based Compensation



(1)

Under Canadian GAAP, the Company follows the fair value method, as determined using the Black-Scholes option valuation model, of accounting for stock-based compensation as recommended by the Canadian Institute of Chartered Accountants Handbook section 3870, Stock-based compensation and other stock-based payments (s. 3870). Under the fair value method, compensation cost is measured at fair value at the date of grant and is expensed over the awards vesting period.

Prior to the release of s. 3870, the Company had accounted for stock options under Canadian GAAP as capital transactions when the options vested. As permitted by this Handbook section, the Company applied this change retroactively, without restatement, for options granted after January 1, 2002. As a result, the opening deficit as at January 1, 2004 was adjusted to reflect a compensation expense of $154,300 relating to options granted in 2002 and 2003.  For US GAAP purposes, no adjustment would be made as the Company continued to follow the intrinsic value based method until SFAS 123, adopted on January 1, 2004. This resulted in a permanent GAAP difference to the balance of equity.

(2)

Prior to the adoption of SFAS 123, the Company measured stock-based compensation cost using the intrinsic value based method of accounting as prescribed by APB opinion No. 25, Accounting for Stock Issued to Employees. On January 1, 2004, the Company adopted SFAS 123 using the retroactive restatement method to recognize stock-based compensation expense relating to stock options granted to employees and directors subsequent to December 31, 2004 and were not fully vested on January 1, 2002 by making an adjustment of $338, 128. No similar expenses were required under Canadian GAAP. This resulted in a permanent GAAP difference to the balance of equity.



On January 1, 2006, the Company adopted SFAS 123(R) Share-Based Payment for US GAAP purposes. SFAS 123(R) requires that stock-based compensation expense be based on awards that are ultimately expected to vest. The adoption of SFAS 123(R) did not result in a significant







---

difference from the stock-based compensation expense that would have been recognized under SFAS 123.



(b)

Comprehensive income (loss)

Under US GAAP, the Company classified the short-term investment as available for sale prior to January 1, 2007. Beginning January 1, 2007, the Company changed the classification for all new short-term investments as held-for-trading except for securities  acquired prior to January 1, 2007 and still held as at the date of balance sheet, which were classified as available for sale.  Held-for-trading financial assets are recorded at market value and any unrealized gains or losses on held-for-trading financial assets are included in net income.



Effective January 1, 2007, under Canadian GAAP, the Company has adopted CICA Handbook Section 3855 Financial instruments  Recognition and Measurement. In accordance with Section 3855, the Company classified all its short term investments as held for trading financial assets which are measure at fair value and any unrealized gains or losses on held-for-trading financial assets are included in net income.



For the year ended December 31, 2008, under US GAAP, the Company continued to classify the securities acquired in 2006 and still held by the Company at December 31, 2008 as available for sale and measured at market value. Unrealized holding gains and losses on held -for sale securities are excluded from income and charged to accumulated other comprehensive income as a separate component of shareholders equity until realized.





(c)

Contributed surplus

With the decrease of the Companys equity interest in Minco Silver Corporation (see note 8), the Company recognized dilution gains under Canadian GAAP for the years ended December 31, 2008, 2007 and 2006. Under US GAAP, such transactions are considered as capital transactions and the resulting dilution gains shall be excluded from net income and included in contributed surplus. The contributed surplus relating to dilution gain recognized as of December 31 2008, 2007 and 2006 were $12,032,819, $10,467,000 and $10,276,000 respectively under US GAAP.  The dilution gain included in income statement for 2008 was $1,544,454, $191,000 for 2007 and $5,213,000 for 2006 under Canadian GAAP.

(d)

Escrow Shares

As described in note 12(a), 4,880,000 common shares were escrowed, to be released based on certain expenditures on exploration and development of a resource property. The escrow terms were subsequently changed to be on a time release basis over 18 months.

20.

Reconciliation of Canadian and United States Generally Accepted Accounting Principles(continued)

US GAAP requires that the fair value of the shares at the time they are issued should be recognized and charged to income over the expected escrow period, which was 12 years. The 2005 change to the escrow terms resulted in the recognition of the remaining unamortized grant date fair value as the shares are no longer contingently cancellable. The Company reversed $ 48,800 being the amount initially recorded in share capital account under Canadian GAAP and recorded the fair value of these escrow shares for $2,864,456. Contingently cancellable shares have been excluded from the calculation of the weighted average number of shares for purpose of loss per share under US GAAP.   All shares were released from escrow in 2007.

(e)

Income Tax Uncertainty:







---

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007. No future income tax asset has been recognized as realization is not considered more likely than not, due to the uncertainty of future taxable income.  There is no difference between the Companys treatment of income taxes under Canadian GAAP versus US GAAP.

(f)       Equity Investments in Minco Silver Corporation



Prior to January 1, 2008, the Minco Silvers accounting policy was to commence capitalizing mineral property development costs only upon the establishment of proven and probable reserves based on results of final feasibility studies which indicate whether a property is economically feasible.  Prior to January 1, 2008, the Minco Silver had not previously identified any properties that it would take from exploration to development and through to production.

On January 1, 2008, the Minco Silver changed this policy to more appropriately align its policy with those applied by other comparable mineral property exploration and development companies at a similar stage.  Minco Silvers new policy is to commence capitalization of mineral property development costs after a mineral resource having economic potential is identified on a property, from which time a property is considered to be a development project and such expenditures are capitalized as development costs. A mineral resource is considered to have economic potential when it is expected that documented resources can be legally and economically developed considering long-term metal prices.

As a result of change in Accounting Policy, Minco Silver capitalized $5,294,098 as development costs in 2008 under Canadian GAAP, which was adjusted into the Exploration Costs and expensed in accordance with US GAAP. Given the Companys 40.48% equity interest in Minco Silver, there was a resulting adjustment of $2,160,438 to the income statement, a credit to the carrying amount of the Companys investment in Minco Silver under US GAAP of $2,139,073 and a credit of $21,365 related to capitalized stock based compensation costs recorded to contributed surplus.

(g)

Accounts Payable and Accrued liabilities



Under Canadian GAAP, accounts payable and accrued liabilities are presented in the consolidated financial statements on an aggregate basis. US GAAP requires that the accounts payable and accrued liabilities be segregated for presentation in the consolidated financial statements.

(in 000s)                                                                    2008                               2007

Accounts payable                                                
       443,000                          707,000

Accrued liabilities                                
                     5,228,000            183,000

Total                                                                        5,671,000                          890,000



---

20.

Reconciliation of Canadian and United States Generally Accepted Accounting Principles (continued)



(h)          Accounts Receivable

Under Canadian GAAP, accounts receivable and GST (Good and Service tax) receivable are presented in the consolidated financial statements on an aggregate basis. US GAAP requires that the accounts receivable and GST receivable be segregated for presentation in the consolidated financial statements.



(in 000s)                                                                    2008                               2007

Accounts receivable                                                    735,000                        236,000

GST receivable                                                            162,000                          83,000

Total                                                                            897,000                         319,000



(i)

Recently adopted accounting standards  US GAAP:

The Fair Value Option for Financial Assets and Financial Liabilities

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS No. 159"). SFAS No. 159 permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007.



The Company adopted SFAS No. 159 beginning January 1, 2008. There was no material impact on the Companys consolidated financial statements as a result of the adoption of this new standard.



Fair Value Measurements

In September 2006, FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"). The objective of SFAS No. 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007.



In February 2008, the FASB released FSP No. SFAS 157-2. FSP No. SFAS 157-2 defers the effective date of SFAS No. 157 for one year for non-financial assets and non-financial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. It does not defer recognition and disclosure requirements for financial assets and financial liabilities, or for non-financial assets and non-financial liabilities that are remeasured at least annually.



The Company adopted SFAS No. 157 beginning January 1, 2008 and there was no material impact on the Companys consolidated financial statements as a result of the adoption of this new standard.



(j)

Recent accounting pronouncements:

Non-controlling Interests

In December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51". This statement amends ARB 51 to establish accounting and reporting standards for the non-controlling interest (minority interest) in a subsidiary and for the deconsolidation of a subsidiary. Upon its adoption, effective as of the beginning of the Company's fiscal year 2010, non-controlling interests will be classified as equity in the Company's balance sheet and income and comprehensive income attributed to the non-controlling interest will be included in the Company's income and comprehensive income. The provisions of this standard must be applied prospectively upon adoption except for the presentation and disclosure requirements. Management is currently evaluating the impact of adopting SFAS No. 160 on the Company's consolidated financial position and results of operations.



Business Combinations

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations" ("SFAS No. 141(R)"). SFAS No. 141(R) establishes principles and requirements for how an acquirer (continued)business combination recognizes and measures the assets acquired, liabilitiesassumed, and any non-controlling interest in the acquiree. The provisions of SFAS No. 141(R) will become effective for the Company's business combinations occurring on or after January 1, 2009.







---

Fair Value of a Financial Asset when the Market for That Asset is Not Active

SFAS FSP No. 157-3, Determining the Fair Value of a Financial Asset when the Market for That Asset is Not Active. (SFAS No. 157-3), was issued October 2008. SFAS FSP No. 157-3 clarifies the application of SFAS No. 157 in a market that is not active and provides key considerations in determining the fair value of the financial asset. FSP FAS No.157- 3 is effective upon issuance, including prior periods for which financial statements have not been issued. Revisions resulting from a change in the valuation technique or its application shall be accounted for as a change in accounting estimate. It is not expected that the adoption of this standard for US GAAP purposes will have a material effect on the consolidated financial statements.

Hierarchy of GAAP

SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, (SFAS No. 162) was issued May 2008. SFAS No. 162 identifies the sources of accounting and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with U.S. GAAP. SFAS No. 162 was effective November 15, 2008. The Company does not expect that the adoption of this standard for US GAAP purposes will have a material effect on its consolidated financial statements.



Subsequent events

SFAS 169, Subsequent Events, (SFAS No. 169) was issued May 2009.  SFAS No. 169 sets out (a) the period after the balance sheet date during which management should evaluate events that may occur for potential recognition or disclosure in the financial statements, (b) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and (c) he disclosures that an entity should make about events or transactions that occurred after the balance sheet date. An entity should apply the requirements of this statement to interim and annual financial periods ending after June 15, 2009. The Company is currently evaluating the impact of this statement on the financial statements.



21.

Subsequent Events

(a)

Effective January 22, 2009, the Company granted options over 1,582,000 common shares to various employees, directors, and contractors at an exercise price of $0.48 that vest over an 18 month period from the issue date and expire in January 2014.



(b)

As of February 28, 2009, the Company received the final installment payment on the sale of BYC of RMB 2.8 million ($0.5 million) (See Note 6 (iv).)



(c)

Effective March 27, 2009, the MingZhong shareholders agreed to increase the companies registered capital by RMB 51.7 million ($9.2 million) and to pay off the RMB 30 million ($5.39 million) loans from shareholders. The Companys 51% share of commitment to increase this registered capital will be a net RMB 26.4 million ($4.7 million), The shareholders have not paid the approved registered capital yet as of July 29, 2009.



