MINCO GOLD CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITIONAND RESULTS OF OPERATIONSFOR THE TWELVE MONTHS ENDED DECEMBER 31, 2008 This management's discussion and analysis ("MD&A") of the operating results and financial position of Minco Gold Corporation and its subsidiaries ("Minco Gold" or  "the Company") is for the year ended December 31, 2008 compared with the year ended December 31, 2007. Together with the consolidated financial statements and related notes, the MD&A provides a detailed account and analysis of the Company's financial and operating performance for the year. The Company's functional and reporting currency is the Canadian dollar. This MD&A is current to April 15, 2009 and should also be read in conjunction with the Company's Annual Information Form and other corporate filings available at www.sedar.com ("SEDAR"). Management is responsible for the interim consolidated financial statements referred to in this MD&A, and provides officers disclosure certifications filed with securities commissions on SEDAR. The audit committee reviews the interim consolidated financial statements and MD&A, and recommends approval to the Company's Board of Directors. The MD&A should be read in conjunction with the consolidated financial statements of the Company and related notes, which have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP"). Refer to Note 2 of the December 31, 2008 audited consolidated financial statements for a discussion of changes in accounting policies and presentation. Refer to Notes 2 and 3 of the December 31, 2008 and 2007 audited consolidated financial statements respectively for disclosure of the Company's significant accounting policies. Company Overview Minco Gold (TSX:MMM/NYSE Amex:MGH/FSE:MI5) was incorporated under the laws of British Columbia, Canada in 1982 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. Minco Gold is exploring and evaluating mineral properties and projects in the People's Republic of China ("China"). Through joint ventures with various Chinese government entities and alliances with mining enterprises in China, the Company is working to build a strong portfolio of commercially viable projects in China. The Company is in the exploration stage and has no operating revenue. Since the signing of its first co-operation agreement in China in 1996, the Company has been active in Chinese mineral exploration and property evaluation and plans to build a portfolio of precious metal properties in China. The Company has conducted exploration work on properties located in Sichuan, Xinjiang, Hebei, Hunan, Inner Mongolia, and Gansu provinces of China, and investigated or evaluated many additional Chinese mineral properties. The Company does not generate revenues and has accumulated losses since inception, and as at December 31, 2008 had an accumulated deficit of $37,802,401 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.   1   Highlights for the year ended December 31, 2008 For the year ended December 31, 2008: 1. Recorded a net loss $13.3 million or a loss per share of $0.30 (2007  - a loss of $7.6 million or a loss per share of $0.18). The Company recorded a loss from continuing operations of $14.4 million or a loss per share of $0.33 (2007  - a loss of $7.5 million or a loss per share of $0.18) which reflects the Company's focus on continued exploration and acquisition activities. 2. In early 2008, the Company received all required government approvals for the Changkeng Gold project including a business license granted to Guangzhou MingZhong Mining Co., Ltd. ("MingZhong", in which the Company holds a 51% equity interest), a cooperative joint-venture to explore and develop the Changkeng Gold property. A 100% interest in the exploration permit (the  "Changkeng Exploration Permit") was approved by the Ministry of Land and Resources and successfully transferred to MingZhong on January 05, 2008. 3. In March 2008, the Company reported an NI 43-101 resource estimate for the Changkeng Gold project completed by P&E Mining Consultants Inc. of Brampton, Ontario. The deposit contains an indicated resource of 2.1 million tonnes @ 5.61 g/t gold ("Au") for a total of 379,000 oz contained gold and an inferred resource of 2.2 million tonnes @ 4.82 g/t Au for a total of 333,400 oz Au. 4. The Company conducted a comprehensive exploration program on ChangKeng project including 61 drill holes covering approximately 12,000 meters of diamond drilling; preliminary metallurgical testing; and a hydrological and geotechnical assessment on the project. All the field related work was completed toward the 2008 year end. 5. In the Longnan region the Company resumed field activities within the three main areas with a trenching program on the Yangshanli property which was completed in April and returned encouraging results. A bedrock sourced gold anomalous area was identified covering an area approximately 1.6 kilometers long by 300 meters wide. The Company conducted an IP survey over the area and a number of prospective drill targets were generated. The Company completed field mapping, sampling and trenching the Xicheng East property in areas of previously defined geochemical anomalies and mineralized areas which were discovered in 2007. This resulted in mineralized structures and trends being extended along strike with 0.5 or 1.0 meter wide channel sample results ranging from 0.28 to 1.85 % Pb in one area and 1.67 g/t Au, 10 g/t Ag and 0.43 % Pb in another favorable target area. Regional field sampling and mapping was carried out in the Yejiaba properties over areas of geochemical anomalies and identified structural trends. Individual grab samples from geologically favorable areas returned values up to 4.29 g/t Au, 137 g/t Ag and 13% Sb. In the fourth quarter, the Company recorded the sale of three small areas which comprised one exploration permit, in the Longnan region, for RMB 2.8 million (approximately $0.5 million). 6. The Company conducted exploration programs on its Gobi Gold project, Gold Bull Mountain project, and Xiaoshan project during the first half of 2008. Given a severe downturn in the financial markets experienced during the second half of 2008, the Company suspended exploration programs on those projects after a detailed review of the exploration data to maximize the benefit of existing cash balances. During the second half 2008, the Company ceased funding of Gold Bull Mountain and decided explore the possibility of selling Yuanling Minco subsequent to year end. Management believes the sales proceeds will exceed the carrying value of the mining license. 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.   2   7. 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 final installment of RMB 2.8 million ($0.4 million) being received by February 28, 2009. Results of Operations Exploration Costs Gross exploration costs including exploration permit purchases for the year ended December 31, 2008 totaled $10.5 million (2007 - $2.9 million) and for the three months ended December 31, 2008 totaled $1.7 million (2007 - $1.5 million). The increase in exploration costs is due to the acquisition of the Changkeng Exploration Permit purchased in 2008, and the increase of field work activities undertaken on the Longnan Properties . Details of the expenditures incurred on the properties are as follows:                        Costs Incurred January 1 to December 31, 2008    Costs Incurred January 1 to December 31, 2007    Cumulative Costs Incurred to December 31, 2008  Currently active properties:                  Gansu                                      - Minco-Qinqi                  (formerly West Extension of Yangshan) *  $-    $(163,008)  $278,576  - Yangshan (Anba) *    -      12,941      490,422  - Longnan    1,414,127      886,375      2,797,887  Inner Mongolia                        - Gobi Gold    270,532      214,319      1,983,542  - BYC **    -      34,098      869,535  Guangdong                        - Changkeng    8,351,719      176,365      9,054,802  Hunan                        - Gold Bull Mountain    98,948      655,858      2,157,540  Henan Zhongjia                        - Xiaoshan    411,181      1,131,000      1,542,181  Total    10,546,507      2,947,948      19,174,485  Exploration cost recoveries    -      163,008      (956,903)Expensed mining license costs    (358,500)    -      (358,500)Expensed exploration permits    (6,611,918)    (842,788)    (9,203,512)Expensed exploration costs    (3,934,589)    (2,268,168)    (8,655,5770)Capitalized (writte off) mining license costs  $(358,500)  $-    $-   * The projects were abandoned.** The project was sold.  3   The following table summarizes the key operating results for the year and quarter ended December 31, 2008 (and 2007):                                                        Statement of Operations  Three months ended Dec 31,  Twelve months ended Dec 31,                                  2008  2007  2008  2007  Exploration Permit costs    -    842,788    6,611,918    842,788  Exploration Costsz    1,657,175    617,428    3,934,589    2,078,346  Administrative expenses    1,219,259    884,279    4,827,249    5,016,036  Operating gain (loss)    (2,876,434)  (2,344,495)  (15,373,756)  (7,937,170)                            Other Income (loss)                          Write down of marketable securities    (12,600)  (169,331)  (75,600)  (232,546)Write down of mineral interests    (358,500)  -    (358,500)  -  Gain on sale of exploration permits    425,632    -    425,632    -  Income from investment in Minco Silver    142,209    (1,374,478)  (948,750)  (3,239,898)Dilution gain    -    191,000    1,544,454    191,000  Gain on sale of Minco Silver shares    -    2,978,034    -    2,978,034  Rental income    16,777    19,908    68,109    58,761  Sundry income    150,000    -    150,000    -  Interest income    80,334    34,418    138,250    248,010  Gain on sale of securities    3,790    -    3,790    -  Loss before discontinued operations, non-controlling interest and tax expense    (2,428,792)  (664,944)  (14,426,371)  (7,933,809)Income tax expense (in China)    (85,349)  -    (85,349)  -  Loss for the period before non-controlling                          interest    (2,514,141)  (664,944)  (14,511,720)  (7,933,807)Non-controlling interest    -    429,442    82,685    429,442  Gain on discontinued operation    1,164,730    (75,866)  1,164,730    (75,864)                            Net income (loss) for the period    (1,349,411)  (311,368)  (13,264,305)  (7,580,231)Basic and diluted gain (loss) per share    (0.03)  (0.01)  (0.30)  (0.18)Weighted average number of shares outstanding    42,989,051    42,928,385    42,970,813    42,908,809   Summary of Quarterly Results The following table summarizes selected financial information for the eight most recently completed quarters:                                                                 2008              2007          Q4  Q3  Q2  Q1  Q4  Q3  Q2  Q1  Interest income  $230,333  $11,869  $2,713  $43,335  $34,418  $67,137  $70,445  $76,010  Net income/(loss)*    (1,349,411)  (2,313,134)  (1,317,998)  (8,283,762)  (311,368)  (2,880,632)  (2,403,260)  (1,984,971)Net income/(loss) per share  - basic and diluted    (0.03)  (0.05)  (0.03)  (0.19)  (0.01)  (0.07)  (0.05)  (0.05) * During the year ended December 31, 2008, the Company retrospectively changed its accounting policy to align its policies with that of Minco Silver Corporation ("Minco Silver") a company that is accounted for using the equity method.  4   **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. As the 2008 year progressed management continued to monitor and make business decisions on how best to manage its available cash flows. Exploration activities were limited in the fourth quarter as the Company concentrated on the Changkeng Gold project. In the first quarter of 2008, the Company recorded RMB 19 million ($2.94 million) as the first installment on the Changkeng exploration permit. (The amount was paid in December 2008) As at December 31, 2008, the Company accrued the remaining balance due on the payment for the exploration permit of RMB 29 million ($ 5.04 million) and recorded the exploration permit costs of $3.66 million, the interest expenses $0.21 million and a $1.17 million exchange loss. As a result of these transactions, total exploration permit costs for 2008 were $6.6 million. In the fourth quarter of 2007, the Company recorded a gain on the sale of 1,000,000 Minco Silver shares of $3.0 million. This is the main contributor to the increase in earnings in the fourth quarter of 2007. There have been no further sales of Minco Silver shares. Minco Base Metals Corporation was formed in 2004 to hold and develop the Company's base metal projects. On November 15 2007, the Company effected the reorganization and spin-off of Minco Base Metals Corporation. The Company effectively transferred the wholly-owned subsidiary Minco Base Metals to Minco Base Metals Corp., including its interest in GanSu Keyin Mining Co. ltd. and the White Silver Mountain project. 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. Under the new policy Minco Silver had capitalized $5.3 million (2007 - $nil) of development costs and Minco Gold's equity share of this amount is $2.1 million. Administrative Expenses 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. In the three-month period ended December 31, 2008, the Company spent a total of $0.8 million on administrative expenses (2007- $1.4 million) net of foreign exchange. Significant changes in expenses are as follows:   Consulting fees increased to $284,000 (2007 - $76,368) as the Company incurred fees associated with a review of the internal controls and SOX compliance with a major accounting firm. In addition, the Company recorded costs associated with consultants providing  "in-house" legal counsel and CFO advisory services.    5      The Company recorded a foreign exchange loss of $1.0 million for the full year ended December 31, 2008 (2007 loss  - $0.4 million) and for the three month period ended December 31, 2008, a foreign exchange loss of $0.4 million (2007  - gain of $0.5 million).            The Company incurred investor relations expense of $0.4 million for the year ended December 31, 2008 (2007 - $0.6 million) and in the current quarter $0.02 million (2007 - $0.2 million). The decrease reflects management's efforts to reduce expenditures as they preserve cash funds for exploration activities.            The Company had reduced property investigation expenses in 2008 ($0.09million) as the focus was on the Changkeng Gold property in relation to prior year (2007 - $0.2 million).            In the quarter ended December 31, 2008, the Company granted 125,000 stock options to its consultants at the price of $0.46 per share (which was accounted for on a mark to market basis). The Company recorded stock based compensation expense of $1.2 million for the full year ended December 31, 2008 (2007 - $2.0 million) and during the three months ended December 31, 2008 $0.3 million (2007 - $0.4 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.  To date the Company has been in the exploration stage and has not earned revenue from operations. Income earned has been interest income, rental income and sundry income. Interest incomeIn the year ended December 31, 2008, interest income was $138,250 (2007 - $0.2 million). Sundry incomeIn the year ended December 31, 2008, sundry income was $150,000 (2007  - nil) recorded on debts forgiven. Rental incomeIn the year ended December 31, 2008, rental income was $68,109 (2007  - 58,761) recorded on office space sub-let to related parties. Short-term investmentAs 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). Including in 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.  