(d)

On April 28, 2009, the Company sold 70% shares of HeNan ZhongJia Minco for RMB 2.46 million and received cash proceeds on June 12, 2009.











---











MINCO SILVER CORPORATION

(A development stage enterprise)



Consolidated Financial Statements

(Expressed in Canadian dollars)



DECEMBER 31, 2008 AND 2007













Index





Report of Independent Registered Public Accounting Firm



Consolidated Balance Sheets



Consolidated Statements of Operations and Comprehensive Loss and Deficit



Consolidated Statements of Cash Flows



Notes to Consolidated Financial Statements



















---





Management's Responsibility for Financial Reporting





The consolidated financial statements and the information contained in the annual report are the responsibility of the Board of Directors and management. The consolidated financial statements have been prepared by management in accordance with Canadian generally accepted accounting principles and include certain estimates that reflect managements best judgments on information currently available. In the opinion of management, the accounting practices utilized are appropriate in the circumstances and the consolidated financial statements fairly reflect the financial position and results of operations of the Company within reasonable limits of materiality.



The Audit Committee of the Board of Directors is composed of three Directors and meets periodically with management and the independent auditors to review the scope and results of the annual audit and to review the consolidated financial statements and related financial reporting matters prior to submitting the consolidated financial statements to the Board of Directors for approval.



The consolidated financial statements have been audited by Ernst & Young LLP, Chartered Accountants, who were appointed by the shareholders. The auditors report outlines the scope of their examination and their opinion on the consolidated financial statements.







Ken Cai

Paul Zhang



President and CEO

Chief Financial Officer



Vancouver, Canada



July 29, 2009







---



[f08msv3auditorsreport002.gif]



REPORT OF INDEPENDENT AUDITORS



To the Directors of

Minco Silver Corporation



We have audited the consolidated balance sheets of Minco Silver Corporation 
(the Company) as at December 31, 2008 and 2007 and the consolidated statements of operations and comprehensive loss and deficit and cash flow for the years ended December 31, 2008, 2007 and 2006. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.



We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Companys internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting.  Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.



In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2008 and 2007 and the results of its operations and its cash flow for the years ended December 31, 2008, 2007 and 2006 in accordance with Canadian generally accepted accounting principles.



As discussed in note 2 to the financial statements, the Company changed its method of accounting for the development of mineral interests during the year ended December 31, 2008.

[f08msv3auditorsreport004.gif]

Vancouver, Canada,

April 1, 2009, except for Notes 1, 16 and

Chartered Accountants

17 as to which the date is July 29, 2009.



---







[f08msv3auditorsreport002.gif]





Comments by Auditors for US Readers on Canada - US Reporting Conflict



In the United States, reporting standards for auditors require the addition of an explanatory paragraph, following the opinion paragraph, when the financial statements are affected by conditions and events that cast substantial doubt on the companys ability to continue as a going concern, such as those described in note 1 to the financial statements. Our report to the shareholders dated April 1, 2009, except as to Notes 1, 16 and 17 which are as of July 29, 2009, is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors' report when these are adequately disclosed in the financial statements.





[f08msv3auditorsreport004.gif]





Vancouver, Canada,

July 29, 2009

Chartered Accountants



---

MINCO SILVER CORPORATION

(A development stage enterprise)

Consolidated Balance Sheets

(Expressed in Canadian Dollars)







|                                                                                                                                        |                 |                   |                 |                   |  | 
|--------------------------------------------------------------------------------------------------------------------------------------- | --------------- | ----------------- | --------------- | ----------------- |  | 
|                                                                                                                                        |                 | December 31,
2008 |                 | December 31,
2007
|                                                                                                                                        |                 |                   |                 |                  
|ASSETS                                                                                                                                  |                 |                   |                 |                  
|                                                                                                                                        |                 |                   |                 |                  
|Current assets                                                                                                                          |                 |                   |                 |                  
|Cash                                                                                                                                    | $               | 1,174,021         | $               | 2,647,546        
|Short-term investments (Note 4)                                                                                                         |                 | 3,706,506         |                 | 14,219,920       
|Receivables                                                                                                                             |                 | 147,262           |                 | 193,022          
|Due from Minco Gold (Note 11(a))                                                                                                        |                 | -                 |                 | 1,929,893        
|Prepaid expenses and deposits                                                                                                           |                 | 370,969           |                 | 22,704           
|Total current assets                                                                                                                    |                 | 5,398,758         |                 | 19,013,085       
|                                                                                                                                        |                 |                   |                 |                  
|Loan receivable (Note 5)                                                                                                                |                 | 6,771,068         |                 | -                
|Mineral interests (Notes 2, 6)                                                                                                          |                 | 5,294,098         |                 | -                
|Plant, property and equipment (Note 7)                                                                                                  |                 | 265,561           |                 | 244,084          
|Total assets                                                                                                                            | $               | 17,729,485        | $               | 19,257,169       
|                                                                                                                                        |                 |                   |                 |                  
|LIABILITIES                                                                                                                             |                 |                   |                 |                  
|                                                                                                                                        |                 |                   |                 |                  
|Current liabilities                                                                                                                     |                 |                   |                 |                  
|Accounts payable and accrued liabilities                                                                                                | $               | 703,088           | $               | 968,279          
|Due to Minco China (Note 11(b))                                                                                                         |                 | 939,806           |                 | 4,639,788        
|Due to Minco Gold  (Note 11(c))                                                                                                         |                 | 306,476           |                 | -                
|Total liabilities                                                                                                                       |                 | 1,949,370         |                 | 5,608,067        
|                                                                                                                                        |                 |                   |                 |                  
|SHAREHOLDERS' EQUITY                                                                                                                    |                 |                   |                 |                  
|Share capital (Note 8 (a))                                                                                                              |                 | 25,799,213        |                 | 21,804,252       
|Contributed surplus (Note 8 (c))                                                                                                        |                 | 6,692,188         |                 | 6,260,998        
|Deficit                                                                                                                                 |                 | (16,711,286)      |                 | (14,416,148)     
|Total shareholders equity                                                                                                              |                 | 15,780,115        |                 | 13,649,102       
|Total liabilities and shareholders equity                                                                                              | $               | 17,729,485        | $               | 19,257,169       
|Nature of Business and Going Concern Uncertainty (Note 1)
Commitments and Contingencies (Note 6, 12 and 13)
Subsequent Events (Note 16) |                 |                   |                 |                  
|See accompanying notes to consolidated financial statements                                                                             |                 |                   |                 |                  
|                                                                                                                                        |                 |                   |                 |                  
|On behalf of the Board:                                                                                                                 | Chan-Seng Lee |                   | William Meyer
|                                                                                                                                        | Chan-Seng Lee   |                   | William Meyer  
|                                                                                                                                       
|Director                                                      Director                                                                 
|                                                                                                                                        |                 |                   |                 |                  





148





---

MINCO SILVER CORPORATION

(A development stage enterprise)

Consolidated Statements of Operations and Comprehensive Loss and Deficit

(Expressed in Canadian Dollars)







|                                                     |  |                              |  |                              |                              |  | 
|---------------------------------------------------- |  | ---------------------------- |  | ---------------------------- | ---------------------------- |  | 
|                                                     |  | Year ended
December 31, 2008 |  | Year ended
December 31,
2007 | Year ended
December 31,
2006 | 
|                                                     |  |                              |  |                              |                             
|Exploration costs(Note 5)                            |  | 1,814,641                    |  | 4,783,545                    | 1,701,709                   
|Total exploration costs                              |  | 1,814,641                    |  | 4,783,545                    | 1,701,709                   
|                                                     |  |                              |  |                              |                             
|Administrative expenses                              |  |                              |  |                              |                             
|Accounting and audit                                 |  | 76,155                       |  | 64,094                       | 130,342                     
|Amortization                                         |  | 49,147                       |  | 26,533                       | 10,830                      
|Consulting                                           |  | 145,219                      |  | 66,965                       | 88,263                      
|Directors fees (Note 10 (c))                        |  | 55,250                       |  | 56,833                       | 41,250                      
|Foreign exchange gain                                |  | (1,440,314)                  |  | (233,629)                    | (44,934)                    
|Investor relations                                   |  | 545,518                      |  | 528,349                      | 422,655                     
|Legal, regulatory and filing                         |  | 83,779                       |  | 98,456                       | 94,593                      
|Rent                                                 |  | 142,851                      |  | 101,194                      | 99,737                      
|Travel and entertainment                             |  | 82,975                       |  | 50,510                       | 56,764                      
|Office administration expenses                       |  | 91,512                       |  | 126,041                      | 87,763                      
|Property investigation                               |  | 40,016                       |  | 104,445                      | 127,475                     
|Salaries and benefits                                |  | 253,829                      |  | 386,792                      | 275,877                     
|Stock based compensation (Note7 (d))                 |  | 1,123,349                    |  | 1,707,000                    | 1,448,000                   
|Field office expenses                                |  | 119,996                      |  | 177,826                      | 36,726                      
|                                                     |  | 1,369,282                    |  | 3,261,409                    | 2,875,342                   
|Operating loss                                       |  | (3,183,923)                  |  | (8,044,954)                  | (4,577,051)                 
|                                                     |  |                              |  |                              |                             
|Interest and sundry income                           |  | 888,785                      |  | 769,837                      | 319,790                     
|                                                     |  |                              |  |                              |                             
|Loss and Comprehensive Loss for the year             |  | (2,295,138)                  |  | (7,275,117)                  | (4,257,261)                 
|                                                     |  |                              |  |                              |                             
|Deficit,beginning of year                            |  | (14,416,148)                 |  | (7,141,031)                  | (2,883,770)                 
|                                                     |  |                              |  |                              |                             
|Deficit,end of year                                  |  | (16,711,286)                 |  | (14,416,148)                 | (7,141,031)                 
|                                                     |  |                              |  |                              |                             
|Loss per share - basic and diluted                   |  | (0.07)                       |  | (0.23)                       | (0.16)                      
|                                                     |  |                              |  |                              |                             
|Weighted average number of common shares outstanding |  |                              |  |                              |                             
|basic and diluted                                    |  | 31,767,488                   |  | 31,054,523                   | 25,917,233                  



See accompanying notes to consolidated financial statements









149





---

MINCO SILVER CORPORATION

(A development stage enterprise)