Marketable SecuritiesAs 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. Financial PositionThe Company's total assets at December 31, 2008 decreased to $10.9 million (2007 - $16.7 million) as the Company converted short term investments and balances owed into cash to support the exploration activities of the Company during 2008. At December 31, 2008, the Company has cash and short term investments (and therefore liquid assets that can easily be converted to cash) of $3.5 million (2007 - $7.5 million) available for use in operations. In addition, the Company has $1.24 million due from Minco Silver and $506,569 due from Minco Base Metals which will be collected on demand.  6   PropertiesThe Company has interests in properties through direct and indirect ownership (through wholly owned subsidiaries and through joint ventures and business combinations) as follows:  Wholly-owned subsidiaries - Minco Mining (China) Corporation ("Minco China"), Yuanling Minco Mining Ltd. ("Yuanling Minco"), Huaihua Tiancheng Mining Ltd. ("Huaihua Tiancheng") and its interests in the Longnan, Jinniusan and Xiaoshan projects, incorporated in the People's Republic of China.          Less than Wholly-owned subsidiaries - the Company has contractual rights to earn into the following projects and joint ventures:      51% of a joint venture company formed and known as Guangzhou MingZhong Mining Co., Ltd. (the  "MingZhong JV"), formerly "MingZhong Guangdong Minco-Jinli Mining Co. Ltd, (the  "Jinli JV") - holding company for the Changkeng Gold project and the Changkeng Exploration Permit;              65% of a joint venture company formed and known as Inner Mongolia Damo Mining Co. Ltd. (the  "Damo JV") - holding company for the Gobi Gold project              70% of a joint venture company formed and known as Henan Zhongjia Minco Mining Co., Ltd. ("Zhongjia Minco JV") - holding company for the Xiaoshan Gold project; and    Equity interests  - during 2008, the Company's ownership decreased to 40.48% due to the exercise of options by Minco Silver option holders. ("Minco Silver").  Changkeng Gold Project On September 28, 2004, Minco Gold signed a 30-year joint venture contract with four other companies in Guangdong for the exploration and development of the Changkeng gold deposit in Gaoyao City of Guangdong Province, China. The Company can now proceed with an exploration program on the Changkeng Gold Project with the granting of the business license on March 30, 2007 and the transfer of the Changkeng Exploration Permit on January 05, 2008. The current exploration program consists of 12,000 meters of drilling, investigation of the potentially mined-out area, limited metallurgical testing and hydro-geological, geotechnical and environmental studies. The program was initiated in April 2008 and was completed on December 15, 2008 with 11,809 meters drilled. Following the completion of the drill program, an updated resource estimate will be completed and an exploration report will be completed for National (China) permitting requirements in 2009. These studies will be combined and used as the basis for completing an independent Preliminary Economic Assessment (PEA) on the project. Currently Beijing General Research Institute of Mining & Metallurgy ("BGRIMM") located in Beijing, China has commenced limited metallurgical and mineralogical studies on a small metallurgical sample of the Changkeng mineralization. In 2007, six infill holes with a total of 1,264 meters were drilled to meet the minimum exploration expenditures required by the Chinese authorities. Assay results for these six holes were released in March 2008 and are available at the Company's website and at www.sedar.com. As at September 30, 2008, a total of 81 drill holes have defined a minimum strike length of 650 meters with drilling conducted on approximate 40 meter section spacing and holes on section between 20 meters to 80 meters apart. On March 12, 2008, the Company released a NI 43-101 compliant resource estimate which contains an indicated resource of 2.1 million tonnes @ 5.61 grams per tonne (g/t) gold (Au) for a total of 379,000 oz Au and an inferred resource of 2.2 million tonnes @ 4.82 g/t Au for a total of 333,400 oz Au. The study also identified areas where inferred resources can be upgraded to indicate and the overall deposit can be expanded. An updated NI 43-101 resource estimate technical report has been filed on March 12, 2008 on SEDAR and is available at www.sedar.com.  7   As at December 15, 2008, 11,809 meters of diamond drilling have been completed in 60 drill holes, including pump holes. Seven shallow observation holes with a total footage of 692 meters were completed for the hydro geological 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 metallurgical sampling have been completed. All results are pending. Gobi Gold Project Minco Gold has a 65% interest in the Damo JV. Field programs were commenced in late May 2008. 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. The widespread, extremely high gold values in previous geochemical samples resulted from the widely but sporadically distributed high-grade silicified veins of less than 1cm to 5cm in width at surface. The exploration potential and economic significance of the northeast extension will rely on the favorable structural preparation to increase the density of the high-grade vein lets at depth. Reprocessing of all the available raw data from previous IP programs will be arranged to further delineate and define any potential targets. BYC Gold Project The Company made the decision to sell its interest in the HYMK as the Company believes that the potential for a significant discovery is limited. On July 18, 2008, the Company agreed to transfer its interest in the HYMK JV to Long Da Fu (Beijing) Investment Co. Ltd. for a total of RMB 7.0 million (approximately $1.2 million).The transaction was completed in October 2008 and the final installment on the sale proceeds received subsequent to year end 2008. Xiaoshan Project The Xiaoshan project consists of two exploration permits, the 17.1km2 Huluyu permit and the 12km2 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. Tectonically, the Xiaoshan project area sits at the Xiaoshan uplift block on the southern rim of the North China. The area also forms part of east section of the E-W trending Qinling metallogenic belt. Host rock of gold and silver mineralization is mainly composed of interbedded chlorite-albite schist, sericite-quartz-albite schist, plagioclase- amphibole schist, and biotite-plagioclase gneiss. 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 Gold's target model of high grade Ag-Pb-Zn with associated Au. Therefore, Minco Gold 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.  8   Gold Bull Mountain Gold Project The Company established a subsidiary company, Yuanling Minco for the purpose of initiating its exploration and mining activities in the major gold-producing areas in the West and Southwest Hunan province. 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 paid a total of RMB 2,546,652 (approximately $358,500), which included a mining licence transfer fee of RMB 1,000,000 (approximately $143,000), an environmental protection fee of RMB 740,000 (approximately $104,000) and other related costs. During the first five months in 2008, 456m of underground drifting was completed at Levels 87 and 47 to explore the gold zones defined in the upper level. Some un-continuous gold mineralization zones were intersected in tunnels at Level 87. Average gold grade in these veins ranges 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 exploration program at GBM in June 2008. 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. Gansu Longnan Properties Minco Gold's wholly-owned subsidiary, Minco China, presently holds 12 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: Yangshan: including five exploration permits located in the northeast extension of the Yangshan gold belt and its adjacent area; potential for gold. Yejiaba: including four exploration permits along a regional structural belt parallel to the Yangshan gold belt; potential for gold and antimony. 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. All of these 12 exploration permits are located over regional geochemical gold anomalies with host rocks and structure similar to that at Anba and other gold deposits in the region. Exploration focus in 2008 was on the following: 1.Detailed mapping, trenching and IP survey and test drilling 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. 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.  9   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 pyritization. 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 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 2m-wide 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.    10   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. 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 alteration zone was identified and 54 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.  Liquidity and Capital Resources The Company does not generate revenues from operations. The Company relies on equity financing for its working capital requirements to fund its exploration, investment, permitting and administrative activities. The Company expects that a combination of its current on hand resources; its ability to raise capital, its ability to work with its minority partners and other joint venture partners; and its ability to manage the timing of exploration expenses, that there will be sufficient resources to complete its planned exploration business plan and support the basic operations expenses 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. .  11   Cash Flow Operating Activities For the full year the Company used $11.3 million (2007 - $4.9 million) to support its operating activities. The full year net loss was $12.9 million (2007 - $7.6 million) with the fourth quarter being $1.0 million (2007 - $0.3 million). (Current year operating loss before gain on discontinued operations was $14.1 million (2007 - loss of $7.5 million)). This level of expenditure activity is consistent with the Company's goal of exploration activity and acquisition opportunities. Cash provided by operation activities of discontinued operation activities was $0.7 million (2007  -$1,756). Financing Activities For the full year ended December 31, 2008, the Company generated cash from proceeds on issuance of shares $46,439 (2007 - $0.1 million), cost of share buyback $nil (2007 - $44,451),contributions of non-controlling interests $nil (2007 - $0.5 million) and loan payable $2.88 million (2007 -$nil). Investing Activities The Company sold short term investment securities to generate cash to support its exploration activities of $5.1 million (2007 - $4.7 million), purchases of equipment totaled $0.1 million (2007 - $0.2 million), received proceeds from the sale of Minco Silver shares $nil (2007 - $3.2 million), proceeds from the sales of mineral interests $0.4 million (2007 - $nil), while having $3.4 million due from Minco Silver be received. (2007  - net advance to Minco Silver of $1.9 million). Cash provided by investing activities of discontinued operation activities was $4,461 (2007 - nil million). Available Resources The Company's cash and short-term investment balance at December 31, 2008 amounted to $3.5 million (2007 - $7.5 million). Accounts Payable and Accrued Liabilities During the year, the MingZhong partners contributed RMB 30.0 million ($5.39 million) to MingZhong as shareholder loans. The funds were used to make the installment on the Changkeng Exploration permit RMB 19 million ($2.94 million) and for exploration and operating activities RMB 11 million ($1.7 million). Application was made to the government authorities to have these funds treated as registered capital. As at the date of this MD&A, this approval has not been received. Therefore on the consolidated financial statements of the Company is reflected a balance due to MingZhong minority shareholders RMB 14.7 million ($2.66 million) which represents their 49% of the initial RMB 30.0 million ($5.39 million) contribution. The remaining balance due for the exploration permit of RMB 29 million ($5.04 million) has been accrued in the December 31, 2008 financial statements as due to 757 Exploration Team. Minco China is responsible for its 51% shareholder contribution to MingZhong of RMB 14.8 million ($2.57 million) and the minority shareholders are responsible for their 49% shareholder contribution to MingZhong of RMB 14.2 million ($2.47 million) to fund the balance due for the exploration permit.  12   Investment in Minco Silver Corporation The Company owns 13,000,000 common shares (representing 40.48% as at December 31, 2008) of Minco Silver that was acquired in 2004 in exchange for the transfer of the Fuwan property and the silver interest in the Changkeng property. Minco Silver's principal business is the acquisition, exploration and development of silver dominant natural resource properties in Asia, particularly in China. This business is and will be conducted through joint ventures with Chinese governmental entities and other entities. Minco Silver's principal property is the Fuwan Property located in Guangdong Province, China. On May 17, 2008 Minco Silver share purchase warrants were exercised for 741,357 common shares at an exercise price of $3.45. The Company did not participate in this exercise and as a consequence its ownership in Minco Silver was reduced from 41.59% to 40.48%. This reduction in ownership resulted in a dilution gain for the quarter ended June 30, 2008 of $1,375,604. 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. Please refer to the 2008 audited financial statements and MD&A of Minco Silver for the year ended December 31, 2008, available on SEDAR and accessible at www.sedar.com, for further information on Minco Silver and its properties. The carrying value and market value of the Minco Silver shares held by the Company and accounted for using the equity basis, are as follow:    December 31, 2008    December 31, 2007                Investment in Minco Silver Corporation on an equity basis  $3,675,116    $3,079,412                    Market value of Minco Silver shares  $18,460,000    $38,740,000   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.  13   Off-Balance Sheet Arrangements The Company does not have any off-balance sheet arrangements. Outlook The current economic environment has prompted the Company to reduce or cease activities within Canada and China that are not focused on its prime assets and stopped or suspended work on non-core properties to preserve its cash position. The Company will be required to raise additional funds to support its strategic goals in 2009, with the focus of the Company being on progressing the work on the Changkeng Gold project and further exploration on the Longnan projects where field programs have been planned for the higher potential areas and a drill program has been prepared for the Yangshanli property to follow up on the discovery made during 2008. Field work will also be conducted in the Yejiaba and Xicheng areas. Share Capital Under the original escrow agreement escrow shares were to be released based on the Company's expenditures on exploration and development of a particular resource properties and as at December 31, 2007, all shares have been released from escrow. As at the date of this MD&A, the Company has 42,989,051 common shares and 6,325,834 stock options outstanding, for a total of 49,314,885 fully diluted common shares outstanding. At December 31, 2008 the Company has 42,989,051 common shares and 4,725,834 stock options outstanding, for a total of 47,714,885 fully diluted common shares outstanding. Contractual Obligations and Contingencies (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.  