Consolidated Statements of Cash Flow

(Expressed in Canadian Dollars)







|                                                                    |   |                              |   |                              |                              |              |  |  | 
|------------------------------------------------------------------- | - | ---------------------------- | - | ---------------------------- | ---------------------------- | ------------ |  |  | 
|                                                                    |   | Year ended December 31, 2008 |   | Year ended
December 31, 2007 | Year ended
December 31, 2006 |             
|Cash flows from (used in) operating activities                      |   |                              |   |                              |                             
|Net loss for the year                                               | $ | (2,295,138)                  | $ | (7,275,117)                  | $                            | (4,257,261) 
|Adjustment for items not involving cash:                            |   |                              |   |                              |                              |             
|- stock-based compensation (Note 8(d))                              |   | 1,123,350                    |   | 1,707,000                    |                              | 1,448,000   
|- amortization                                                      |   | 49,147                       |   | 26,533                       |                              | 12,881      
|- foreign exchange gain                                             |   | (1,440,314)                  |   | (233,629)                    |                              | (24,000)    
|Changes in non-cash working capital items:                          |   |                              |   |                              |                              |             
|- decrease (increase) in receivables                                |   | 45,760                       |   | (34,620)                     |                              | (121,411)   
|- decrease (increase) in prepaid expense and deposits               |   | (348,264)                    |   | 11,299                       |                              | 27,844      
|- increase (decrease) in accounts payable and  accrued  liabilities |   | (524,085)                    |   | (414,043)                    |                              | 732,752     
|                                                                    |   |                              |   |                              |                              |             
|Cash flows from (used in) operating activities                      |   | (3,389,544)                  |   | (6,212,577)                  |                              | (2,181,195) 
|                                                                    |   |                              |   |                              |                              |             
|Cash flows from financing activities                                |   |                              |   |                              |                              |             
|Proceeds from issuance of shares and warrants (Note 8 (a))          |   | 2,942,716                    |   | 397,681                      |                              | 15,300,813  
|Due from Minco Gold (Note 11 (a))                                   |   | 1,929,893                    |   | -                            |                              | -           
|Advances from (repayments to) to Minco China  (Note 11(b))          |   | (3,393,506)                  |   | 2,267,491                    |                              | 323,167     
|                                                                    |   |                              |   |                              |                              |             
|                                                                    |   | 1,479,103                    |   | 2,665,172                    |                              | 15,623,980  
|                                                                    |   |                              |   |                              |                              |             
|Cash flows from (used in) investing activities                      |   |                              |   |                              |                              |             
|Development costs incurred                                          |   | (4,675,120)                  |   | -                            |                              | -           
|Acquisition of plant, property and equipment                        |   | (70,624)                     |   | (190,098)                    |                              | (51,338)    
|Acquisition of exploration permits                                  |   | -                            |   | -                            |                              | (460,000)   
|Loan receivable (Note 5)                                            |   | (5,776,068)                  |   | -                            |                              | -           
|Decrease (increase) in short-term investments                       |   | 10,513,414                   |   | 6,065,656                    |                              | (12,960,672)
|Cash flows from (used in) investing activities                      |   | (8,398)                      |   | 5,875,558                    |                              | (13,472,010)
|Effect of exchange rate changes on cash                             |   | 445,314                      |   | 233,629                      |                              | 24,000      
|                                                                    |   |                              |   |                              |                              |             
|Increase (decrease) in cash                                         |   | (1,473,525)                  |   | 2,561,782                    |                              | (5,225)     
|                                                                    |   |                              |   |                              |                              |             
|Cash, beginning of year                                             |   | 2,647,546                    |   | 85,764                       |                              | 90,989      
|                                                                    |   |                              |   |                              |                              |             
|Cash, end of year                                                   | $ | 1,174,021                    | $ | 2,647,546                    | $                            | 85,764      

See accompanying notes to consolidated financial statements



150





---

MINCO SILVER CORPORATION

(A development stage enterprise)

Consolidated Statements of Cash Flow

(Expressed in Canadian Dollars)





1.

Nature of Business and Going Concern Uncertainty

Minco Silver Corporation (Minco Silver or the Company) was incorporated on August 20, 2004 under the laws of British Columbia, Canada. Its principal business activities include the acquisition, exploration and development of silver mineral properties.

At December 31, 2008, Minco Gold Corporation (formerly Minco Mining & Metals Corporation) (Minco Gold) owned a 40.48% (2007  41.75%) equity interest in Minco Silver Corporation.

Minco Silver is exploring, evaluating and developing silver mineral properties and projects in the Peoples Republic of China (China) with the aim of bringing properties to production. The ability of the Company to meet its commitments as they become payable, the exploration and development of mineral properties and projects, and the underlying value of the mineral properties are entirely dependent upon the existence of economically recoverable reserves, the ability of the Company to arrange appropriate financing to complete the exploration and development of its properties, the receipt of necessary permits and upon achieving future profitable production or receiving proceeds from the disposition of the properties. The timing of such events occurring, if at all, is not yet determinable. The Company is considered to be a development stage enterprise as it has not yet generated any revenue from operations.

These consolidated financial statements have been prepared on a going concern basis, which assumes that the Company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. The Company does not generate revenues and has accumulated losses since inception and is unlikely to generate earnings in the immediate future. The continuation of the Company as a going concern is dependant upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to achieve its operating and developing objectives, confirmation of the Companys interests in the underlying properties and the attainment of profitable operations. The continuation of the Company as a going concern is in substantial doubt and is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to achieve its operating and developing objectives, confirmation of the Companys interests in the underlying properties and the attainment of profitable operations. If the going concern principle is not appropriate, adjustments will be necessary to the carrying amounts and classification of assets and liabilities and expenses in these interim consolidated financial statements.  The adjustments could be material.



151





---





2.

Change in Accounting Policy

Development of Mineral Interests



Prior to December 31, 2008, the Companys accounting policy was to commence capitalizing mineral property development costs only upon the establishment of proven and probable reserves based on results of final feasibility studies which indicate whether a property is economically feasible.  Prior to January 1, 2008, the Company had not previously identified any properties that it would take from exploration to development and through to production.



On December 31, 2008, the Company changed this policy to more appropriately align its policy with those applied by other comparable mineral property exploration and development companies at a similar stage.  The Companys new policy to commence capitalization of mineral property development costs until a mineral resource having economic potential is identified on a property, from which time a property is considered to be a development project and such expenditures are capitalized as development costs. A mineral resource is considered to have economic potential when it is expected thatdocumented resources can be legally and economically developed considering long-term metal prices.



Prior to January 1, 2008, the Company capitalized only mineral property and mineral rights acquisition costs.  Exploration permit acquisition, exploration and development costs were expensed as incurred, as proven and probable reserves had not been established.



During 2008, management determined that the Fuwan Silver deposit area had met the criteria for treatment as a development property effective March 5, 2008 and as such has capitalized expenditures relating to the Fuwan Silver project. The Company has continued to expense exploration costs associated with other exploration activities including current year regional drilling programs.



The effect of the new policy on the current year financial statements is to capitalize $5.3 million of development related costs to Mineral Interests. As there had previously been no projects or properties determined to have met the necessary criteria for capitalization, there is no effect of the new policy on prior years.



3.

Significant Accounting Policies

a.

Basis of Presentation and Consolidation

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. These consolidated financial statements include the accounts of Minco Silver Corporation, Minco Silver, Ltd. and Foshan Minco FuWan Mining Co. Ltd (Foshan Minco) which is subject to a 10% carried interest (note 6).

All material inter-company accounts and transactions have been eliminated upon consolidation.



152





---





3.

Significant Accounting Policies (continued)



b.

Use of Estimates and measurement of uncertainty

The preparation of consolidated financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the period reported. By their nature, these estimates are subject to measurement uncertainty and the effect on the consolidated financial statements of changes in such estimates in future periods could be significant. Accounts that require management to make material estimates and significant assumptions in determining the amounts recorded include amortization, mineral interests, accrued liabilities, income taxes and contingencies. Actual results could differ from those estimated.

c.

Short-term Investments

Short-term investments comprise marketable securities, highly liquid investment grade bonds, and guaranteed investment certificates with remaining terms to maturity of greater than 90 days when acquired. Short-term investments are classified as held-for-trading financial instruments in accordance with the requirements of Canadian Institute of Chartered Accountants (CICA) Handbook Section 3855 Financial Instruments, adopted by the Company on January 1, 2007. These investments are recorded at fair value with unrealized gains and losses being recorded in income in the current period.

d.

Impairment

The carrying values of mineral interests and plant, property and equipment are reviewed on an annual basis and when changes in circumstances suggest their carrying value may become impaired.  Management considers assets to be impaired if the carrying value exceeds the estimated undiscounted future projected cash flows from the use of the asset or mineral interests and its eventual disposition. If impairment is deemed to exist, the assets or development property will be written down to fair value with a charge to operations.

e.

Stock Based Compensation

The Company grants stock options to buy common shares of the Company to directors, officers, employees and service providers. The board of directors grants such options for periods of up to five years, with vesting periods determined at its sole discretion and at prices equal to or greater than the closing market price on the day preceding the date the options were granted.



The Company applies the fair-value method of accounting in accordance with the recommendations of CICA Handbook Section (CICA 3870), Stock-based Compensation and Other Stock-based Payments. Stock-based compensation expense is calculated using the Black-Scholes option pricing model with a corresponding credit to contributed surplus, on a straight-line basis over the vesting period. Warrants granted are

recorded at estimated fair values using the Black-Scholes pricing model. If and when the stock options or warrants are ultimately exercised, the applicable amounts of contributed surplus are transferred to share capital.











153





---





3.

Significant Accounting Policies (continued)



f.

Acquisition, Exploration and Development of Mineral Interests



During the year ended December 31 2008, the Company changed its accounting policy relating to mineral property development expenditures. The Company now capitalizes developmentcosts identified as associated with the development stage, however, continues to expense as incurred costs during the exploration stage (see note 2).



Costs incurred for the acquisition of mineral property and mineral rights, including option payments under acquisition agreements, are capitalized until such time as the related interest is placed into production, sold, abandoned or where management has determined that conditions of impairment in carrying value have occurred.



Where a specific mineral interest property is identified as having a resource with economic potential, costs specific to the development of the particular project are capitalized as development costs and carried at cost until the properties to which they relate are placed into commercial production, sold, abandoned or determined by management to be impaired in value.



A mineral resource is considered to have economic potential when it is expected thatdocumented resources can be legally and economically developed considering long-term metal prices. Therefore, prior to capitalizing such costs, management determines that the following conditions have been met:



i.

There is a probable future benefit that will contribute to future cash inflows;



ii.

The Company can obtain the benefit and control access to it; and



iii.

The transaction or event giving rise to the benefit has already occurred.



Costs of abandoned projects are charged to operations upon abandonment. Costs relating to any producing mineral interest would be amortized on the unit-of-production method based on the estimated life of the ore reserves, while costs for the prospects abandoned would be written-off. Costs incurred after the property is placed into production that increase production volume or extend the life of the mine are capitalized. Common shares issued for mineral property acquisition are recorded when issued based on the fair value of the shares at the date of issuance.



The recoverability of the amount capitalized for the capitalized mineral interests is dependent upon the determination of economically recoverable ore reserves, confirmation of the Company's interest in the underlying mineral claims, the ability to farm-out its resource properties, the ability to obtain the necessary financing to complete their development and future profitable production or proceeds from the disposition thereof.



Capitalized costs as reported represent the lesser of actual costs incurred to date or estimated fairvalue. Ultimate recovery of carrying value is dependent upon future commercial success from participating interests or proceeds from disposition of the mineral property interests. Management evaluates each mineral interest as events and changes in circumstances warrant, and makes a determination based on development activity and results, estimated future cash flows and availability of funding as to whether carrying values have been impaired. Mineral interests, where future cash flows are not reasonably determinable, are evaluated for impairment based on the result of continued delineation of the ore body, managements intentions and determination of the extent to which future exploration programs are warranted and likely to be funded.



154





---







3.

Significant Accounting Policies (continued)



Costs incurred for new project evaluation and consulting where no acquisition or future benefits are expected to be derived and no specific mineral interest property development programs has been planned and budgeted by management are expensed as incurred.



g.

Plant, Property and Equipment

Plant, property and equipment are recorded at cost less accumulated amortization and depletion.



Amortization is calculated using the following methods based on the assets estimated useful lives:



Computer Equipment

30% per year declining-balance

Leasehold Improvements

5 year, straight-line basis

Mining Equipment

30% per year declining-balance

Motor Vehicles

30% per year declining-balance

Office Equipment and Furniture

20% per year declining-balance



Amortization is provided at half the annual rate in the year of acquisition.



h.

Asset Retirement Obligations

The Company recognizes the fair value of liabilities for asset retirement obligations in the period in which they are incurred and in which a reasonable estimate of such costs can be made.  The asset retirement obligation is recorded as a liability with a corresponding increase to the carrying amount of the related asset and depreciated over the life of the asset. Over time, the liability is increased to reflect an interest element (accretion expenses) considered in its initial measurement at fair value. The amount of liability will be subject to re-measurement at each reporting period. It is possible that the Companys estimates of its ultimate reclamation and closure liabilities could change as a result of changes in regulations, the extent of environmental remediation required, and the means of reclamation or cost estimates. Changes in estimates are accounted for prospectively from the period the estimate is revised.

As at December 31, 2008 and 2007, the Company did not have any asset retirement obligations.

i.

Revenue/Income Recognition

The Company does not currently earn revenue from operations. Interest income on cash, short-term investments and loans are recognized as it is earned.



155





---





3.

Significant Accounting Policies (continued)



j.

Financial instruments

Financial assets

Initial recognition -Financial assets are classified at fair value being receivables, held-for-trading investments, held-to-maturity investments, available-for-sale financial assets, loans receivable or as derivatives designated as hedging instruments in an effective hedge, as appropriate. The Company determines the classification of its financial assets at initial recognition.



Financial assets purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the marketplace (regular way purchases) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.



The Company's financial assets include cash and short-term investments, receivables and loans receivable



Subsequent measurement -The subsequent measurement of financial assets depends on their classification as follows:



Financial assets at fair value -include financial assets held for trading and financial assets designated upon initial recognition at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Financial assets are carried in the balance sheet at fair value with gains or losses recognized in the income statement.



Loans and receivables -Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such financial assets are carried at amortized cost using the effective interest rate method. Gains and losses are recognized in the income statement when the loans and receivables are derecognized or impaired, as well as through the amortization process



Financial liabilities



Initial recognition -Financial liabilities are classified as accounts payable and accrued liabilities, loans and borrowings, as appropriate. The Company determines the classification of its financial liabilities at initial recognition.





Financial liabilities are recognized initially at fair value and in the case of loans and borrowings, directly attributable transaction costs.



Loans and borrowings -After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate method. Gains and losses are recognized in the income statement when the liabilities are derecognized as well as through the amortization process.













156





---





3.

Significant Accounting Policies (continued)



Fair value of financial instruments -The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance sheet date. For financial instruments where there is no active market, fair value is determined using various valuation techniques.

Impairment of financial assets



The Company assesses at each balance sheet date whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred loss event') and that loss event has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.



k.

Income Taxes

The Company follows the liability method of accounting for income taxes. Future income taxes are recognized for the future tax consequences attributable to differences between the carrying values of assets and liabilities and their respective income tax bases on the balance sheet date. Future income tax assets and liabilities are measured using substantially enacted income tax rates expected to apply in which temporary differences are expected to be recovered or settled. The effect on future tax assets and liabilities of a change in substantially enacted rates is included in operations. A future income tax asset is recorded when the probability of the realization is more likely than not.

l.

Loss Per Share

Basic loss per share is computed using the weighted average number of common shares outstanding during the year. Diluted loss per share amounts are calculated giving effect to the potential dilution that would occur if securities or other contracts to issue common shares were exercised or converted to common shares using the treasury stock method. If the Company incurred net losses in fiscal year no adjustment to the computation of loss per share is required as their inclusion would be anti-dilutive.

m.

Translation of Foreign Currencies

The Companys functional currency is the Canadian dollar as the Company has raised its treasury in Canadian funds and when funds are advanced to Chinese subsidiary, the investment is treated as registered capital. The functional currency within the Chinese operations is the China RMB. The Company follows the temporal method of accounting for the translation of its integrated foreign operations and for foreign currency transactions. Under this method, transactions denominated in foreign currencies are translated into Canadian dollars at the exchange rates prevailing at the transaction dates.  At year-end, monetary assets and liabilities are re-measured at the year-end exchange rates, and non-monetary assets and liabilities denominated in foreign currencies are translated to Canadian dollars at their historical exchange rates.  The exchange gains and losses on translation are charged to operations.





157





---





3.

Significant Accounting Policies (continued)



n.

Comprehensive Income

The Company reports their comprehensive income, which are changes in equity, from transactions and other events and circumstances from non-owner sources. Other comprehensive income refers to items recognized in comprehensive income that are excluded from net income calculated in accordance with Canadian GAAP.



o.

Adoption of Recent Accounting Pronouncements

On January 1, 2008, the Company adopted six standards that were issued by the Canadian Institute of Chartered Accountants: Handbook Section 1400, General Standards of Financial Statement Disclosure (Section 1400), Handbook Section 1506, Accounting Changes (Section 1506), Handbook Section 1535, Capital Disclosures ("Section 1535"), Handbook Section 3031, Inventories  (Section 3031), Handbook Section 3862, Financial Instruments - Disclosures ("Section 3862") and Handbook Section 3863, Financial Instruments - Presentation ("Section 3863"). These standards were adopted on a prospective basis without restatement of prior periods.



(i) General Standards of Financial Statement Disclosure - Section 1400

Section 1400, General Standards of Financial Statement Disclosure establishes standards for assessing a companys ability to continue as a going concern and disclosing any material uncertainties that cast doubt upon its ability to continue as a going concern. The Companys disclosure reflects such assessment and discussion (see Note 1).



(ii) Accounting Changes  Section 1506

Section 1506, Accounting Changes, prescribes the criteria for changing accounting policies, together with the accounting treatment and disclosure of changes in accounting policies, changes in accounting estimates and corrections of errors. This Section allows for voluntary changes in accounting policies only if they result in the consolidated financial statements providing reliable and more relevant information. In addition, this Section requires entities to disclose the fact that they did not apply a primary source of GAAP that have been issued but not yet effective. The adoption of this Section has had an impact on the financial position or results of operations for the year ended December 31, 2008 as the change in accounting policy, described in note 2 had to meet the standard of providing reliable and more relevant information of the Companys financial position and performance..



(iii) Capital disclosures  Section 1535

Section 1535, Capital Disclosures, establishes disclosure requirements regarding an entitys capital, including (i) an entitys objectives, policies, and processes of managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any externally imposed capital requirements; and (iv) if it has not complied, the consequences of such non-compliance. The new standard has had no impact on the financial position or results of operations for the year ended December 31, 2008.



(iv) Financial instruments  Sections 3862 and 3863

Section 3862, Financial Instruments  Disclosures and Section 3863, Financial Instruments  Presentation replace Section 3861 Financial Instruments  Disclosure and Presentation. These new sections revise and enhance disclosure requirements while leaving presentation requirements unchanged. These new sections place increased emphasis on disclosures about the nature and extent of risks arising from financial instruments and how the entity manages those risks. The new standards have had no impact on the financial position or results of operations for the year ended December 31, 2008.



158





---







3.

Significant Accounting Policies(continued)

(v) Inventories  Section 3031

Section 3031, Inventories, provides more guidance on the measurement and disclosure requirements for inventories. Specifically the new pronouncement requires inventories to be measure at the lower of cost or net realizable value, and provides guidance on the determination of cost and its subsequent recognition as an expense, including any write-down to net realizable value. The new standard has had no impact on the financial position or results of operations for the year ended December 31, 2008.



p.

Recent Accounting Pronouncements



(i) Convergence with International Financial Reporting Standards

In 2006, Canadas Accounting Standards Board ratified a strategic plan that will result in Canadian GAAP, as used by public companies, being evolved and converged with International Financial Reporting Standards (IFRS) over a transitional period to be complete by 2011. The official changeover date from Canadian GAAP to IFRS is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011. The Company has not yet assessed the impact of the ultimate adoption of IFRS on the Company.



(ii) Goodwill and Intangibles  Section 3064

The CICA issued the new Handbook Section 3064, Goodwill and Intangible Assets, which will replace Section 3062, Goodwill and Intangible Assets. The new standard establishes revised standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets. The new standard also provides guidance for the treatment of preproduction and start-up costs and requires that these costs be expensed as incurred. The new standard applies to the Companys annual and interim financial statements beginning January 1, 2009. The Company does not expect the adoption of this change to have an impact on its consolidated financial statements.



(iii) Sections 1582, Business Combinations, 1601, Consolidations and 1602, Non-controlling Interests

In January 2009, the CICA issued these new sections to replace Section 1581, Business Combinations and Section 1600, Consolidated Financial Statements. Section 1582 will apply to a transaction in which the acquirer obtains control of one or more businesses (as defined in the Section). Most assets acquired and liabilities assumed, including contingent liabilities that are considered to be improbable, will be measured at fair value. A bargain purchase will result in the recognition of a gain. Acquisition costs will be expensed. Any non-controlling interest will be recognized as a separate component of shareholders equity and net income will be allocated between the controlling and noncontrolling interests. These new standards will apply to fiscal years beginning on or after January 1, 2011. The Company does not believe that these new Sections will have an impact on its financial statements unless the Company enters into a business acquisition subsequent to January 1, 2011.



(iv) EIC-173 Credit Risk and the Fair Value of Financial Assets and Liabilities



In January 2009 the Emerging Issues Committee (EIC) issued EIC-173. In this EIC the Committee reached a consensus that in determining the fair value of financial assets and financial liabilities an entity should take into account the credit risk of the entity and the counterparty. The EIC is effective for periods ending after the issuance date, the Company is evaluating the effect of EIC-173 and will adopt prospectively.



159





---







3.

Significant Accounting Policies (continued)



(v) EIC  174 Mining Exploration Costs



On March 27, 2009 theEIC issued EIC-174. In this EIC theCommittee reached a consensus that an enterprise that has initially capitalized exploration costs has an obligation in the current and subsequent accounting periods to test such costs for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. The EIC is effective for periods ending after the issuance date and the Company has adopted the EIC-174,



q.