14   Transactions with Related Parties The Company earned the rental income and incurred the following fees to its directors or corporations controlled by its directors:    2008  2007 Rental Income $68,100  $58,761               2008   2007 Exploration costs $85,937  $80,625 Management fees  42,135   17,344 Property investigation  6,979   21,094 Investor relations  8,177   - Director's fees  48,000   62,500    $191,228  $181,563  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 and outstanding 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 expenses, 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. 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 Metals' operations. 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. Critical Accounting Estimates The preparation of the Company's consolidated 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. 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. 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. The Company is required to make estimates of future production costs, future gold commodity pricing, and currency exchange fluctuations in the process of testing the impairment of its assets.  15   In testing the impairment of its mineral interests the Company is evaluating its resources and extended determination of gold reserves which requires a number of assumptions and estimations, including geological sampling and modeling as well as estimates of future gold prices and future production costs. Estimates of the resources and ultimately the estimates of reserves may change based on additional information obtained subsequent to the assessment date. This may include data obtained from exploration drilling, significant changes in the price of gold and changes in estimates of the cost of production. A change in the estimate of reserves could result in a change in the rate of depletion, development amortization, or impairment of the resources, resulting in a write down. 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 operation. Business Environment and Risks 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: 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. ** Loan/other receivables include receivables, due from Minco Silver and due to Minco Base Metals. The effective interest rate on financial assets ranges 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.  16   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. 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 call except for balance of $5,047,161 which is due and payable in one year. The $5,047,161 (discounted at 5% to carrying value) balance that is due in one year has a contractual value of $5,170,262. The effective interest rate on financial liabilities ranges 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 both Canadian and China based assets. The Company does not hedge its foreign currency fluctuations. A 1% increase in the exchange rate between the Canadian dollar and 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 bears 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 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. Initial Adoption of Accounting Policies On January 1, 2008, the Company adopted six new standards that were issued by the Canadian Institute of Chartered Accountants: Handbook Section 1400, General Standards of Financial Statement Disclosure ("Section 1400"), 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.  17   (i) General Standards of Financial Statement Disclosure - Section 1400Section 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 1506Section 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. Even though the Company changed its accounting policy on development costs, the adoption of this Section had no impact on the financial position or results of operations for the year ended December 31, 2008 as there were no Minco Gold properties that met the criteria for capitalization. The basis for the change in accounting policy is to align the accounting policies with those companies in a group and Minco Silver changed its accounting policy in 2008. (iii) Capital disclosures  - Section 1535Section 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 3863Section 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. (v) Inventories  - Section 3031Section 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. 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  18   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. (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. Internal Controls over Financial Reporting There has been no significant change in the Company's internal control over financial reporting during the year 2008 that has materially affected, or is reasonably likely to materially affect, the Company's internal control 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   19   3. Provide reasonable assurance in the prevention and timely detection of material unauthorized acquisition, use or disposal of the Company's assets. 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). Management has concluded that the Company did have some material financial reporting weaknesses which have impacted its ability to maintain effective internal control over financial reporting throughout the year ended December 31, 2008 based on the criteria set forth in the Committee of Sponsoring Organization of the Treadway Commission framework. Remediation of Material Weaknesses To address the material weaknesses described above, management has started a project to redesign the financial reporting process with a view to evaluating and designing an implementation strategy of the redesigned process as part of the first quarter 2009, with the expected redesigned process being implemented though the third quarter of 2009. Subsequent Events 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. As of February 28, 2009, the Company received the installment payment on the sale of BYC of RMB 2.8 million ($0.5 million). Effective March 27, 2009, the MingZhong shareholders agreed to increase the companies registered capital by RMB 51.7 million ($9.2 million) and paying off the RMB 30 million ($5.39 million) loans from shareholders. As of April 9, 2009, the Company is subject to a Cease Trade Order due to delayed filing of 2008 annual Financial Statements and MD&A.  20   Cautionary Statement on Forward-Looking Information This MD&A, which contains certain forward-looking statements, are intended to provide readers with a reasonable basis for assessing the financial performance of the Company. All statements, other than statements of historical fact, are forward-looking statements. The words  "believe", "expect", "anticipate", "contemplate", "target", "plan", "intends",  "continue", "budget", "estimate", "may", "will", "schedule" and similar expressions identify forward looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. Such factors include, but are not limited to, fluctuations in the currency markets such as Canadian dollar, Chinese RMB and U.S. dollar, fluctuations in the prices of gold, silver and other commodities, changes in government legislation, taxation, controls, regulations and political or economic developments in Canada, the United States, or China or other countries in which the Company carries or may carry on business in the future, risks associated with mining or development activities, the speculative nature of exploration and development, including the risk of obtaining necessary licenses and permits, and quantities or grades of reserves. Many of these uncertainties and contingencies can affect the Company's actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company. Readers are cautioned that forward-looking statements are not guarantees of future performance. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those acknowledged in such statements. Specific reference is made to the Company's most recent Annual Information Form on file with Canadian provincial securities regulatory authorities for a discussion of some of the factors underlying forward-looking statements. 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, except to the extent required by applicable laws.Ken Cai April 14, 2009   21     MINCO  GOLD CORPORATION   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITIONAND  RESULTS OF OPERATIONSFOR  THE YEAR ENDED DECEMBER 31, 2009   This  management's discussion and analysis ("MD&A") of the operating  results and financial position of Minco Gold Corporation and its subsidiaries  ("Minco Gold" or "the Company") is for the year ended December 31,  2009 compared with the year ended December 31, 2008. Together with the  consolidated financial statements and related notes, the MD&A provides a  detailed account and analysis of the Company's financial and operating  performance for the year. The Company's functional and reporting currency is  the Canadian dollar. This MD&A is current to March 29, 2010 and should  also be read in conjunction with the Company's Annual Information Form and  other corporate filings available at www.sedar.com ("SEDAR").   Management  is responsible for the consolidated financial statements referred to in this  MD&A, and provides officers disclosure certifications filed with  securities commissions on SEDAR. The audit committee reviews the consolidated  financial statements and MD&A, and recommends approval to the Company's  Board of Directors.   The  MD&A should be read in conjunction with the consolidated financial  statements of the Company and related notes, which have been prepared in  accordance with Canadian generally accepted accounting principles ("GAAP").  Refer to Note 2 of the December 31, 2009 and 2008 audited consolidated  financial statements for disclosure of the Company's significant accounting  policies.   Company  Overview   Minco  Gold (TSX: MMM/NYSE Amex:MGH/FSE:MI5) was incorporated under the laws of  British Columbia, Canada in 1982 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.   Minco  Gold is exploring and evaluating mineral properties and projects in the People's  Republic of China ("China"). Through joint ventures with various Chinese  government entities and alliances with mining enterprises in China, the  Company is working to build a strong portfolio of commercially viable projects  in China.   The  Company is in the exploration stage and has no operating revenue. Since the  signing of its first co-operation agreement in China in 1996, the Company has  been active in Chinese mineral exploration and property evaluation and plans  to build a portfolio of precious metal properties in China. The Company has  conducted exploration work on properties located in Sichuan, Xinjiang, Hubei,  Hunan, Inner Mongolia, Guangdong and Gansu provinces of China, and  investigated or evaluated many additional Chinese mineral properties.   The  Company does not generate revenues and has accumulated losses since inception  and is unlikely to generate earnings in the immediate future. On October 22,  2009, the Company closed a private placement financing for gross proceeds of  $4,400,000.   Companies   The  Company has interests in properties through direct and indirect ownership  (through wholly owned subsidiaries and through joint ventures and business  combinations) as follows: 1    Wholly-owned  subsidiaries -Minco Mining (China) Corporation ("Minco China"), Yuanling  Minco Mining Ltd. ("Yuanling Minco"), Huaihua Tiancheng Mining Ltd. ("Huaihua  Tiancheng") and Triple Eight Mineral Corporation ("Temco")..   Less  than Wholly-owned subsidiaries - the Company has equity interests in the  following projects and joint ventures:   .51%          of a joint venture company formed and known as Guangzhou Mingzhong          Mining Co., Ltd. (the "Mingzhong JV"),- holding company for the          Changkeng Gold project and the Changkeng Exploration Permit;   .65%          of a joint venture company formed and known as Inner Mongolia Damo          Mining Co. Ltd. (the "Damo JV") - holding company for the Gobi          Gold project   .Equity          interests - as at December 31, 2009, the Company's ownership of          Minco Silver Corporation ("Minco Silver") was 32.01%.   Highlights  for the year ended December 31, 2009   For  the year ended December 31, 2009:   1.  Recorded a net loss $0.2 million or a loss per share of $0.00 (2008 - a loss  of $13.3 million or a loss per share of $0.30). The Company recorded a loss  from continuing operations of $0.8 million or a loss per share of $0.02 (2008 -  a loss of $14.1 million or a loss per share of $0.33) which reflects the  Company's focus on continued exploration and acquisition activities.   2.  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 was completed by P&E Mining Consultants Inc. of Brampton,  Ontario. 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. Work  continued on the completion of the National Exploration Report.   3.  In the Longnan region the Company resumed field activities within the three  main areas and then later stopping all work at Xicheng East due to negative  results. Traversing, sampling and trenching were completed in all three  project areas. During the 2nd  half of 2009, all work was focused on the Yangshan and Yejiaba project areas.  A new gold enriched structural trend was discovered on the Oujiaba permit  within the Yangshan area and was identified intermittently over a strike  length of approximately 6 kilometres with significant gold mineralization  being intersected in surface trenches in 4 areas. The best continuous channel  samples results are 1.18g/t Au over 4.7 metres, 13.2 g/t Au over 10.0 metres,  0.33 g/t Au over 4.0 metres and 0.60g/t Au over 1.5 metres. Within the Yejiaba  project area, detailed traversing and surface trenching identified significant  silver - iron - lead - zinc enriched poly-metallic zone with a width of 5 to  25 metres. The best continuous surface channel sample results are listed in  the Summary and detailed property section of this document.   4.  No work was completed on the Gobi Gold project, Gold Bull Mountain project and  Xiaoshan project during 2009.   5.  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 of 2008. Proceeds from the sale were received in three  installments, with the final installment of RMB 2.8 million ($0.4 million)  received on February 28, 2009. 2    6.  Minco Gold elected to sell its interest in Henan Zhongjia Co. Ltd. On April  26, 2009, the Company entered into a sale agreement to dispose of its interest  in Zhongjia . After completion of all legal requirements and approvals, the  Company relinquished all managerial involvement and control to the purchaser  on June 30, 2009. Gross proceeds on disposal were RMB 2.46 million  (approximately $0.4 million)   Results  of Operations   Exploration  Costs   For  the years ended December 31, 2009 and 2008   Exploration  costs, net of exploration cost recoveries, for the year ended December 31,  2009 were $0.2 million compared to $10.2 million in the comparative year in  2008. The decrease was due to the recovery of exploration costs of $1.4  million for the Changkeng Silver mineralization and lower exploration  activities. Therefore the gross amount before recovery was $1.6 million for  the year ended December 31, 2009.   For  the three months ended December 31, 2009 exploration costs totaled $0.4  million (2008 - $1.7 million).   Pursuant  to the terms of the agreement on Changkeng Silver mineralization, the Company  has assigned its right to earn 51% interest on Changkeng Silver mineralization  to Minco Silver. As a result of the assignment, Minco Silver is responsible  for 51% of the costs in relation to the Changkeng Silver mineralization.   In  2009, the Company and Minco Silver entered into an agreement and agreed Minco  Silver will share and pay 30% of the Company's 51% of the cost of the  permit. Accordingly, in the year ended December 31, 2009, the Company recorded  a receivable due from Minco Silver of $1,205,298, and an exploration permit  costs recovery for the year.   For  the years ended December 31, 2008 and 2007   Exploration  costs including exploration permit purchases for the year ended December 31,  2008 totaled $10.2 million (2007 - $1.8 million) and for the three months  ended December 31, 2008 totaled $1.6 million (2007 - $1.5 million).   