Certain comparative figures have been reclassified to conform with the presentation as at and for the year ended December 31, 2008.

4.

Short-term Investments

As at December 31, 2008, short-term investments consist of cashable guaranteed investment certificates ($3.5 million) and corporate notes ($0.2 million). The yields on these investments were 1.50% to 4.55%.

As at December 31, 2007, short-term investments consist of bankers acceptance ($1.5 million) cashable guaranteed investment certificates ($10.0 million) and corporate notes ($2.5 million). The yields on these investments were 3.75% to 6.75% per year.

5.

Loan Receivable (also see Note 17 Subsequent Events)

On July 22, 2008 the Company announced that Minco Silver executed a letter of intent with Sterling Mining Company (Sterling) to acquire 100% of the issued and outstanding common shares of Sterling, at a ratio of 0.51 of a Minco Silver share for each one of Sterlings shares, based upon Minco Silvers July 21, 2008 closing price. The offer valued Sterling at US $62.3 million.



The Company also extended a line of credit in the amount of US$15.0 million (the facility) to be advanced from time to time to meet general working capital and other operating expenses to carry on Sterlings business, of which US$5.0 million was advanced on July 30, 2008; bearing 10% simple interest plus fees and expenses.   It is a term of the facility that any and all subsequent advances be conditional upon the successful completion of an extended due diligence review of Sterlings operations and the execution of a definitive agreement.



The letter of intent also provided for a break fee in the amount of US$2.75 million payable to Minco Silver under certain conditions. This break fee is listed as one of the unsecured creditors and is not recorded in these financial statements.



On August 27, 2008 the Company terminated the obligation to acquire 100% of the outstanding common shares of Sterling and the obligation to advance the additional US$10.0 million under the line of credit, as provided in the facility.



To secure the US$5.0 million advance (plus interest and fees); Minco Silver and Sterling executed the following:



(a)

a Secured Promissory Note to secure and evidence the US$5.0 million advance in which Sterling promises to pay to the order of the Company;





160





---





5.

Loan Receivable (continued)

(b)

an All Assets Security Agreement and a Mortgage, Assignment of Leases and Rents Security Agreement and Fixture Filing in which Sterling agreed to provide a second charge security on all of the assets and properties of Sterling with the exception of the Sunshine Lease

(c)

an Assignment and Assumption Agreement in which Sterling assigns the Sunshine Mine under lease to the Company.

The US$5.0 million advance is secured by a perfected secured interest in all of Sterlings, now or future personal and real property, including all mineral leases, rents and mortgages.



The Companys secured interest is seconded to a previous loan in the amount of US$1.4 million, whereby another secured creditor has first priority over this amount. The Company also has a perfected secured interest in the lease of Sterlings main asset, the Sunshine Mine.

Sterling LoanDecember 3120082007Principal Amount (US$5.0 million)$           5,119,000$                        -Foreign exchange gain995,000-Interest on principal amount386,231-6,500,231-Expenses155,916-Interest on expenses7,428-163,344-Late payment penalty107,493-Total$             6,771,068$                        -




Since Minco Silver terminated its obligation to Sterling and prior to December 31, 2008, Sterling has:

1.

Ceased mining operations;



2.

Delisted from the Toronto Stock Exchange;  and



3.

Laid off its work force.



The Company believes that the estimated fair value of Sterling's assets in which it holds a security interest is significantly in excess of the carrying value of the loan as at December 31, 2008.  However, the note is presented as a non-current asset as the timeframe for realization of the current interest is indeterminate.



6.

Mineral Interests

Guangdong Province, China



On August 20, 2004, Minco Gold transferred the following mineral interests to the Company:



(a)

The right to earn a 51% interest in the Changkeng Silver Interest;





161





---





(b)

A preliminary working agreement in relation to the exploration and development of the Fuwan silver deposit ( the Fuwan Silver Project); and



(c)

New exploration permits acquired or to be acquired in respect of certain mineral properties adjoining the Fuwan and Changkeng properties and known as the Guanhuatang, Luoke-Jilinggang, Guyegang-Sanyatang and Dadinggang properties, respectively.



Minco Gold was the sole shareholder of the Company and the two companies had common management at the time of the transaction.  As at the date of transfer, Minco Gold had expended $63,331 in preliminary exploration costs. As a result of a series of transactions and agreements between September 2004 and the current year end, the Company is now responsible for all of the exploration and development expenditures on the property.



Fuwan Silver Deposit



On July 20, 2005, the Ministry of Land and Resources, China, approved the transfer of the Fuwan Exploration Permit to Minco Mining (China) Corporation (Minco China), a wholly-owned subsidiary of Minco Gold. The total amount of the exploration permit had been fully paid



The exploration permits owned by the Company are held through Minco China for and on behalf of the Company.  Although the Company has taken steps to verify the title to mineral properties in which it has an interest in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Companys title.  Property title may be subject to unregistered prior agreements or transfers and title may be affected by undetected defects. In July 2008 the Company incorporated Foshan Minco as the operating company for the Fuwan project. In December 2008, the exploration permits for the project held by Minco China were transferred to Foshan Minco. Minco Silver currently has 100% controlling interest in Foshan Minco with the 10% carried interest in Foshan Minco being earned by GGB. There will be no distributions or participation by GGB, until such time as Minco Silvers capital invested is returned to Minco Silver and the mine is in production and there are net profits for distribution. GGB is not required to fund any of the development or production capital, is not required to participate in any working capital calls to fund start up or participate in any losses that may be incurred. GGB will provide professional services and technical assistance to the Company in relation to the Companys mining activities in Guangdong Province, China in return for its10% net profit interest in the Fuwan Silver Project.



During the year ended December 31, 2008, the Company changed its accounting policy relating to mineral interest exploration expenditures.  The Company now capitalizes costs identified as associated with the development stage, however continues to expense as incurred costs during the exploration state (see note 2).



Management has determined that the Fuwan Silver deposit area met criteria for capitalization of development costs in the first quarter of 2008 and has been capitalizing development costs relating to the main Fuwan Silver Deposit since that time. The Company will continue to expense exploration costs associated with other exploration activities including current year regional drilling programs.



















162





---





6.

Mineral Interests(continued)

The following is a summary of exploration expenditures incurred and capitalized by the Company on the Fuwan project from March 2008, from which time the Fuwan Silver deposit project had been determined to be in the development stage (note 2):

Fuwan Silver Deposit20082007Consulting fees$            742,482$                        -Drilling1,738,039-Labour Cost229,311-Feasibility Study1,113,032-Stock based compensation360,086-Other development costs1,111,148-Total$         5,294,098$                        -






The following is a summary of exploration costs incurred and expensed by the Company on the Fuwan project up until March 2008, when the Company changed its accounting policy (see Note 2):





January 1, 2008
to March 5, 2008Year ended
    December 31,2007Year ended
December 31,2006Cumulative from August 20, 2004 (inception) to December 31, 2008Fuwan ExplorationConsulting fees$              81,174$     
    635,427$       
    223,157$         1,776,892Drilling594,3872,862,6901,342,4777,705,558Labour costs43,674277,33853,229684,904Other exploration costs41,2121,008,09082,8462,223,612Total$            760,447$  
    4,783,545$    
    1,701,709$      12,390,996






Regional Exploration



On April 7, 2005, the Company acquired three additional silver exploration permits in China, referred to as the Guanhuatang Property, the Luoke-Jilinggang Property and the Guyegang-Sanyatang Property; and paid $267,427 (RMB1,500,000) for the three permits in September 2005.



The permit application for Dadinggang Property was approved by the Ministry of Lands and Resources in China in December 2006. The Dadinggang area, which covers the northeast extension of the Fuwan Silver Project, has been added to the Luoke-Jilinggang exploration permit.



During 2008, the regional exploration activities were focused on an area down strike from the Fuwan Silver main deposit, where the Company drilled 18 holes totaling 5,003 meters, to test the major drilling targets on the extension of the Fuwan Silver Trend which were generated on the basis of all historical data and results of the ground magnetic and IP surveys completed in the second quarter of 2008.





163





---







Regional ExplorationYear ended
December 31,2008Year ended
December 31,2007Cumulative from August 20, 2004 (inception) to December 31, 2008Consulting fees$             151,150$                         -$             151,150Drilling560,574-560,574Labour cost69,405-69,405Other exploration costs273,065-273,065Total$           1,054,194$                         -$           1,054,194


There were not incurred regional exploration costs prior January 01, 2008.



Changkeng Silver Interest



The Companys interest in the silver mineralization in the Changkeng Property is dependent upon Minco Gold maintaining its interests in the Changkeng Property in accordance with the terms of a joint venture agreement, to which the Company is not a party.



The Company is not responsible to Minco Gold for any of its current commitments as those are designated for the exploration of gold deposits in the Changkeng property. The Company will only be responsible for 51% of any commitments made by the joint venture to explore silver deposits in the Changkeng Property. As of December 31, 2008, the joint venture had not made any commitments to explore the silver deposits in the Changkeng Property (Note 13).



7.

Plant, Property and Equipment



December 31, 2008CostAccumulated
AmortizationNet Book
ValueComputer equipment$    115,169$    46,471$    68,698Leasehold improvements45,61812,40933,209Mining equipment2,7358541,881Motor vehicles146,92921,952124,977Office equipment and furniture50,70213,90636,796$  361,153$    95,592$265,561




December 31, 2007CostAccumulated
AmortizationNet Book
ValueComputer equipment$    85,921$    26,361$    59,560Leasehold improvements25,4455,06220,383Mining equipment2,7355992,136Motor vehicles146,9299,620137,309Office equipment and furniture29,4994,80324,696290,52946,445244,084




The Company recorded amortization of plant, property and equipment of $49,147,

$26,533 and $10,830 respectively for the years ended December 31, 2008, 2007 and 2006.



164





---





8.

Share Capital and Special Warrants



(a)

Common Shares

Authorized: Unlimited number of common shares without par value.

Issued:

SharesAmountBalance, December 31, 200630,852,567$21,266,071Stock options exercised at $1.25 per share, including $78,500 contributed surplus attributed to stock-based compensation recognized116,665224,332Share purchase warrants exercised at $1.50 per share, including $62,000 contributed surplus attributed to stock-based compensation recognized167,900313,850Balance, December 31, 200731,137,13221,804,253Stock option exercised at $1.25 - $2.85 per share, including $281,234 contributed surplus attributed to stock-based compensation recognized240,001666,267Share purchase warrants exercised at $3.45 per share, including $771,011 contributed surplus attributed to stock-based compensation recognized741,3573,328,693Balance, December 31, 200832,118,490$25,799,213




On November 17, 2006, the Company completed a public offering (the Offering) of 5,000,000 units at a price of $3.00 per unit for gross proceeds of $15,000,000. Each unit consisted of one common share and one-half of one common share purchase warrant. Each warrant is exercisable at $3.45 per share until May 17, 2008. The Offering was completed by way of a short form prospectus through a syndicate of underwriters (the Underwriters).



On December 1, 2006, the Company completed an additional 528,200 common shares at a price of $2.80 per common share and an additional 375,000 common share purchase warrants (the Warrant) at a price of $0.40 per Warrant for gross proceeds of $1,628,960 pursuant to the exercise of an over-allotment option (the Over-Allotment Option) by the Underwriters. Each Warrant is exercisable at $3.45 per share until May 17, 2008.



On May 17, 2008, share purchase warrants were exercised for 741,357 common shares at the exercise price of $3.45.  The remaining 2,133,643 warrants expired on May 17, 2008.



165





---





8.

Share Capital and Special Warrants(continued)



(b)

Share Purchase Warrants

A summary of the status of share purchase warrants and broker options granted by the Company is as follows:

Number ofWeighted AverageWarrantsExercise PriceOutstanding at December 31, 20063,042,900$3.33Exercised(167,900)1.50Outstanding at December 31, 20072,875,0003.45Exercised(741,357)3.45Expired(2,133,643)3.45Outstanding at December 31, 2008-$     -




(c)

Contributed Surplus

Summary of contributed surplus is as follows:

Balance at December 31, 2006$    4,694,4982007 stock-based compensation1,707,000Transfer to share capital on exercise of stock options(78,500)Transfer to share capital on exercise of share purchase warrants(62,000)Balance at December 31, 20076,260,9982008 stock-based compensation1,483,435Transfer to share capital on exercise of stock options(281,234)Transfer to share capital on exercise of share purchase warrants(771,011)Balance at December 31, 2008$     6,692,188




(d)

Stock Options

The Company may grant options to its directors, officers, employees and consultants under its stock option plan.  The maximum number of common shares reserved for issuance is 15% of the issued and outstanding shares. The Company expenses stock options over their vesting period, with stock options typically vesting in various increments and having a maximum term of five years.

In 2008, the Company granted 1,132,500 stock options to its employees and consultants at a price range from $0.46 to $4.05 per share. The Company recorded $1,123,349 of stock based compensation expense in 2008 (2007 - $1,707,000, 2006 - $1,448,000) and $360,086 (2007 and 2006 - $nil) in stock based compensation was capitalized to mineral interests as the individuals entitled to the options were directly engaged in the development activities of the Fuwan Silver Deposit. Capitalization of costs related to development of the Fuwan Silver Deposit began in 2008 (see Note 2).



166





---





8.

Share Capital and Special Warrants(Continued)

A summary of the status of options granted by the Company is as follows:

Weighted AverageNumberExercise PriceOptions outstanding at December 31, 20063,113,3331.71Granted1,704,0002.40Exercised(116,665)1.25Cancelled(795,000)2.98Options outstanding at December 31, 20073,905,6681.77Granted1,132,5001.91Exercised(240,001)1.60Cancelled(648,333)2.25Options outstanding at December 31, 20084,149,834$ 1.74




The weighted average fair value of options granted during the year ended December 31, 2008 was $1.74. Each option entitles the holders to purchase one common share.

Options OutstandingOptions ExercisableRange of
Exercise
PricesNumber
OutstandingWeighted
Average
Remaining
Contractual
Life (yr)Weighted
Average
Exercise
PriceNumber
ExercisableWeighted
Average
Exercise
Price$1.00- $1.302,500,8342.59$1.142,043,333$1.31$2.80 - $4.001,549,0003.36$2.59379,672$2.64$4.00 - $4.05100,0004.18$4.05100,000$4.054,149,8343.00$1.742,523,005$1.63




The Company used the Black-Scholes option pricing model to determine the fair value of the options with the following assumptions:

200820072006Risk-free interest rate1.96% - 3.46%4.02% - 4.67%3.86% -4.21%Dividend yield0%0%0%Volatility68% - 102%148%154%Approximate expected lives5 years5 years5 years












167





---





8.

Share Capital and Special Warrants(Continued)

Option pricing models require the use of highly subjective estimates and assumptions including the expected stock price volatility.  Changes in the underlying assumptions can materially affect the fair value estimates and therefore, in managements opinion, existing models do not necessarily provide a reliable measure of the fair value of the Companys stock options. As at December 2008, 667,939 shares were available for the stock options.

9.

Income Taxes

The Company has two branches in China, FoShan Minco and FoShan Minco Beijing Branch for Canadian tax purposes.  The operating results of these two branches are included in the Companys tax reporting for Canadian tax purposes.   From a Chinese tax reporting perspective, the operating result of these two branches is included in Minco Chinas operating results.

On March 16, 2007, the National Peoples Congress (NPC) of China approved a new Corporate Income Tax Law, which became effective January 1, 2008.  The new law establishes a unified 25% tax rate for both domestic enterprises and foreign invested enterprises (FIEs).  This change to the Chinese tax law will have an impact to the extent of the Companys business operation in China when the Company becomes profitable in China.

20082007200631.00%34.12%34.12%Income tax recovery at statutory rates$(711,493)$(2,482,270)$(1,452,577)Deductible expenditures-(150,048)(128,713)Non-deductible expenditures167,111590,113505,158Unrecognized benefits of foreign exploration and development expenditures-1,141,968527,530Unrecognized benefits of losses carried         forward-202,362446,842Impact of federal income tax rate change233,532697,875101,760Cost (benefit) of previously unrecognized tax pools(1,238,502)-Change in Valuation Allowance1,603,478-Other(54,126)-$               -$               -$               -




Income tax expense differs from the amount that would result from applying the Canadian federal and provincial income tax rates to earnings before income taxes.  These differences result from the following items:





168





---





9.        Income Taxes (Continued)



Future income taxes arise from temporary differences in the recognition of income and expenses for financial reporting and tax purposes. The significant components of future income tax assets and liabilities at December 31 are as follows:



2008200726%27%Future income tax assets:Non-capital losses$   1,447,140$    942,240Unused cumulative foreign exploration and development expenses3,636,9702,301,282Capital assets24,83612,521Write down of securities2,5162,614Share issue costs175,489284,092$ 5,286,951$ 3,542,749Foreign exchange gain on account of capital(140,725)-(140,725)-Less:  valuation allowance(5,146,226)(3,542,749)Total future income tax assets$               -$               -




The Company has non-capital losses carry-forward for Canadian income tax purposes as follows:



Loss Expiry                          Amount

2014                             $           52,974

2015                                        746,632

2026                                     1,449,119

2027                                     1,103,076

2028                                     2,214,124

$        5,565,925



The Company also has $18,922,360 (2007 - $8,523,268, 2006  $3,739,723) of cumulative foreign resources expenses for Canadian income tax purposes which can be carried forward indefinitely and used to reduce future taxable income in Canada. Certain of these non-capital losses and the cumulative foreign resource expenses are related to the Companys exploration activities in China. Consequently, certain of the related expenditures are currently deductible for Chinese tax purposes (subject to China tax law deductibility limitations) which have resulted in tax losses in China which can only be carried forward for a five year period to a maximum date of 2011.



As explained in note 14(a) there is some risk to the Companys ownership in all of its mineral interest in China as it does not hold its interests directly as described in note 14(a). If such risk materializes, the basis on which the future income tax assets have been recorded may change and as such the company may lose the tax deductions and future income tax assets related to the mineral interest in China.





169





---





10.

Capital Risk Management

The Companys objectives in the managing the liquidity and capital are to safeguard the Companys ability to continue as a going concern and provide financial capacity to meet its strategic objectives. The capital structure of the Company consists of equity attributable to common shareholders, comprising issued share capital, common share purchase warrants, contributed surplus, accumulated and other comprehensive income and accumulated deficit.



The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, acquire or dispose of assets.



In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending upon various factors, including successful capital deployment and general industry conditions. The annual and updated budgets are approved by the Board of Directors.



The Company does not pay out dividends.



As at December 31, 2008 the Company does not have any long term debt and is not exposed to any externally imposed capital requirements.



The Company expects that its current capital resources will be sufficient to carry on a limited development and exploration business plan and support the basic operational expenses.

11.

Related Party Transactions

(a)

Due from Minco Gold at December 31, 2008 include $nil (2007  $1,929,893). The amount due from Minco Gold was unsecured, non-interest bearing and payable on demand.

(b)

Due to Minco China at December 31, 2008 was $939,806 (2007  $4,639,788), used for expenditures on the Fuwan Property, new silver projects investigation, and shared office expenses in Minco China. The amount due to Minco China, a wholly-owned subsidiary of Minco Gold, is unsecured, non-interest bearing and payable on demand.

(c)

Due to Minco Gold at December 31, 2008 was $306,476 (2007 - $Nil). This balance represents shared expenses for the Vancouver office and the sharing of salaries and expenses of common consultants. The amount due is unsecured, non-interest bearing and payable on demand.

(d)

In 2008, the Company paid consulting fees of $407,231 (2007  $177,187, 2006 - $164,075) to companies controlled by the CEO, COO and Vice President of the Company. These consulting fees are included in exploration costs, property investigation, management fees.  The Company paid directors fees of $55,250 to three independent directors (2007 - $56,833, 2006  $41,250).









170





---





11.

Related Party Transactions(continued)

(e)

In 2008, the Company paid or accrued $78,122 (2007  $67,141, 2006  $55,216) in respect of rent, $249,589 (2007  $237,179, 2006  $155,169) in respect of exploration costs, and $778,833 (2007  $732,441, 2006 - $779,518) in respect of shared office expenses to Minco Gold.

(f)

The Company entered into a strategic alliance with Silver Standard. The agreement provides that all silver-dominant properties of the Minco Group located in China will be held by Minco Silver and that Silver Standard will not actively explore for or seek out silver-dominant properties located in China. In addition, both the Minco Group and Silver Standard have agreed to offer to the other a first right of refusal on any silver-dominant properties in China brought to their attention which they do not intend to pursue.

The above transactions are conducted in the normal course of business and are measured at the exchange amount, which is the amount of consideration established and agreed to by the parties.



12.

Geographical Information



The Companys business is considered as operating in one segment, mineral exploration and development. The geographical division of the Companys assets and liabilities and net loss is as follows:



December 31,
2008December 31,
2007Current AssetsCanada$          4,044,325$        18,959,458China1,354,43353,627$          5,398,758$        19,013,085Long-term AssetsCanada$          8,273,155$               67,734China4,057,572176,350$        12,330,727$             244,084Current LiabilitiesCanada$             654,369$          4,872,518China1,295,001735,549$          1,949,370$          5,608,067




Year ended
December 31, 2008Year ended
December 31, 2007Year ended
December 31, 2006Net LossCanada$          (851,038)$        (2,492,865)$        (2,336,044)China(1,444,101)(4,782,252)(1,921,217)$       (2,295,138)$        (7,275,117)$        (4,257,261)








171





---





13.

Commitments

(a)

The Company has commitments in respect of office leases in China and Canada, requiring minimum payments of $588,698, as follows:

2009$  102,697201099,069201197,642201296,074201396,608201496,608$  588,698




(b)

The Company has committed to the completion of a feasibility study for the Fuwan Silver Project.  The total estimated cost for completing the feasibility study is $0. 6 million.  The feasibility study is expected to be completed within the next six months.  The Company has committed in respect of the mine design contract requiring payments of RMB 8 million (approximately $1.4 million).