The  increase in exploration costs is due to the acquisition of the Changkeng  Exploration Permit during 2008 and the increase in field work activities  undertaken on the Longnan Properties.   The  following is a summary of exploration costs incurred by the Company.          Year          ended December 31, 2009  2008  2007 Gansu         -          Yangshan, Anba(*) $-  $-  $12,941 -          Minco-Qinqi            (formerly          West Extension of Yangshan) *  -   -   (163,088)-          Longnan  1,336,083   1,414,127   886,375 Inner          Mongolia            -          Gobi Gold  (8,003)  270,532   214,319 -          BYC **  -   -   34,098 Guangdong            -          Changkeng  (1,090,981)  8,351,719   149,551 Hunan            -          Gold Bull Mountain  4,137   98,948   655,858 Henan          Zhongjia            -          Xiaoshan**  -   57,953   55,196 Total  241,236   10,193,273   1,845,250     *          Projects terminated **          Projects disposed 3    The  following table summarizes the key operating results for the years ended  December 31, 2009, 2008 and 2007.             Statement          of Operations           2009  2008  2007 Exploration          Permit costs (recoveries) $(1,205,298) $6,611,918  $842,788 Exploration          costs  1,446,534   3,581,361   1,002,462 Administrative          expenses  2,481,140   4,789,686   4,965,307 Operating          loss  (2,722,376)  (14,982,965)  (6,810,557)Unrealized          gain (loss) on marketable securities  23,100   (75,600)  (232,546)Write          down of mineral interests  -   (358,500)  - Gain          on sale of exploration permits  -   425,632   - Gain          on sale of Minco Silver shares  -   -   2,978,034 Interest          and other income  123,051   363,361   299,354 Loss          for the year before discontinued operations, non-controlling interest,          taxes expenses, loss from equity investment and dilution gain  (2,576,224)  (14,628,072)  (3,765,715)Tax          expenses  -   (85,349)  - Share          of loss from equity investment in Minco Silver  (1,659,280)  (948,750)  (3,239,898)Dilution          gain  3,479,000   1,544,454   191,000 Non-controlling          interest  -   -   97,114 Loss          for the period from continuing operations  (756,504)  (14,117,717)  (6,717,499)Income          (loss) from discontinued operations  555,604   853,412   (862,732)Loss          for the year  (200,900)  (13,264,305)  (7,580,231)Basic          and diluted (loss) per share $(0.00) $(0.31) $(0.18)Weighted          average number of shares outstanding  43,148,525   42,970,813   42,908,809  4    Summary  of Quarterly Results   The  following table summarizes selected financial information for the eight most  recently completed quarters:  2009  2008    Q4   Q3   Q2   Q1   Q4   Q3   Q2   Q1 Exploration          costs (recoveries) $375,951  $(1,011,452) $303,435  $573,302  $1,565,329  $864,403  $751,978  $7,011,569 Administrative          expenses  757,916   715,180   863,870   705,771   832,197   951,442   942,721   1,048,304 Foreign          exchange (gain) loss  (613        518)  73,049   46,213   (67,341)  323,425   344,107   284,917   48,870 Operating          income (loss)  (520,349)  223,223   (1,213,518)  (1,211,732)  (2,720,951)  (2,159,952)  (1,979,616)  (8,108,743)Other          income (loss)  1,535   90,184   26,845   27,587   308,654   (18,555)  388   64,406 Income          (loss) for the period before discontinued operations, non-controlling          interest, tax, loss from equity investment and dilution gain  (518,814)  313,407   (1,186,673)  (1,184,145)  (2,412,297)  (2,178,507)  (1,979,228)  (8,044,337)Tax        expenses   -   -    -    -   (85,349 )    -    -    - Share          of gain (loss) from equity investment in Minco Silver  (277,786)  (742,483)  (506,188)  (132,823)  142,209   (112,964)  (507,599)  (470,396),Dilution          gain  3,361,154   965   116,881   -   -   -   1,375,604   168,850 Non-controlling          interest  -   -   -   -   (82,685)  72,290   (51,726)  62,121 Income          (loss) from continuing operations  2,564,555   (428,111)  (1,575,980)  (1,316,968)  (2,438,122)  (2,219,181)  (1,162,949)  (8,283,762)Income          (loss) from discontinued operations  (7,488)  (14,359)  577,451   -   1,088,712   (93,954)  (155,049)  - Net          income (loss) for the period $2,557,067  $(442,470) $(998,529) $(1,316,968) $(1,349,410) $(2,313,135) $(1,317,998) $(8,283,762)Basic          and diluted income (loss) per share $(0.05) $(0.01) $(0.02) $(0.03) $(0.03) $(0.05) $(0.03) $(0.19)Weighted          average number of shares outstanding  43,148,525   43,011,106   43,005,551   42,989,051   43,148,525   42,974,157   42,974,157   42,928,385    As  the 2009 year progressed, management continued to monitor and make business  decisions on how best to manage its available cash flows. Exploration  activities were limited in the fourth quarter as the Company concentrated on  the Changkeng Gold project and Longnan projects.   In  the first quarter of 2008, the Company accrued RMB 19 million ($2.94 million)  as the first installment on the Changkeng exploration permit. (The amount was  paid in December 2008) As at December 31, 2008, the Company accrued the  remaining balance due on the payment for the exploration permit of RMB 29  million ($ 5.04 million) and paid exploration permit costs of $3.66 million,  the interest expenses $0.21 million and a $1.17 million exchange loss. As a  result of these transactions, total exploration permit costs for 2008 were  $6.6 million.   On  May 25, 2009, Mingzhong received government approval to convert shareholder  loans totaling RMB 30 million (approximately $5.53 million) to equity. As a  result of this conversion, the Company recognized the minority shareholder's  contribution as a non-controlling interest of RMB 14.7 million (approximately  $2.49 million).   Pursuant  to the terms of the agreement on Changkeng Silver mineralization, the Company  has assigned its right to earn a 51% interest in the Changkeng Silver  mineralization to Minco Silver. As a result, Minco Silver is responsible for  51% of the costs in relation to the Changkeng Silver mineralization. 5    In  the year ended December 31, 2009, $207,710 was recorded as an exploration cost  recovery, which represents 51% of the incurred costs on Changkeng Silver  mineralization and paid on Minco Silver's behalf by the Company. Minco  Silver will reimburse this amount to the Company.   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. As at December 31, 2008, the Company  recorded Earnings for the year from discontinued operations of $ 1.16 million.   In  the fourth quarter of 2007, the Company recorded a gain on the sale of  1,000,000 Minco Silver shares of $3.0 million. This is the main contributor to  the increase in earnings in the fourth quarter of 2007. There have been no  further sales of Minco Silver shares.   Minco  Silver has capitalized $9.0 million (2008 - $5.3 million) of development costs  and Minco Gold's equity share of this amount is $3.6 million.   Administrative  Expenses   For  the years ended December 31, 2009 and 2008   The  Company's administrative expenses include overhead associated with  administering and financing the Company's exploration activities. For the  full year ended December 31, 2009 the Company incurred a total of $2.5 million  (2008 - $4.8 million) administrative expenses. In the three-month period ended  December 31, 2008, the Company spent a total of $0.8 million on administrative  expenses (2008- $0.8 million).   Significant  changes in expenses are as follows: The          Company had incurred nominal interest expense in 2009 compared to $0.2          million in 2008. This decrease reflects the conversion of the loans          payable of the minority shareholders' loans in Mingzhong to share          capital.    The          Company recorded a foreign exchange gain of $0.56 million for the full          year ended December 31, 2009 (2008 loss - $1 million) and for the          three month period ended December 31, 2009, a foreign exchange gain of          $0.02 million (2008 - loss of $1.5 million).    The          Company incurred investor relations expense of $0.1 million for the          year ended December 31, 2009 (2008 - $0.4 million) and in the current          quarter $0.01 million (2008 - $0.02 million). The decrease reflects          management's efforts to reduce expenditures to preserve funds for          exploration activities.    In          the year ended December 31, 2009, the Company granted 1,907,000 stock          options to its directors, officers, employees and consultants at the          price range from $0.48 to $1.06 per share. The Company recorded stock          based compensation expense of $0.8 million for the full year ended          December 31, 2009 (2008 - $1.2 million) and during the three months          ended December 31, 2009 $0.06 million (2008 - $0.3 million). The          decrease in stock based compensation over prior year is due to the          lower weighted average exercise price of options issued in 2009 as          compared to 2008. 6    To  date the Company has been in the exploration stage and has not earned revenue  from operations. Income earned has been interest income, rental income and  sundry income.   Interest  income   In  the year ended December 31, 2009, interest income was $0.04 million (2008 -  $0.14 million).   Sundry  income   In  the year ended December 31, 2009, sundry income was $0.01 million (2008 - $0.15 million) recorded on debts forgiven.   Rental  income   In  the year ended December 31, 2009, rental income was $0.08 million (2008 - 0.07 million) recorded on office space sub-let to related parties.   Short-term  investment   As  at December 31, 2009, short-term investments consisted of $2,475,936 of  cashable guaranteed investment certificates with terms of greater than ninety  days but not greater than one year (2008 - $850,904) and $Nil in commercial  notes (2008 - $71,655).   Marketable  Securities   As  at December 31, 2009, the Company held 420,000 common shares (2008 - 420,000  common shares) of Nanika Resources Inc. ("Nanika"). The market value of  the shares was $35,700 (2008 - $12,600).   For  the years ended December 31, 2008 and 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 $4.8 million  (2007 - $5.0 million) administrative expenses. In the three-month period ended  December 31, 2008, the Company spent a total of $0.9 million on administrative  expenses (2007- $1.4 million) net of foreign exchange.   Significant  changes in expenses are as follows: Consulting          fees increased to $0.28 million (2007 - $0.08 million) as the Company          incurred fees associated with a review of the internal controls and          SOX compliance with a major accounting firm. In addition, the Company          recorded costs associated with consultants providing "in-house"          legal counsel and CFO advisory services.    The          Company recorded a foreign exchange loss of $1.0 million for the full          year ended December 31, 2008 (2007 loss - $0.4 million) and for the          three month period ended December 31, 2008, a foreign exchange gain of          $0.6 million (2007 - gain of $0.5 million).    The          Company incurred investor relations expense of $0.4 million for the          year ended December 31, 2008 (2007 - $0.6 million) and in the current          quarter $0.02 million (2007 - $0.2 million). The decrease reflects          management's efforts to reduce expenditures as they preserve cash          funds for exploration activities.    The          Company had reduced property investigation expenses in 2008 ($0.1          million) as the focus was on the Changkeng Gold property in relation          to prior year (2007 - $0.2 million). 7  In          the year ended December 31, 2008, the Company granted 767,500 stock          options to its employee and consultants at the price of $0.46 per          share. The Company recorded stock based compensation expense of $1.2          million for the full year ended December 31, 2008 (2007 - $2.0          million) and during the three months ended December 31, 2008 $0.3          million (2007 - $0.4 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.   To  date the Company has been in the exploration stage and has not earned revenue  from operations. Income earned has been interest income, rental income and  sundry income.   Interest  income   In  the year ended December 31, 2008, interest income was $0.14 million (2007 -  $0.24 million).   Sundry  income   In  the year ended December 31, 2008, sundry income was $0.15 million (2007 - nil) recorded on debts forgiven.   Rental  income   In  the year ended December 31, 2008, rental income was $0.07 million (2007 - 0.06 million) recorded on office space sub-let to related parties.   Short-term  investment   Short-term  investments consist of, cashable guaranteed investment certificates with terms  of greater than ninety days but not greater than one year, commercial notes  and marketable securities. As of December 31, 2008, the Company held $922,559  (2007 - $6,149,044) in short-term investments.   Financial  Position   The  Company's total assets at December 31, 2009 increased to $14.6 million (2008  - $10.6 million) as the Company increased cash and short term investments  during 2009. In addition, the Company's equity investment in Minco Silver  has increased during 2009 due to dilution gains. At December 31, 2009, the  Company has cash and short term investments (and therefore liquid assets that  can easily be converted to cash) of $6.0 million (2008 - $3.5 million)  available for use in operations. In addition, the Company has $2.1 million due  from Minco Silver (2008 - $1.2 million) which can be collected on demand.   Properties   The  Company has interests in properties through direct and indirect ownership  (through wholly owned subsidiaries and through joint ventures and business  combinations) as follows: Wholly-owned          subsidiaries -Minco Mining (China) Corporation ("Minco China"),          Yuanling Minco Mining Ltd. ("Yuanling Minco"), Huaihua Tiancheng          Mining Ltd. ("Huaihua Tiancheng") and its interests in the Longnan          project, incorporated in the People's Republic of China and Triple          Eight Mineral Corporation ("Temco"). 8  Less          than Wholly-owned subsidiaries - the Company has the following          projects and joint venture interests:     51%          of a joint venture company formed and known as Guangzhou Mingzhong          Mining Co., Ltd. (the "Mingzhong JV"), formerly "Mingzhong          Guangdong Minco-Jinli Mining Co. Ltd, (the "Jinli JV") - holding          company for the Changkeng Gold project and the Changkeng Exploration          Permit;     .65%          of a joint venture company formed and known as Inner Mongolia Damo          Mining Co. Ltd. (the "Damo JV") - holding company for the Gobi          Gold project; and     Equity          interests - during 2009, the Company's ownership decreased to          40.48% due to the exercise of options by Minco Silver option holders.          ("Minco Silver").   Changkeng  Gold Project   On  September 28, 2004, Minco Gold signed a 30-year joint venture contract with  four other companies in Guangdong for the exploration and development of the  Changkeng gold deposit in Gaoyao City of Guangdong province, China.   The  Company can now proceed with an exploration program on the Changkeng Gold  Project with the granting of the business license on March 30, 2007 and the  transfer of the Changkeng Exploration Permit on January 5, 2008.   In  2007, six infill holes with a total of 1,264 meters were drilled to meet the  minimum exploration expenditures required by the Chinese authorities. Assay  results for these six holes were released in March 2008 and are available at  the Company's website and at www.sedar.com.   