(c)

The Company has commitments to complete the registered capital investment of RMB 30 million into Foshan Minco by April 23, 2010.

14.      Contingencies

The Companys interest in the Changkeng Property relates to the assignment to it by Minco Gold of Minco Golds right to earn up to a 51% interest in the Changkeng Propertys silver mineralization pursuant to the Preliminary Changkeng Joint Venture (JV) Agreement dated April 16, 2004, superseded by the formal joint venture agreement dated September 28, 2004.  On February 28, 2007 Minco China signed a joint venture agreement with the JV partners to form Guangdong Mingzhong Mining Corporation (Mingzhong). Mingzhong received its business license on March 30, 2007 and received the exploration permit in February 2008. The Companys interest in the silver mineralization of the Changkeng Property is entirely dependent on: (i) the Changkeng JV (or Minco Gold directly) maintaining the Changkeng Permit; and (ii) Minco Gold acquiring and maintaining a 51% interest in the Changkeng JV (or in the Changkeng Property).

15.

Financial Management Risk

The Companys operations consist of the acquisition, exploration and development of properties in China. The Company examines the various financial risks to which it is exposed and assesses the impact and likelihood of occurrence. These risks may include credit risk, liquidity risk, currency risk and interest rate risk. Management reviews these risks on a monthly basis and when material, they are reviewed and monitored by the Board of Directors.

Credit risk  Counterparty credit risk is the risk that the financial benefits of contracts with a specific counterparty will be lost if the counterparty defaults on its obligations









172





---





15.

Financial Management Risk (continued)

under the contract, This includes any cash amounts owed to the Company by these counterparties, less any amounts owed to the counterparty by the Company where a legal right of set-off exists and also includes the fair value contracts with individual counterparties which are recorded in the consolidated financial statements. The Company considers the following financial assets to be exposed to credit risk:

i.

Cash  In order to manage credit and liquidity risk the Company places its short-term investment funds into government and Canadian bank debt securities with terms of 90 days or less when acquired. At December 31, 2008 the balance of $1.2 million was placed with three institutions. The fair value is equal to the carrying value.

ii.

Short term investments  are investment grade bonds and guaranteed investment certificates with maturities of greater than 90 days when acquired. At December 31, 2008, these totalled $3.7 million and were placed with one institution. The yields on these investments were 1.50% to 4.55%. The fair value is equal to the carrying value

iii.

Loan Receivable  see note 5.  The yield on this loan balance is 10%. At year end, repayment date of Loan Receivable is indeterminable. The fair value approximates carrying value.

The Company does not have any derivative financial instruments nor has it invested in asset backed paper instruments.

Liquidity risk  Liquidity risk includes the risk that the Company cannot meet its financial obligations as they fall due. The Company has in place a planning and budgeting process to help determine the funds required to support the Companys normal operating requirements and its exploration and development plans. The annual budget is approved by the Board of Directors. The Company insures that there are sufficient cash balances to meet its short-term business requirements. At December 31, 2008, the Company has positive working capital of approximately $3.4 million and therefore has sufficient funds to meet its current operating and exploration and development obligations. However, the Company will require significant additional funds in the future to complete its plans for the Fuwan Silver Deposit.

The Company considers the following financial liabilities to be exposed to financial risk:

i.

Accounts payable and accrued liabilities  These balances are all current and non-interest bearing and the fair value is equal to carrying value.

ii.

Due to Minco China  see note 11. This balance is unsecured and non-interest bearing. The fair value is equal to carrying value.

iii.

Due to Minco Gold  see note 11. This balance is unsecured and non-interest bearing. The fair value is equal to carrying value.











173





---





15.

Financial Management Risk(continued)

Currency/Foreign exchange risk  The Companys functional currency is the Canadian dollar and therefore the Companys net earnings are impacted by fluctuations in the valuation of foreign currencies in relation to the Canadian dollar. The Company raises funds in Canadian dollars and lends either Canadian or US dollar amounts to support the Chinese operations. As the Company operates in China and many of its exploration and development expenditures are payable in either U.S. dollars or the Chinese currency RMB, there exist foreign currency risks arising from changes in exchange rates with the Canadian dollar. The Company maintains its excess cash in Canadian based assets. The Company does not hedge its exposure to currency fluctuations. A 1% fluctuation in the exchange rate between US Dollar and the Canadian dollar will have $64,768 effect on the financial results.

Interest rate risk The interest rate risk is the risk that the fair value of future cash flows of a financial instrument fluctuates because of changes in market interest rates. Cash and cash equivalents, short-term investments and loans, entered into by the Company bear interest at a fixed rate thus exposing it to the risk of changes in fair value arising from interest rate fluctuations.The cash and the short term investments are invested in high grade, highly liquid instruments and as such the Company manages its exposure to potential interest rate fluctuations to short term. The Company has no interest bearing debt.



The Companys ability to raise capital to fund development and exploration activities is subject to the fluctuations in the market price of silver. The Company closely monitors commodity prices to determine the appropriate course of action to be taken.



The Company is engaged primarily in mineral exploration and manages related industry risk issues directly. The Company is at risk for environmental issues and fluctuations in commodity pricing.



Management is not aware of and does not anticipate significant environmental remediation costs or liabilities in respect of its current operations.



The Company is not exposed to significant credit concentration risk. The Company is not exposed to significant interest rate risk.







174





---





16.

Reconciliation of Canadian and United States Generally Accepted Accounting Principles

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in Canada (Canadian GAAP). These consolidated financial statements also conform, in all material respects,  with generally accepted accounting principles in the United States of America (United States GAAP) with respect to recognition, measurement and presentation except as described and quantified below.

Consolidated Balance SheetsDecember 31, 2008December 31, 2007Total assets under Canadian GAAP$17,729,485$19,257,169Unrealized gain on short-term investment (a)-3,325Adjustment for the capitalized development costs (c)(5,294,098)-Total assets under US GAAP$12,435,387$19,260,494Deficit under US GAAP -beginning of year$(14,416,148)$(7,141,031)Loss for the year under US GAAP(7,589,236)(7,275,117)Deficit under US GAAP  end of year$(22,005,384)$(14,416,148)Shareholders' equity under US GAAPShare capital$25,799,213$21,804,252Contributed surplus6,692,1886,260,998Accumulated comprehensive income (a)-3,325Deficit(22,005,384)(14,416,148)Total shareholders' equity under US  GAAP$10,486,017$13,652,427




175





---





Consolidated Statement of Operations and Comprehensive Loss and Deficit:



2008 Net loss according to Canadian GAAP                                           $          (2,295,138)

Adjustment of mineral interests capitalization (c)

(5,294,098)

2008 Net loss according to US GAAP                                                   $            (7,589,236)

Loss per share according to US GAAP                                                                        0.24

There were no reconciling items between US GAAP and Canadian GAAP identified for the years ended December 31, 2007 and 2006.



Consolidated Statement of Cash FlowsDec 31, 2008Dec 31, 2007Dec 31, 2006Cash flows (used) in operating activities under Canadian GAAP(3,389,544)(6,212,577)(2,181,195)Adjustment for development costs (c)(4,675,120)--Cash flows (used) in operating activities under US GAAP(8,064,664)(6,212,577)(2,181,195)Cash flows (used in) from investing activities under Canadian GAAP(8,398)5,875,558(13,472,010)Adjustment for development costs (c)4,675,120--Cash flows (used in) from investing activities under US GAAP4,666,7225,875,558(13,472,010)




(a)

Comprehensive income:

Held -for-sale securities are recorded at market value. Unrealized holding gains and losses on held-for sale securities are excluded from income and charged toaccumulated other comprehensive income as a separate component of shareholders equity until realized. Effective January 1, 2007, under Canadian GAAP, the Company has adopted CICA Handbook Section 3855 Financial instruments  Recognition and Measurement. In accordance with Section 3855, the Company classified all its short term investments as held for trading financial assets which are measure at fair value and any unrealized gains or losses on held-for-trading financial assets are included in net income.

Under US GAAP, the Company classified the short-term investment as available for -sale prior to January 1, 2007. Beginning January 1, 2007, the Company changed the classification for all new short-term investments as held-for-trading. Held-for-trading financial assets are recorded at market value and any unrealized gains or losses on held-for-trading financial assets are included in net income.

There were no short term investments classified as available for sale financial assets for the year ended December 31, 2008 under US GAAP.

(b)

Income Tax Uncertainty:

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007. No future income tax asset has been recognized as realization is not considered more likely than not, due to the uncertainty of



176





---





future taxable income.  There is no difference between the Companys treatment of income taxes under Canadian GAAP versus US GAAP.

(c)

Mineral properties development:

Mineral properties are accounted for in accordance with Canadian GAAP as discussed in Note 6.  Beginning January 1, 2008, the Company changed its accounting policy under Canadian GAAP to commence capitalization of mineral property development costs after a mineral resource having economic potential is identified on a property, from which time a property is considered to be a development project and such expenditures are capitalized as development costs. A mineral resource is considered to have economic potential when it is expected that documented resources can be legally and economically developed considering long-term metal prices. During 2008, management determined that the Fuwan Silver deposit area had met the criteria for treatment as a development property effective March 5, 2008 and as such has capitalized expenditures in the amount of $5.3 million relating to the Fuwan Silver project under Canadian GAAP (see note 2).

For US GAAP purposes, in accordance with Emerging Issues Task Force (EITF) 04-2, Whether Mineral Rights Are Tangible or Intangible Assets, exploration expenditures as well as acquisition costs for properties, leases and permits, are expensed as incurred unless commercial feasibility is established.  Therefore, amount of $5,294,000 capitalized under Canadian GAAP shall be expensed in accordance with US GAAP.

(d)

Accounts Payable and Accrued liabilities



Under Canadian GAAP, accounts payable and accrued liabilities are presented in the consolidated financial statements on an aggregate basis. US GAAP requires that the accounts payable and accrued liabilities be segregated for presentation in the consolidated financial statements.



(in 000s)                                                                    2008                             2007

Accounts payable                                            
           334,000                  
     826,000

Accrued liabilities                                                 
      369,000                        142,000

Total                                                               
           703,000                     
  968,000



(e)        Accounts Receivable



Under Canadian GAAP, accounts receivable and GST (Goods and Service tax) receivable are presented in the consolidated financial statements on an aggregate basis. US GAAP requires that the accounts receivable and GST receivable be segregated for presentation in the consolidated financial statements.



(in 000s)                                                                    2008                             2007

Accounts receivable                                                    69,000                  
      170,000

GST receivable                                                            78,000               
          23,000

Total                                                                          147,000            
          193,000



(f)      Reconciliation of consolidated statement of cash flow:



Under Canadian GAAP, cash flow of $4,675,120 (2007 and 2006  Nil) related to mineral property exploration  was included in the investing activities, which was adjusted to the operating activities under US GAAP.