On  March 12, 2008, the Company released a NI 43-101 compliant resource estimate  which contains an indicated resource of 2.1 million tonnes @ 5.61 grams per  tonne (g/t) gold (Au) for a total of 379,000 oz Au and an inferred resource of  2.2 million tonnes @ 4.82 g/t Au for a total of 333,400 oz Au. An updated NI  43-101 resouce estimate technical report has been filed on March 12, 2008 on  SEDAR and is available at www.sedar.com.   The  2008 exploration program consisted of 11,809 meters of drilling in 60 holes,  investigation of the potentially mined-out area, limited metallurgical  testing, hydro-geological, geotechnical and environmental studies. Assay  results for all holes were released and are available at the Company's  website. Following the completion of the drill program, an updated resource  estimate was completed and an exploration report was initiated for National  (China) permitting requirements in 2009. These studies will be combined and  would be used as the basis for completing any future independent Preliminary  Economic Assessment (PEA) on the project.   In  March 25, 2009, the Company reported an updated NI 43-101 resource estimate  for the Changkeng project based on the 2008 exploration program results and  calculated on the distinct and separate gold dominant and silver dominant  zones was completed by P&E Mining Consultants Inc. of Brampton, Ontario.  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. The updated NI 43-101  resource estimate technical report has been filed on March 2009 on SEDAR and  is available at www.sedar.com. 9    The  Company is currently working on the National Exploration Report for submission  to MOLAR.   Gansu  Longnan Properties   Minco  Gold's wholly-owned subsidiary, Minco China, at present holds 12 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:   Yangshan:  includes five exploration permits located in the northeast extension of the  Yangshan gold belt and its adjacent area; potential for gold.   Yejiaba:  includes four exploration permits along a regional structural belt parallel to  the Yangshan gold belt; potential for gold and poly-metallic mineralization  (silver-iron-lead-zinc).   Xicheng  East: includes three exploration permits to the east extension of the famous  Xicheng Pb-Zn mineralization belt; potential for gold, silver, lead and zinc.   All  of these 12 exploration permits are located over regional geochemical gold  anomalies with host rocks and significant structure trends similar to that at  Anba and other gold deposits in the region.   Exploration  in 2008   2008  Regional Target Generation for Yangshan and Yejiaba   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 alteration zone was identified and 54  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. Grab 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 over 1.0 m.   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. 10 5.Realgar          Occurrences, Weiziping Permit, and Yejiaba Sub-project: By talking          with local people, it is known that there has been a realgar mining          activity at the northern part of the Weiziping permit since ancient          time.   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 structural 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. Continuous  surface chip samples returned results 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 over a 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 Pbdominated  mineralization zone and deep potential of the zone should be further  evaluated.   1.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 pyritization. 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.   2.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. Sphalerite and galena, spotty          pyrite filled in some of these fissures. 14 channel samples were          collected and 4 samples contain 0.15% to 0.74% Pb, 0.14% to 2.14% Zn          over 1.0 m. 11  b)Sanhewan          Pb-Zn Occurrence: Sanhewan is the west extension of the Xiaodonggou          occurrence. A 2m-wide 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.   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.   Exploration  in 2009   Exploration  was resumed in March 2009, and through to December 31, 2009 it was focused on  the following areas:   Reconnaissance  traverses and trenching within Shajinba-Fujiawan structure in Yejiaba  subproject area.   Prospecting,  traversing and trenching in Yangshan sub-project area.   Traversing  and trenching in the Xicheng East area.   Xicheng  East   In  2009, verification of soil gold anomalies in Caopingshan area and trenching  resulted in identifying argillization and silicification zones in  metasandstone. Width of zones is from 1 to 5m, strike 315 to 330 deg., dip 65  degrees. Intensity of alteration is weak, pyrite and rare galena inclusions  present in altered rocks. The most significant concentrations were discovered  in the trench TC1-1 on the soil sampling line XIV (the westernmost one) - continuous trench samples returned 0.43 g/t Au over 4.0 metres. The assays  received for trenching samples in Caopingshan area confirm that soil anomalies  correspond with elevated gold concentrations in bedrock. Nine trenches in  total were completed in the vicinity of trench TC1-1, one of them intersected  a zone of weak silicification with inclusions of fine arsenopyrite, average  gold content is 0.33 g/t Au over 2.3 metres. No works were completed in this  area during the fourth quarter.   Yejiaba  area:   Reconnaissance  traversing within a major fault zone trending 60 deg. NE in Yejiaba area  discovered several mineralization showings (Shajinba zone, Yaoshang zone and  Fujiawan zone) which have high potential for gold. The overall structural  trend is 10.0 km long. The most significant results are as follows:   Shajinba  zone. In Shajinba area, a zone of argillization and carbonatization was  discovered near Shajinba village. Intensity of alteration is moderate, fine  pyrite inclusions and chalcosine present in the zone. True width of the zone  is not less than 5.0 meters; it appears to be concordant to hosting phyllite.  Another zone of silicification was found 1.0 km North. The zone coincides with  a minor fault and dykes of rhyolite, both striking 80 deg. Silicification is  represented by quartz veinlets 1.0 cm to 3.0 cm wide with inclusions of  pyrite, arsenopyrite and antimonite. Width of the silicification zone is  approximately 5.0 metres. The best grab samples taken from outcrops returned  0.26, 0.23 and 0.06 g/t Au with corresponding silver content of 155.0, 2.0 and  455.0 g/t. Several grab samples were taken 100 metres NE from this  intersection and two of them returned 37.0 g/t Ag and 833.0 g/t Ag. Most  significant result achieved in Shajinba zone in the third quarter and fourth  quarter is the discovery of poly-metallic mineralization associated with the  silver zone. 12    The  new zone is hosted by massive limestone and represented by massive lead  mineralization in the central part and veinlets of galena in contact zones.  Observed length of the mineralization is approximately 350.0 metres, width  varies from 5 metres to 25 metres. Trenching continued in the fourth quarter  which continued to intersect the silver - antimony iron rich poly-metallic  mineralization with spacing between trenches from 80 metres to 120 metres.   The  best surface channel samples results for the silver - iron - lead - zinc  rich poly metallic zone for 2009 are as follows:Sample          No.Width,          mAverage          GradeAlterationAg(g/t) Pb(%)Zn(%)Fe(%) YJB-09-2250      to2.3m89.000.270.01-Silicification          with limonite antimoniteYJB-09-2252      YJB-09-2269      to11.0m4.245.090.6529.5Silicification          with hematite, pyrolusiteYJB-09-2279      YJB-09-24301.1m71.00.140.004-SilicificationYJB-09-2487      to8.0m102.80.150.1726.1Silicification          with hematite, pyrolusiteYJB-09-2494      YJB-09-2561      to3.0m117.90.550.1831.5Silicification          with hematite, pyrolusiteYJB-09-2563      YJB-09-2585      to5.0m100.21.250.1146.6Silicification          with hematite, pyrolusiteYJB-09-2589      YJB-09-2631      to2.0m169.71.150.3241.5Silicification          with hematite, pyrolusiteYJB-09-2632         Yaoshang  zone. One grab sample taken from silicified phyllite in early April returned  0.5 g/t Au, 12 g/t Ag and 0.13% Pb. Trenching in the area exposed a tectonic  block of phyllite in limestone with numerous dykes of rhyolite. Width of the  block is 100 metres. Both the phyllite and rhyolite are silicified. Two  intervals 5.0 m and 6.0 metres long with gold content from 0.11 g/t to 0.64  g/t were discovered in silicified rhyolite. No works were completed in the  zone in the fourth quarter.   -             Fujiawan  zone. Two trenches 40m and 21m long were completed in the zone. One of them  exposed strong argillization and silicification in a dyke of rhyolite. The  best results are 2.0 g/t Au over 2.0 metres and 1.46 g/t Au over 3.0 metres..  No works were completed on the zone in the fourth quarter. 
-            In  the western most part of the property as channel sample was taken across a  north-south trending hydrothermally altered structure and it returned a result  that averaged 2.66 g/t Au and 322 g/t Ag over 0.8 metres. 
 13    Yangshan  area   In  2009, traversing in Yangshan area resulted in discovery of gold mineralization  in Oujiaba-Dianziping area. The discovery has been traced for approximately 6  kilometres and has the same host lithologies as the Anba gold deposit.   Continuous  channel samples were taken in 4 places along the 6 kilometres mineralized  structure and returned averaged gold results of: Line          01.18g/t          Au over 4.7 metres Line          40013.2          g/t Au over 10.0 metres Line          4960.33          g/t Au over 4.0 metres Line          6080.60g/t          Au over 1.5 metres   The  gold enriched, hydrothermally altered structural trend has been discovered  during the 2009 exploration program which consisted of traversing and  trenching. The mineralization has a width ranging from 5 to 10 metres and is  hosted along the contact of hanging wall limestone and heavily folded footwall  phyllite which is intruded by numerous intrusive dykes. Numerous grab samples  taken from outcrop along the structure returned 0.5g/t to 27.9g/t Au.   The  Oujiaba property, located 25 kilometres east of the Anba gold deposit, is part  of the Company's 100% owned Longnan Project which is located within the  Yangshan Gold Belt.   Gobi  Gold Project   Minco  Gold has a 65% interest in the Damo JV.   In  2008 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. 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. The widespread,  extremely high gold values in the previously completed geochemical surveys  resulted in the discovery of sporadically distributed high-grade silicified  veins of less than 1cm to 5cm in width at surface. The exploration potential  and economic significance of the northeast extension will rely on the  favorable structural preparation to increase the density of the high-grade  veinlets at depth. Reprocessing of all the available raw data from previous IP  programs will be arranged to further delineate and define any potential  targets.   There  was no work conducted in 2009 and a buyer is being sought.   BYC  Gold Project   The  Company made the decision to sell its interest in HYMK as the Company believes  that the potential for a significant discovery is limited. On July 18, 2008,  the Company agreed to transfer its interest in the HYMK JV to Long Da Fu  (Beijing) Investment Co. Ltd. for a total of RMB 7.0 million (approximately  $1.2 million).The transaction was completed in October 2008 and the final  installment on the sale proceeds received subsequent to year end 2008. 14    Xiaoshan  Project   The  Xiaoshan project consists of two exploration permits, the 17.1km2  Huluyu permit and the 12km2  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. Tectonically, the Xiaoshan  project area sits at the Xiaoshan uplift block on the southern rim of the  North China. The area also forms part of east section of the E-W trending  Qinling metallogenic belt. Host rock of gold and silver mineralization is  mainly composed of interbedded chlorite-albite schist, sericite-quartz-albite  schist, plagioclase-amphibole schist, and biotite-plagioclase gneiss.   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 Gold's target model of  high grade Ag-Pb-Zn with associated Au. Therefore, Minco Gold 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.   The  Company has sold the property in 2009.   Gold  Bull Mountain Gold Project   The  Company established a subsidiary company, Yuanling Minco for the purpose of  initiating its exploration and mining activities in the major gold-producing  areas in the West and Southwest Hunan province. 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 paid a total of RMB 2,546,652 (approximately  $358,500), which included a mining licence transfer fee of RMB 1,000,000  (approximately $143,000), an environmental protection fee of RMB 740,000  (approximately $104,000) and other related costs.   During  the first five months in 2008, 456m of underground drifting was completed at  Levels 87 and 47 to explore the gold zones defined in the upper level. Some  un-continuous gold mineralization zones were intersected in tunnels at Level  87. Average gold grade in these veins ranges 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 exploration program at GBM in June 2008.   The  Company is currently exploring the possibility of selling Yuanling Minco.   The  Company is currently renewing the permits and evaluations to keep the permits  in good standing for potential future sale.   Liquidity  and Capital Resources   The  Company does not generate revenues from operations. The Company relies on  equity financing for its working capital requirements to fund its exploration,  investment, permitting and administrative activities. The Company depends on a  combination of its current on hand resources; its ability to raise capital,  its ability to work with its minority partners and other joint venture  partners; and its ability to manage the timing of exploration expenses, to  complete its planned exploration business plan and support the basic  operations expenses 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. 15    Cash  Flow   Operating  Activities   For  the year ended December 31, 2009, the Company used $5 million to support its  continuing operating activities. (2008 - $7.5 million). The full year net loss  was $0.2 million (2008 - $13.3 million) with the fourth quarter being $2  million (2008 - $1. million). Current year operating loss before gain on  discontinued operations was $0.8 million (2008 - loss of $14.1 million). This  level of expenditure activity is consistent with the Company's goal of  exploration activity and acquisition opportunities. Cash provided by  discontinued operations was $0.6 million (2008 -$0.2 million).   Financing  Activities   For  the full year ended December 31, 2009, the Company generated cash from  proceeds on issuance of shares $4.5 million (2008 - $0.05 million).   Investing  Activities   The  Company purchased $1.6 million (2008 - sold $5.1 million) in short term  investment securities to shore up its cash to support future exploration  activities, Cash provided by investing activities of discontinued operation  activities was $44,871 (2008 - $288).   Available  Resources   The  Company's cash and short-term investment balance at December 31, 2009  amounted to $6 million (2008 - $3.5 million).   Accounts  Payable and Accrued Liabilities   During  the year, the Mingzhong partners contributed RMB 30.0 million ($5.53 million)  to Mingzhong as shareholder loans. Of the five partners, the Company  contributed RMB 15.3 million ($2.82 million) with the minority partners  contributing 14.7 million ($2.71 million). The funds were used to make the  installment on the Changkeng Exploration permit RMB 19 million ($2.94 million)  and for exploration and operating activities RMB 11 million ($1.7 million).   On  May 20, 2009, the loan of RMB 30.0 million ($5.53 million) was converted to  share capital of Mingzhong. Accordingly, $2,493,427 was reclassified to  minority interests and the translation difference is recognized in the  earnings. 16    Investment  in Minco Silver Corporation   As  at December 31, 2009 the Company owns 13,000,000 common shares of Minco Silver  (2008 - 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.   The  Company has not participated in the share offering of Minco Silver and as a  result of dilution and sale of 1,000,000 shares in 2007, its ownership  interest has decreased to 32.01% as at December 31, 2009.   The  Company is exposed to the transactions undertaken by Minco Silver through its  equity accounting for the Company's investment in Minco Silver.   Dilution  gains and equity losses on the investment in Minco Silver as follows:  2009  2008  2007 Dilution          gain in Minco Silver $3,479,000  $1,544,454  $191,000 Equity          loss of Minco Silver Corporation $(1,659,280) $(948,750) $(3,239,898)Income          (loss) from investment in Minco Silver $1,819,720  $595,704  $(3,048,898)   The  carrying value and market value of the Minco Silver shares held by the Company  and accounted for using the equity basis, are as follow:     December          31, 2009  December          31, 2008  December          31, 2007 Investment          in Minco Silver Corporation on an equity basis $5,494,836  $3,675,116  $3,079,412 Market          value of Minco Silver shares $24,050,000  $18,460,000  $38,740,000    As  at December 31, 2009 the closing share price for Minco Silver's shares on  the Toronto Stock Exchange was $1.85 (2008 - $1.42).   As  at December 31, 2009, Minco Silver had current assets of $11,526,006,  non-current assets 17,494,393 (including $9,000,902 in capitalized mineral  interest costs), current liabilities of $2,405,152 and shareholders equity of  $26,615,247. Minco Silver incurred exploration costs of $1,413,008,  administration costs of $3,274,557 and a loss of $4,246,398 during the year  ended December 31, 2009.   As  at 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.   Minco  Silver had capitalized $9.0 million (2008 - $5.3 million) of development costs  and Minco Gold's equity share of this amount is $3.5 million.   Off-Balance  Sheet Arrangements   The  Company does not have any off-balance sheet arrangements. 17    Outlook   In  2010, the Company will continue to focus on exploration programs on the  Longnan and Changkeng projects. Aggressive exploration programs will be  conducted to follow up the discoveries made on Oujiaba property and Yejiaba  property. The Company will continue to sell its non-core projects in China to  generate capital for the Company's exploration efforts. In addition, the  Company will continue to seek advanced gold projects for acquisition.   Share  Capital   As  at the date of this MD&A, the Company has 48,157,782 common shares and  5,662,101 stock options outstanding, for a total of 53,819,883 fully diluted  common shares outstanding.   Contractual  Obligations and Contingencies   (a)  The Company has commitments in respect of office leases requiring minimum  payments of $792,148 as follows:    2010 $115,490 2011  128,911 2012  151,850 2013  165,710 2014  172,640 2015  57,547        $792,148    The  Company has entered into sub-lease agreements for a portion of its leased  premises. 18    Transactions  with Related Parties   The  Company earned the rental income and incurred the following fees to its  directors or corporations controlled by its directors:  2009  2008  2007 Rental            Income $75,547  $68,100  $58,761           2009   2008   2007 Exploration            costs $59,813  $85,937  $80,625 Management            fees  37,927   42,135   17,344 Property            investigation  2,979   6,979   21,094 Investor            relations  9,281   8,177   - Director's            fees  49,000   48,000   62,500   $159,000  $191,228  $181,563    Receivables  of $Nil (2008 - $166,872) are due from four companies related by two common  directors.   At  December 31, 2009, the Company has $2,109,285 due from Minco Silver (2008 - $1,246,282) 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.   At  December 31, 2009, the Company has $120,576 (2008 - $506,569) 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.   Critical  Accounting Estimates   The  preparation of the Company's consolidated 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.   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. 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.   The  Company is required to make estimates of future production costs, future gold  commodity pricing, and currency exchange fluctuations in the process of  testing the impairment of its assets. In testing the impairment of its mineral  interests the Company is evaluating its resources and extended determination  of gold reserves which requires a number of assumptions and estimations,  including geological sampling and modeling as well as estimates of future gold  prices and future production costs. Estimates of the resources and ultimately  the estimates of reserves may change based on additional information obtained  subsequent to the assessment date. This may include data obtained from  exploration drilling, significant changes in the price of gold and changes in  estimates of the cost of production. A change in the estimate of reserves  could result in a change in the rate of depletion, development amortization,  or impairment of the resources, resulting in a write down. 19    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 operation.   Business  Environment and Risks   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 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:   Cash  and cash equivalents - 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, 2009 the balance of $ 3,508,917 was placed with three institutions.   Short  term investments - are investment grade bonds and guaranteed investment  certificates with maturities of greater than 90 days when acquired. At  December 31, 2009, these totaled $2.5 million and were placed with one  institution. The yields on these investments were 0.65% to 0.80%.   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, 2009, the Company has positive working  capital of approximately $2.87 million and therefore has sufficient funds to  meet its current operating and exploration obligations. However, the Company  will require significant additional funds in the future to complete its plan.   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 10% strength in  the Canadian dollar against the Chinese RMB will have a before tax effect of a  $253,676 gain on the financial results. 20    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. A1% increase in the interest  rate in Canada will have a net (before tax) income effect of $24,759, assuming  the foreign exchange rate remains constant.   Initial  Adoption of Accounting Policies   On  January 1, 2009, the Company adopted three new standards that were issued by  the Canadian Institute of Chartered Accountants:   Goodwill  and Intangible Assets   Effective  from 1 January 2009, the Company adopted the recommendations included in  Section 3064, "Goodwill and Intangible Assets," of the CICA Handbook,  which replaced CICA Section 3062, "Goodwill and Other intangible Assets".  The adoption of this Section had no material impact on the Company's  financial statements.   Credit  Risk and the Fair Value of Financial Assets and Financial Liabilities   Effective  from 1 January 2009, the Company adopted the EIC 173, "Credit Risk and the  Fair Value of Financial Assets and Financial Liabilities". This guidance  clarified that an entity's own credit risk and the credit risk of the  counterparty should be taken into account in determining the fair value of  financial assets and financial liabilities including derivative instruments.  The adoption of this Section had no material impact on the Company's  financial statements.   Mining  Exploration Costs   Effective  March 27, 2009, the Company adopted the EIC 174, "Mining Exploration Costs".  This standard provides guidance on the capitalization of exploration costs  related to mining properties, in particular, and on impairment of long-lived  assets. The adoption of this standard did not have a significant impact on the  Company's financial statements.   Recent  Accounting Pronouncements   International  Financial Reporting Standards ("IFRS")   The  Canadian Accounting Standards Board ("AcSB") has set January 1, 2011 as  the date for publicly listed companies to adopt IFRS, replacing Canadian GAAP.  Accordingly, IFRS compliant financial statements will be required for the  first quarter of 2011. Comparative figures presented in these financial  statements are also required to comply with IFRS.   In  January 2010, the Company initiated an IFRS diagnostic study to assess the  impact of the transition to IFRS. A number of key accounting areas where IFRS  differs and accounting alternatives were to be reviewed. The Company has  planned to start the process to make a determination of the impact of  transition to IFRS on its financial statements and systems, if any, during the  first half of 2010. The second phase of the conversion plan will include  detailed assessments and technical analysis that will result in understanding  potential impacts, decision on accounting policy choices and the drafting of  accounting polices. The Company expects this phase to be completed in the  first half of 2010. The final phase of implementation and transitioning to  IFRS is being planned for 2010. 21    At  this time, the comprehensive impact of the changeover on the Company's  future financial position and results of operations is not yet determinable.  The Company continues to monitor and assess the impact of evolving differences  between IFRS and Canadian GAAP, since the International Accounting Standards  Board is expected to continue issuing new accounting standards during the  transition period. As a result, the final impact of IFRS on the Company's  financial statements can only be measured once all the applicable IFRS at the  conversion date are known.   Section  1582, Business Combinations, 1601, Consolidations and 1602, Non-controlling  interests   In  January 2009, the CICA issued three 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 non-controlling interests. These new standards will apply to  fiscal years beginning on or after January 1, 2011. These Sections will not  have an impact on the Company's financial statements unless the Company  enters into a business combination subsequent to January 1, 2011.   Internal  Controls over Financial Reporting   There  has been no significant change in the Company's internal control over  financial reporting during the year 2009 that has materially affected, or is  reasonably likely to materially affect, the Company's internal control 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.   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  evaluated the internal control over financial reporting based on the criteria  established by the Committee of Sponsoring Organizations of the Treadway  Commission (COSO) in Internal Control-Integrated Framework and identified some  material weakness in the financial reporting process as of December 31, 2009.  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). 22    Management  has concluded that the Company will be able to mitigate the above weaknesses  by: a)the          nature and present level of activities and transactions within the          Company being readily transparent; b)the          review of the Company's financial statements by senior management          and the board of directors; and, c)active          participation of senior management in monitoring financial reporting.   Subsequent  Event   Subsequent  to the year end, the Company has received the amounts due from Minco Silver  totaling approximately $1,395,553.   Cautionary  Statement on Forward-Looking Information   This  MD&A, which contains certain forward-looking statements, are intended to  provide readers with a reasonable basis for assessing the financial  performance of the Company. All statements, other than statements of  historical fact, are forward-looking statements. The words "believe", "expect",  "anticipate", "contemplate", "target", "plan", "intends", "continue", "budget",  "estimate", "may", "will", "schedule"  and similar expressions identify forward looking statements. Forward-looking  statements are necessarily based upon a number of estimates and assumptions  that, while considered reasonable by the Company, are inherently subject to  significant business, economic and competitive uncertainties and  contingencies. Known and unknown factors could cause actual results to differ  materially from those projected in the forward-looking statements. Such  factors include, but are not limited to, fluctuations in the currency markets  such as Canadian dollar, Chinese RMB and U.S. dollar, fluctuations in the  prices of gold, silver and other commodities, changes in government  legislation, taxation, controls, regulations and political or economic  developments in Canada, the United States, or China or other countries in  which the Company carries or may carry on business in the future, risks  associated with mining or development activities, the speculative nature of  exploration and development, including the risk of obtaining necessary  licenses and permits, and quantities or grades of reserves. Many of these  uncertainties and contingencies can affect the Company's actual results and  could cause actual results to differ materially from those expressed or  implied in any forward-looking statements made by, or on behalf of, the  Company.   Readers  are cautioned that forward-looking statements are not guarantees of future  performance. There can be no assurance that such statements will prove to be  accurate and actual results and future events could differ materially from  those acknowledged in such statements. Specific reference is made to the  Company's most recent Annual Information Form on file with Canadian  provincial securities regulatory authorities for a discussion of some of the  factors underlying forward-looking statements.   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, except to the extent required by applicable laws.Dr.  Ken CaiMarch  29, 2010 23 MINCO  GOLD CORPORATION   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITIONAND  RESULTS OF OPERATIONSFOR  THE YEAR ENDED DECEMBER 31, 2010   This  management's discussion and analysis ("MD&A") of the operating  results and financial position of Minco Gold Corporation and its subsidiaries  ("Minco Gold" or "the Company") is for the year ended December 31,  2010 compared with the year ended December 31, 2009. Together with the  consolidated financial statements and related notes, the MD&A provides a  detailed account and analysis of the Company's financial and operating  performance for the year. The Company's functional and reporting currency is  the Canadian dollar. This MD&A is current to March 30, 2010 and should  also be read in conjunction with the Company's Annual Information Form and  other corporate filings available at www.sedar.com ("SEDAR").   Management  is responsible for the consolidated financial statements referred to in this  MD&A, and provides officers disclosure certifications filed with  securities commissions on SEDAR. The audit committee reviews the consolidated  financial statements and MD&A, and recommends approval to the Company's  Board of Directors.   