177





---





(g)

Recently adopted accounting standards  US GAAP:

The Fair Value Option for Financial Assets and Financial Liabilities

In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS 159"). SFAS 159 permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected will be reported in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007.



The Company adopted SFAS No. 159 beginning January 1, 2008. There was no material impact on the Companys consolidated financial statements as a result of the adoption of this new standard.



Fair Value Measurements

In September 2006, FASB issued SFAS No. 157, "Fair Value Measurements" ("SFAS 157"). The objective of SFAS 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007.



In February 2008, the FASB released FSP No. FAS 157-2. FSP No. FAS 157-2 defers the effective date of SFAS 157 for one year for non-financial assets and non-financial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. It does not defer recognition and disclosure requirements for financial assets and financial liabilities, or for non-financial assets and non-financial liabilities that are remeasured at least annually.



The Company adopted SFAS No. 157 beginning January 1, 2008 and there was no material impact on the Companys consolidated financial statements as a result of the adoption of this new standard.



(h)

Recent accounting pronouncements:



Non-controlling Interests

In December 2007, the FASB issued SFAS No. 160, "Non-controlling Interests in Consolidated Financial Statements, an Amendment of ARB No. 51". This statement amends ARB 51 to establish accounting and reporting standards for the non-controlling interest (minority interest) in a subsidiary and for the deconsolidation of a subsidiary. Upon its adoption, effective as of the beginning of the Company's fiscal year 2010, non-controlling interests will be classified as equity in the Company's balance sheet and income and comprehensive income attributed to the non-controlling interest will be included in the Company's income and comprehensive income. The provisions of this standard must be applied prospectively upon adoption except for the presentation and disclosure requirements. Management is currently evaluating the impact of adopting SFAS No. 160 on the Company's consolidated financial position and results of operations.







178





---





Business Combinations

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations" ("SFAS No. 141(R)"). SFAS No. 141(R) establishes principles and requirements for how an acquirer (continued)business combination recognizes and measures the assets acquired, liabilitiesassumed, and any non-controlling interest in the acquiree. The provisions of SFAS No. 141(R) will become effective for the Company's business combinations occurring on or after January 1, 2009.

Instrument (or Embedded Features) indexed to an Entitys Own Stock

In June 2008, the FASB issued EITF No. 07-5, Determining Whether an Instrument (or an Embedded Feature) is Indexed to an Entity's Own Stock ("EITF07-5").  EITF07-5 provides that an entity should use a two step approach to evaluate whether an equity-linked financial instrument (or embedded feature) is indexed to its own stock, including evaluating the instrument's contingent exercise and settlement provisions. It also clarifies on the impact of foreign currency denominated strike prices and market-based employee stock option valuation instruments on the evaluation. EITF 07-5 is effective for fiscal years beginning after December 15, 2008.  The Company is currently assessing the impact, if any, on its consolidated financial position and results of operations.



Fair Value of a Financial Asset when the Market for That Asset is Not Active

SFAS No. 157-3, Determining the Fair Value of a Financial Asset when the Market for That Asset is Not Active. (SFAS No. 157-3), was issued October 2008. SFAS No. 157-3 clarifies the application of SFAS No. 157 in a market that is not active and provides key considerations in determining the fair value of the financial asset. FSP FAS 157- 3 is effective upon issuance, including prior periods for which financial statements have not been issued. Revisions resulting from a change in the valuation technique or its application shall be accounted for as a change in accounting estimate. It is not expected that the adoption of this standard for US GAAP purposes will have a material effect on the consolidated financial statements.

Hierarchy of GAAP

SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles, (SFAS No. 162) was issued May 2008. SFAS No. 162 identifies the sources of accounting and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with U.S. GAAP. SFAS No. 162 was effective November 15, 2008. The Company does not expect that the adoption of this standard for US GAAP purposes will have a material effect on its consolidated financial statements.



Subsequent events

SFAS 169, Subsequent Events, (SFAS No. 169) was issued May 2009.  SFAS No. 169 sets out (a) the period after the balance sheet date during which management should evaluate events that may occur for potential recognition or disclosure in the financial statements, (b) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements and (c) he disclosures that an entity should make about events or transactions that occurred after the balance sheet date. An entity should apply the requirements of this statement to interim and annual financial periods ending after June 15, 2009. The Company is currently evaluating the impact of this statement on the financial statements.



179





---







17.

Subsequent Events

Effective January 22, 2009, the Company granted options over 650,000 common shares to various employees, directors, and contractors at an exercise price of $1.05 that vest over a three year period from the issue date and expire in January 2014.



Subsequent to the year end, the Board of Directors of the Company and the Board of Directors, of Minco Gold decided that the Company will share 15.3% of the acquisition cost of Changkeng Exploration Permit related to Changkeng Silver Mineralization. Total acquisition cost for Changkeng Exploration Permit is RMB49 million ($6.6million), therefore the Companys share of the cost is RMB 7.5 million ($1 million).



On February 18, 2009 Minco Silver filed in the District Court of the First Judicial District of the State of Idaho, in and for the County of Shoshone an action commencing a foreclosure proceeding to foreclose on Sterling and appointing a receiver. 
On March 3, 2009 Minco Silvers foreclosure action was stayed in favor of Sterlings filing a voluntary petition under Chapter 11 bankruptcy code in the Bankruptcy Court for the District of Idaho.



On May 29, 2009 the United States Bankruptcy Court, District of Idaho approved on an interim basis a motion by Sterling for a post petition financing subject to the terms and conditions of the Secured Post Petition Financing Agreement executed between Minco Silver and Sterling on May 18, 2009.



Minco Silver agreed to provide Secured Post Petition Financing Agreement in the form of a line of credit up to US$1,000,000 from time to time to fund Sterlings continued administrative expenses during Sterlings Bankruptcy including the expenses associated with the care and maintenance of the Sunshine Mine and the expenses associated with curing the defaults under the Sunshine Mining lease yet to be determined by the United States Bankruptcy Court. Minco Silver subsequently advanced US$80,000 ($100,800).









180





---







SIGNATURES



The registrant hereby certifies that it meets all of the requirements for filing this Annual Report on Form 20-F and that it has duly caused the undersigned to sign this Annual Report on its behalf.



MINCO GOLD CORPORATION



Dated:

July
30, 2009

Ken Z. Cai

Ken Z. Cai, President







181





---



EXHIBIT 12.1

CERTIFICATION

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, Ken Z. Cai, certify that:

I Ken Z. Cai, certify that:

|    |  |                                                                                                                                                                                                                                                                                                                                                                             |  | 
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|    |  |                                                                                                                                                                                                                                                                                                                                                                             |  | 
|1.  |  | I have reviewed this annual report on Form 20-F of Minco Gold  Corporation;                                                                                                                                                                                                                                                                                                
|2.  |  | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;                                                                 
|3.  |  | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;                                                                                       
|4.  |  | The companys other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:                                          
|(a) |  | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|(b) |  | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;    
|(c) |  | Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and                                                                                           
|(d) |  | Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and                                                                       
|5.  |  | The companys other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions):                                                                                  
|(a) |  | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and                                                                                                     
|(b) |  | Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting.                                                                                                                                                                                                    



Date:  July 30, 2009

Ken Z. Cai"

Ken Z. Cai, President







182





---



EXHIBIT
12.2

CERTIFICATION

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, Ken Z. Cai, certify that:

I Paul Zhang, certify that:

|    |  |                                                                                                                                                                                                                                                                                                                                                                             |  | 
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|    |  |                                                                                                                                                                                                                                                                                                                                                                             |  | 
|1.  |  | I have reviewed this annual report on Form 20-F of Minco Gold  Corporation;                                                                                                                                                                                                                                                                                                
|2.  |  | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;                                                                 
|3.  |  | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;                                                                                       
|4.  |  | The companys other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:                                          
|(a) |  | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|(b) |  | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;    
|(c) |  | Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and                                                                                           
|(d) |  | Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and                                                                       
|5.  |  | The companys other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions):                                                                                  
|(a) |  | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and                                                                                                     
|(b) |  | Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting.                                                                                                                                                                                                    



Date:  July 30, 2009

Paul Zhang

Paul Zhang, Chief Financial Officer





183





---

Exhibit 13.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 20-F of Minco Gold Corporation for the year ended December 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the Annual Report), I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



|   |                                                                                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                               
|1. | The Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and                      
|2. | The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.





Date:  July 30, 2009





Ken Z. Cai

Ken Z. Cai President







184





---



Exhibit 13.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report on Form 20-F of Minco Gold Corporation for the year ended December 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the Annual Report), I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:



|   |                                                                                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                               
|1. | The Annual Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and                      
|2. | The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.







Date:

July 30, 2009





Paul Zhang

Paul Zhang, Chief Financial Officer









185





---





Exhibit 14.1





[peconsentmincogoldcorpjul002.gif]

2 County Court Blvd., Suite 202, Brampton, Ontario, L6W 3W8

Ph: 905-595-0575   Fax: 905-595-0578





CONSENT OF P&E MINING CONSULTANTS INC.





We consent to the reference to our firm under the caption "Experts" and to the use of our updated Technical Report titled Technical Report and Updated Resource Estimate on the Changkeng Gold Property, Guangdong Province, China for Minco Gold Corporation dated May 8, 2009, and the use of our previous Technical Report titled Technical Report and Resource Estimate on the Changkeng Gold Property, Guangdong Province, China for Minco Gold Corporation dated April 24, 2008 (the Reports) both prepared in compliance with National Instrument 43-101 and Form 43-101F1 in the Annual Registration Statement (Form 20-F) of Minco Gold Corporation (the Company).



We the undersigned have read the Annual Registration Statement (Form 20-F), the National Instrument 43-101 (the "Instrument"), the Companion Policy 43-101CP, and Form 43-101F1 (the "Form 43-101F1"), and confirm that:



(a)

we have no reason to believe that there are any misrepresentations in the information contained in the Annual Registration Statement (Form 20-F) derived from The Reports or that is within our knowledge as a result of the investigations and enquiries made by us in connection with the preparation of the Reports;



(b)

the Reports comply with the requirements of the Instrument and Form 43-101F1.



Further, we hereby confirm our consent to the Company's use of the Annual Registration Statement (Form 20-F) for its regulatory filing purposes and its disclosure to the public.



[peconsentmincogoldcorpjul006.gif]                    [peconsentmincogoldcorpjul004.gif]

________________________

Eugene Puritch, P.Eng

Tracy Armstrong, P.Geo

President

Sr. Associate Geologist

P&E Mining Consultants Inc.

P&E Mining Consultants Inc.



[peconsentmincogoldcorpjul007.jpg]

_____________________

Antoine Yassa, P.Geo.

Sr. Associate Geologist

P&E Mining Consultants Inc.



Brampton, Ontario, Canada

July 30, 2009







Exhibit 14.2



CONSENT OF PETER FOLK

Professional Engineer







[minco20f073109003.jpg]



Peter Folk, P.Eng









Mayne Island, British Columbia, Canada

July 30, 2009





186