The  MD&A should be read in conjunction with the consolidated financial  statements of the Company and related notes, which have been prepared in  accordance with Canadian generally accepted accounting principles ("GAAP").  Refer to Note 2 of the December 31, 2010 and 2009 audited consolidated  financial statements for disclosure of the Company's significant accounting  policies.   As  at December 31, 2010, the Company had 49,514,882 common shares outstanding. As  at March 30, 2011, the Company has 50,243,315 common shares outstanding.   Company  Overview   Minco  Gold Corporation (the "Minco Gold" or the "Company") (TSX: MMM/NYSE  Amex: MGH/FSE: MI5) 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.   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.   Companies   The  Company has interests in properties through direct and indirect ownership  (through wholly owned subsidiaries and through joint ventures and business  combinations) as follows:   Wholly-owned  subsidiaries - Minco Mining (China) Corporation ("Minco China"), Yuanling  Minco Mining Ltd. ("Yuanling Minco"), Huaihua Tiancheng Mining Ltd. ("Huaihua  Tiancheng") and Triple Eight Mineral Corporation ("Temco")..   Less  than Wholly-owned subsidiaries - the Company has equity interests in the  following projects and joint ventures:   51%          of a joint venture company formed and known as Guangzhou Mingzhong          Mining Co., Ltd. (the "Mingzhong JV"),- holding company for the          Changkeng Gold project and the Changkeng Exploration Permit; 1 Equity          interests - as at December 31, 2010, the Company's ownership of          Minco Silver Corporation ("Minco Silver") was 26.2%.   Highlights  for the year ended December 31, 2010   For  the year ended December 31, 2010:  1.Recorded          a net loss of $0.5 million or a loss per share of $0.01 (2009 - a          loss of $0.2 million or a loss per share of $0.00). The Company          recorded a loss from continuing operations of $2.1 million or a loss          per share of $0.04 (2009 - a loss of $0.8 million or a loss per          share of $0.02) which reflects the Company's focus on continued          exploration and acquisition activities.  2.In          2010, the Company has been working on the National Exploration Report          for submission to the Ministry of Land and Resources ("MOLAR") and          on the maintenance for Changkeng exploration permit.  3.In          the Longnan region, the Company was mobilized to the field in March          2010 to follow-up the positive results that were discovered on the          Qujiaba and Yejiaba target areas. The Company had employed geophysical          company and an experienced Nevada geologist to assist in progressing          both of the target areas. Planned works included detailed mapping,          trenching, soil geochemical surveys, geophysical surveys which were          all included and used to help define drill targets.  4.Minco          Gold elected to sell its interest in the Inner Mongolia Damo Mininig          Co. Ltd (Damo). On May 24, 2010, the Company entered into a sale          agreement to dispose of its interet in Damo. After completion of all          legal requirement and approvals, the Company relinquished all          managerial involvement and control to the purchaser on September 30,          2010. Net proceeds on disposal were RMB 10.75 million (approximately          $1.67 million) which represents the difference between the gross          proceeds of RMB 13.5 million (approximately $2.10 million) and a          commission of RMB 2.75 million (approximately $0.43 million) paid to a          third party for consulting services related to the disposition.  5.In          December 2010, Minco China entered into a Joint Venture Agreement (the          "JV Agreement") with the 208 Exploration Team (the "208 Team"),          a subsidiary of China National Nuclear Corporation (the "CNNC"),          to acquire a 51% equity interest in the Tugurige Gold Project located          in Inner Mongolia, China.   Under          the terms of the JV Agreement, the 208 Team will set up a new entity          (the "JV Co") and transfer its 100% interest in the Tugurige Gold          Project into the JV Co, Minco China has the right to contribute a          total of RMB 250 million (approximately $37 million) (the "Earn-In          Amount") to earn a 51% equity interest in the JV Co, with RMB 180          million (approximately $27 million) to be contributed upon completion          of the JV Agreement. The Earn-In Amount is subject to an independent          evaluation of the value of the Tugurige Project.   To          secure the project, Minco China has provided RMB 60 million          (approximately $9 million) in the form of a secured short term loan to          the Tugurige Gold Mine. The loan matured on March 24, 2011 and was          repaid subsequently on March 25, 2011 with full interest. The loan is          secured by all the assets of the mine and is also guaranteed by the          208 Team. Minco China has the right to convert the loan into its          contribution to the Earn-In Amount upon appropriate approvals          obtained.   The          JV Agreement is subject to the approvals of various Chinese government          agencies. The Company will pay a finder's fee to a non-arm's          length third party upon all approval obtained and successful          conclusion of the transaction  6.In          connection to Minco China's loan of RMB 60 million (approximately $9          million) to the Tugurige Gold Mine described above, Minco Gold and          Minco Based Metals Corporation ("MBM") entered into an agreement          where Minco Gold borrowed $7,561,779 million (RMB 50 million) on          December 22, 2010. The loan is repayable in full on or before June 30,          2011 and bears interest at the rate of 10% per annum, calculated and          compounded monthly. The loan is secured by 3 million Minco Silver          shares held by Minco Gold. Minco China subsequently received RMB 50          million from Beijing Zhongjia Kailong Technology Development Co., Ltd.          ("Zhongjia"), the trustee of MBM's cash in China. Zhongjia is          related to Minco China in that they share some of the same senior          management team.). 2    Selected  Annual Information   The  following table summarizes selected financial information for the most recent  three years ended December 31.     2010 2009 2008Total          revenue - - -Loss          before discontinued operations $(2,120,074) $(815,908) $(13,762,921)Net          loss $(512,773) $(200,900) $(13,264,305)Loss          per share from continuing operations - basic and diluted $(0.04) $(0.02) $(0.31)Loss          per share - basic and diluted $(0.01) $(0.00) $(0.31)Total          assets $23,860,155 $14,595,566 $10,558,425Total          long-term financial liabilities - - -Cash          dividends declared per share for each class of share - - -          Results  of Operations   Exploration  Costs   For  the years ended December 31, 2010 and 2009   Exploration  costs, net of exploration cost recoveries, for the year ended December 31,  2010 were $1.5 million compared to $0.3 million in the comparative year in  2009. The increase was due to the increase exploration activities for the  Longnan project and $Nil recovery of exploration costs for the Changkeng  Silver mineralization (2009 - $1.4 million).   For  the three months ended December 31, 2010 exploration costs totaled $0.6  million (2009 - $0.4 million).   Pursuant  to the terms of the agreement on Changkeng Silver mineralization, the Company  has assigned its right to earn 51% interest on Changkeng Silver mineralization  to Minco Silver. As a result of the assignment, Minco Silver is responsible  for 51% of the costs in relation to the Changkeng Silver mineralization.   In  2009, the Company and Minco Silver entered into an agreement and agreed Minco  Silver will share and pay 30% of the Company's 51% of the cost of the permit  for the Changkeng Silver mineralization. Accordingly, in the year ended  December 31, 2010, the Company recorded a receivable due from Minco Silver of  $Nil (2009 - $1.2 million) for the year.   For  the years ended December 31, 2009 and 2008   Exploration  costs including exploration permit purchases for the year ended December 31,  2009 totaled $0.3 million (2008 - $10.2 million) and for the three months  ended December 31, 2009 totaled $0.4 million (2008 - $1.7 million).   The  decrease in exploration costs was due to the recovery of exploration costs of  $ 1.4 million for the Changkeng Silver mineralization and lower exploration  activities. 3    The  following is a summary of exploration costs incurred by the Company.Year          ended December 31,  2010  2009  2008 Gansu          - Longnan $1,330,745 $1,336,083 $1,414,127 Inner          Mongolia  - Gobi Gold*  -  6,450  96,739 Guangdong          - Changkeng  135,727  (1,090,981) 8,351,719 Hunan          - Gold Bull Mountain  1,169  4,137  98,948 Henan          Zhongjia - Xiaoshan*  -  -  57,953 Total $1,467,641 $255,689 $10,019,486                *  Projects disposed of             The  following table summarizes the key operating results for the years ended  December 31, 2010, 2009 and 2008.       2010   2009   2008 Exploration          Permit costs (recoveries)  $-  $(1,205,298) $6,611,918 Exploration          costs   1,467,641   1,460,987   3,407,568 Administrative          expenses   2,469,869   2,526,087   4,608,523 Operating          loss   (3,937,510)  (2,781,776)  (14,628,009)Unrealized          gain (loss) on marketable securities   (10,500)  23,100   (75,600)Write          down of mineral interests   -   -   (358,500)Gain          on sale of exploration permits   -   -   425,632 Interest          and other income   147,755   123,048   363,201 Loss          for the year before discontinued operations, non-controlling interest,          tax expenses, loss from equity investment and dilution gain   (3,800,255)  (2,635,628)  (14,273,276)Dilution          gain   2,845,000   3,479,000   1,544,454 Share          of loss from equity investment in Minco Silver   (1,214,470)  (1,659,280)  (948,750)Tax          expenses   -   -   (85,349)Non-controlling          interest   49,651   -   - Loss          for the year from continuing operations   (2,120,074)  (815,908)  (13,762,921)Income          from discontinued operations   1,607,301   615,008   498,616 Loss          for the year  $(512,773) $(200,900) $(13,264,305)Basic          and diluted loss per share  $(0.01) $(0.00) $(0.31)Weighted          average number of shares outstanding   48,582,347   43,148,525   42,970,813  4    Summary  of Quarterly Results   The  following table summarizes selected financial information for the eight most  recently completed quarters:  2010  2009    Q4   Q3   Q2   Q1   Q4   Q3   Q2   Q1 Exploration          costs $577,506  $309,488  $367,524  $213,123  $372,332  $(978,995) $289,050  $573,302 Administrative          expenses  751,001   627,408   653,435   552,788   747,980   703,231   837,666   705,771 Foreign          exchange (gain) loss  57,834   (204,162)  (75,511)  107,076   (594,057)  110,606   82,231   (67,341)Operating          income (loss)  (1,386,341)  (732,734)  (945,448)  (872,987)  (526,255)  165,158   (1,208,947)  (1,211,732)Other          income  61,817   35,640   17,086   22,712   1,536   90,184   26,845   27,583 Income          (loss) for the period before discontinued operations, non-controlling          interest, loss from equity investment and dilution gain  (1,324,524)  (697,094)  (928,362)  (850,275)  (524,719)  255,342   (1,182,102)  (1,184,149)Dilution          gain  1,891,000   193,000   739,000   22,000   3,361,154   965   116,881   - Share          of gain (loss) from equity investment in Minco Silver  (524,824)  (456,987)  225,626   (458,285)  (277,786)  (742,483)  (506,188)  (132,823)Non-controlling          interest  4,738   15,192   15,382   14,339   -   -   -   - Income          (loss) from continuing operations  46,390   (945,889)  51,646   (1,272,221)  2,558,649   (486,176)  (1,571,409)  (1,316,972)Income          (loss) from discontinued operations  -   (110,606)  1,717,907   -   (1,583)  43,708   577,451   (4,568)Net          income (loss) for the period $46,390  $(1,056,495) $1,769,553  $(1,272,221) $2,557,066  $(442,468) $(993,958) $(1,321,540)Basic          and diluted income (loss) per share  0.00  $(0.02) $0.04  $(0.03) $0.05  $(0.01) $(0.02) $(0.03)Weighted          average number of shares outstanding  48,967,175   48,561,351   48,436,115   48,321,430   46,952,731   43,011,106   43,005,551   42,989,051    Administrative  Expenses   For  the years and periods ended December 31, 2010 and 2009   The  Company's administrative expenses include overhead associated with  administering and financing the Company's exploration activities. For the  year ended December 31, 2010, the Company incurred a total of $2.5 million  (2009 - $2.5 million) in administrative expenses. In the three-month period  ended December 31, 2009, the Company spent a total of $0.8 million on  administrative expenses (2009 - $0.7 million).   Significant  changes in expenses are as follows:    -  
The          Company recorded a foreign exchange gain of $0.11 million for the full          year ended December 31, 2010 (2009 - $0.47 million) and for the          three month period ended December 31, 2010, a foreign exchange loss of          $0.06 million (2009 - gain of $0.6 million).   -  
The          Company incurred investor relations expense of $0.3 million for the          year ended December 31, 2010 (2009 - $0.1 million) and in the current          quarter $0.1 million (2009 - $0.01 million). The increase is mainly          due to the increase of investor activities including increased          attendance at advertising and promotional events in 2010.   -  
Consulting          fees for the year ended 2010 were $0.1 million (2009 - $0.3 million).          For the three month period ended December 31, 2010, consulting fees          were $0.06 million (2009 - $0.1 million). The decrease is mainly a          result of decreased use of consultants. 5  -  
Property          investigation expenses for the year ended 2010 were $0.2 million (2009          - 0.1 million). For the three month period ended December 31, 2010,          property investigation expenses were $0.09 million (2009 - $0.05          million). This increase was due to the investigation of various          mineral properties.    -  
In          the year ended December 31, 2010, the Company granted 175,000 stock          options to its consultants at the price range from $0.93 to $1.24 per          share. The Company recorded stock based compensation expense of $0.5          million for the full year ended December 31, 2010 (2009 - $0.8          million) and during the three months ended December 31, 2010 $0.2          million (2009 - $0.06 million).   To  date the Company has been in the exploration stage and has not earned revenue  from operations. Income earned has been interest income, rental income and  sundry income.   Interest  income and other income   In  the year ended December 31, 2010, interest and other income were $0.14 million  (2009 - $0.12 million).   Sundry  income   In  the year ended December 31, 2010, sundry income was $Nil million (2009 - $0.01 million) recorded on debts forgiven.   Cash  and Short-term investment   As  at December 31, 2010, Cash and cash equivalents consisted of short term  deposits with a maturity term of seven days and can be renewed automatically.  The yields on the short term deposit was 1.7%   As  at December 31, 2010, short-term investments consisted of $0.3 million of  cashable guaranteed investment certificates with terms of greater than ninety  days but not greater than one year (2009 - $2.5 million).   Marketable  Securities   As  at December 31, 2010, the Company held 420,000 common shares (2009 - 420,000  common shares) of Nanika Resources Inc. ("Nanika"). The market value of  the shares was $0.03 million (2009 - $0.04 million).   For  the years and periods ended December 31, 2009 and 2008   The  Company's administrative expenses include overhead associated with  administering and financing the Company's exploration activities. For the  year ended December 31, 2009 the Company incurred a total of $3.0 million  (2008 - $3.7 million) administrative expenses, net of foreign exchange. In the  three-month period ended December 31, 2009, the Company spent a total of $0.7  million on administrative expenses (2008- $0.9 million) net of foreign  exchange.   Significant  changes in expenses are as follows:    -  
The          Company recorded a foreign exchange gain of $0.5 million for the full          year ended December 31, 2009 (2008 loss - $0.9 million) and for the          three month period ended December 31, 2009, a foreign exchange gain of          $0.6 million (2008 - $0.6 million). -  
The          Company incurred investor relations expense of $0.1 million for the          year ended December 31, 2009 (2008 - $0.4 million) and in the current          quarter $0.01 million (2008 - $0.02 million). The decrease reflects          management's efforts to reduce expenditures as they preserve cash          funds for exploration activities. -  
In          the year ended December 31, 2009, the Company granted stock options to          its consultants at the price range from $0.48 to $1.06 per share. The          Company recorded stock based compensation expense of $0.8 million for          the full year ended December 31, 2009 (2008 - $1.2 million) and during          the three months ended December 31, 2009 $0.06 million (2008 - $0.4          million). The decrease in stock based compensation over prior year is          due to the lower price at which the options were granted. 6    To  date the Company has been in the exploration stage and has not earned revenue  from operations. Income earned has been interest income, rental income and  sundry income.   Interest  income and other income   In  the year ended December 31, 2009, interest and other income were $0.12 million  (2008 - $0.21 million).   Sundry  income   In  the year ended December 31, 2009, sundry income was $0.01 million (2008 - $0.15) recorded on debts forgiven.   Short-term  investment   Short-term  investments consist of, cashable guaranteed investment certificates with terms  of greater than ninety days but not greater than one year, commercial notes  and marketable securities. As of December 31, 2009, the Company held $2.5  million (2008 - $0.9 million) in short-term investments.   Financial  Position   The  Company's total assets at December 31, 2010 increased to $23.9 million (2009  - $14.6 million) as the Company increased cash and short term investments  during 2010. In addition, the Company's equity investment in Minco Silver  has increased during 2010 due to dilution gains. At December 31, 2010, the  Company has cash and short term investments (and therefore liquid assets that  can easily be converted to cash) of $6.3 million (2009 - $6.0 million)  available for use in operations.   Properties   The  Company has interests in properties through direct and indirect ownership  (through wholly owned subsidiaries and through joint ventures and business  combinations) as follows:   -  
Wholly-owned          subsidiaries - Minco Mining (China) Corporation ("Minco China"),          Yuanling Minco Mining Ltd. ("Yuanling Minco"), Huaihua Tiancheng          Mining Ltd. ("Huaihua Tiancheng") and its interests in the          Longnanprojects, incorporated in the People's Republic of China and          Triple Eight Mineral Corporation ("Temco").   -  
Less          than Wholly-owned subsidiaries - the Company has contractual rights to          earn into the following projects and joint ventures:   -  
51%          of a joint venture company formed and known as Guangzhou Mingzhong          Mining Co., Ltd. (the "Mingzhong JV"), formerly "Mingzhong          Guangdong Minco-Jinli Mining Co. Ltd, (the "Jinli JV") - holding          company for the Changkeng Gold project and the Changkeng Exploration          Permit; and   -  
Equity          interests - during 2010, the Company's ownership decreased to          26.20% due to the exercise of options by Minco Silver option holders.   Changkeng  Gold Project   On  September 28, 2004, Minco Gold signed a 30-year joint venture contract with  four other companies in Guangdong for the exploration and development of the  Changkeng gold deposit in Gaoyao City of Guangdong province, China.   The  Company can now proceed with an exploration program on the Changkeng Gold  Project with the granting of the business license on March 30, 2007 and the  transfer of the Changkeng Exploration Permit on January 5, 2009.   In  2007, six infill holes with a total of 1,264 meters were drilled to meet the  minimum exploration expenditures required by the Chinese authorities. Assay  results for these six holes were released in March 2009 and are available at  the Company's website and at www.sedar.com.   On  March 12, 2008, the Company released a NI 43-101 compliant resource estimate  which contains an indicated resource of 2.1 million tonnes @ 5.61 grams per  tonne (g/t) gold (Au) for a total of 379,000 oz Au and an inferred resource of  2.2 million tonnes @ 4.82 g/t Au for a total of 333,400 oz Au. An updated NI  43-101 resouce estimate technical report has been filed on March 12, 2009 on  SEDAR and is available at www.sedar.com. 7          The  2008 exploration program consisted of 11,809 meters of drilling in 60 holes,  investigation of the potentially mined-out area, limited metallurgical  testing, hydro-geological, geotechnical and environmental studies. Assay  results for all holes were released and are available at the Company's  website. Following the completion of the drill program, an updated resource  estimate was completed and an exploration report was initiated for National  (China) permitting requirements in 2009. These studies will be combined and  would be used as the basis for completing any future independent Preliminary  Economic Assessment (PEA) on the project.   In  March 25, 2009, the Company reported an updated NI 43-101 resource estimate  for the Changkeng project based on the 2008 exploration program results and  calculated on the distinct and separate gold dominant and silver dominant  zones was completed by P&E Mining Consultants Inc. of Brampton, Ontario.  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. The updated NI 43-101  resource estimate technical report has been filed on March 2009 on SEDAR and  is available at www.sedar.com.   The  Company is currently working on the National Exploration Report for submission  to MOLAR and on the maintenance for Changkeng exploration permit.   Gansu  Longnan Properties   Minco  Gold's wholly-owned subsidiary, Minco China, presently holds 12 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:   Yangshan:  includes five exploration permits located in the northeast extension of the  Yangshan gold belt and its adjacent area; potential for gold.   Yejiaba:  includes four exploration permits along a regional structural belt parallel to  the Yangshan gold belt; potential for gold and poly-metallic mineralization  (silver-iron-lead-zinc).   Xicheng  East: includes three exploration permits to the east extension of the famous  Xicheng Pb-Zn mineralization belt; potential for gold, silver, lead and zinc.   All  of these 12 exploration permits are located over regional geochemical gold  anomalies with host rocks and significant structure trends similar to that at  Anba and other gold deposits in the region.   Exploration  in 2010 and 2009   Exploration  was resumed in March 2009, and through to December 31, 2010 it was focused on  the following areas:   Reconnaissance  traverses and trenching within Shajinba-Fujiawan structure in Yejiaba  sub-project area.   Prospecting,  traversing and trenching in Yangshan sub-project area.   Traversing  and trenching in the Xicheng East area. 8    Xicheng  East   In  2009, verification of soil gold anomalies in Caopingshan area and trenching  resulted in identifying argillization and silicification zones in  metasandstone. Width of zones is from 1 to 5m, strike 315 to 330 deg., dip 65  degrees. Intensity of alteration is weak, pyrite and rare galena inclusions  present in altered rocks. The most significant concentrations were discovered  in the trench TC1-1 on the soil sampling line XIV (the westernmost one) - continuous trench samples returned 0.43 g/t Au over 4.0 metres. The assays  received for trenching samples in Caopingshan area confirm that soil anomalies  correspond with elevated gold concentrations in bedrock. Nine trenches in  total were completed in the vicinity of trench TC1-1, one of them intersected  a zone of weak silicification with inclusions of fine arsenopyrite, average  gold content is 0.33 g/t Au over 2.3 metres. No works were completed in this  area during the fourth quarter.   Yejiaba  area:   Reconnaissance  traversing within a major fault zone trending 60 deg. NE in Yejiaba area  discovered several mineralization showings (Shajinba zone, Yaoshang zone and  Fujiawan zone) which have high potential for gold. The overall structural  trend is 10.0 km long. The most significant results are as follows:   Shajinba  zone. In Shajinba area, a zone of argillization and carbonatization was  discovered near Shajinba village. Intensity of alteration is moderate, fine  pyrite inclusions and chalcosine present in the zone. True width of the zone  is not less than 5.0 meters; it appears to be concordant to hosting phyllite.  Another zone of silicification was found 1.0 km north. The zone coincides with  a minor fault and dykes of rhyolite, both striking 80 deg. Silicification is  represented by quartz veinlets 1.0 cm to 3.0 cm wide with inclusions of  pyrite, arsenopyrite and antimonite. Width of the silicification zone is  approximately 5.0 metres. The best grab samples taken from outcrops returned  0.26, 0.23 and 0.06 g/t Au with corresponding silver content of 155.0, 2.0 and  455.0 g/t. Several grab samples were taken 100 metres NE from this  intersection and two of them returned 37.0 g/t Ag and 833.0 g/t Ag. Most  significant result achieved in Shajinba zone in the third quarter and fourth  quarter is the discovery of poly-metallic mineralization associated with the  silver zone. The new zone is hosted by massive limestone and represented by  massive lead mineralization in the central part and veinlets of galena in  contact zones. Observed length of the mineralization is approximately 350.0  metres, width varies from 5 metres to 25 metres. Trenching continued in the  fourth quarter which continued to intersect the silver - antimony iron rich  poly-metallic mineralization with spacing between trenches from 80 metres to  120 metres. 9    The  best surface channel samples results for the silver - iron - lead - zinc  rich poly metallic zone for 2009 are as follows:  Average          GradeAlteration  Ag(g/t)Pb(%)Zn(%)Fe(%) YJB-09-2250      to2.3m89.000.270.01-Silicification          with limonite antimoniteYJB-09-2252      YJB-09-2269      to11.0m4.245.090.6529.5Silicification          with hematite, pyrolusiteYJB-09-2279      YJB-09-24301.1m71.00.140.004-SilicificationYJB-09-2487      to8.0m102.80.150.1726.1Silicification          with hematite, pyrolusiteYJB-09-2494      YJB-09-2561      to3.0m117.90.550.1831.5Silicification          with hematite, pyrolusiteYJB-09-2563      YJB-09-2585      to5.0m100.21.250.1146.6Silicification          with hematite, pyrolusiteYJB-09-2589      YJB-09-2631      to2.0m169.71.150.3241.5Silicification          with hematite, pyrolusiteYJB-09-2632         Yaoshang  zone. One grab sample taken from silicified phyllite in early April returned  0.5 g/t Au, 12 g/t Ag and 0.13% Pb. Trenching in the area exposed a tectonic  block of phyllite in limestone with numerous dykes of rhyolite. Width of the  block is 100 metres. Both the phyllite and rhyolite are silicified. Two  intervals 5.0 m and 6.0 metres long with gold content from 0.11 g/t to 0.64  g/t were discovered in silicified rhyolite. No works were completed in the  zone in the fourth quarter.  -  
Fujiawan          zone. Two trenches 40m and 21m long were completed in the zone. One of          them exposed strong argillization and silicification in a dyke of          rhyolite. The best results are 2.0 g/t Au over 2.0 metres and 1.46 g/t          Au over 3.0 metres. No works were completed on the zone in the fourth          quarter. -  
In          the western most part of the property as channel sample was taken          across a north-south trending hydrothermally altered structure and it          returned a result that averaged 2.66 g/t Au and 322 g/t Ag over 0.8          metres.   Yangshan  area   In  2009, traversing in Yangshan area resulted in discovery of gold mineralization  in Oujiaba-Dianziping area. The discovery has been traced for approximately 6  kilometres and has the same host lithologies as the Anba gold deposit.   Continuous  channel samples were taken in 4 places along the 6 kilometres mineralized  structure and returned averaged gold results of:    -  
Line          01.18g/t          Au over 4.7 metres -  
Line          40013.2          g/t Au over 10.0 metres -  
Line          4960.33          g/t Au over 4.0 metres -  
Line          6080.60g/t          Au over 1.5 metres 10    The  gold enriched, hydrothermally altered structural trend has been discovered  during the 2010 exploration program which consisted of traversing and  trenching. The mineralization has a width ranging from 5 to 10 metres and is  hosted along the contact of hanging wall limestone and heavily folded footwall  phyllite which is intruded by numerous intrusive dykes. Numerous grab samples  taken from outcrop along the structure returned 0.5g/t to 27.9g/t Au.   The  Oujiaba property, located 25 kilometres east of the Anba gold deposit, is part  of the Company's 100% owned Longnan Project which is located within the  Yangshan Gold Belt.   Exploration  in 2010   Field  crews were mobilized to the field in March 2010 to follow-up the positive  results that were discovered on the Oujiaba and Yejiaba target areas. Minco  had a geophysical company and currently has an experienced Nevada geologist to  assist in progressing both of the target areas. Planned works include detailed  mapping, trenching, soil geochemical surveys, geophysical surveys which will  all be included and used to help define drill targets.   Yejiaba  Area:   At  the Shajinba target area, geological mapping, soil geochemical, ground  magnetic and IP surveys have been completed. Trenching is in progress. Altered  and mineralized boulders were discovered approximately 500 metres southeast of  the main mineralized zones that were identified in 2009. One grad sample  returned 31.55 g/t Au and 66.0 g/t Ag. The geochemical soil sampling  highlighted numerous gold anomalieds over an area of 700 metres long by 100  metres wide. The anomalies are open along strike to the east. Trenching in the  area revealed a 5 metre wide zone of silicification with arsenopyrite, galena  and stibnite. Mineralization is controlled by a regional thrust fault zone  dividing phyllite in the foot wall and conglomerate in the hanging wall.  Extensive trenching program is focused on the newly discovered zone. Channel  sampling from trenches returned gold values ranging from 0.12 to 5.58 g/t Au  over widths from 1.7 to 10.2 metres. The channel sample results are  highlighted as follows. -  
5.58          g/t Au over 4.7 metres. -  
3.56          g/t Au over 4.3 metres. -  
1.63          g/t Au over 2.0 metres.   Yangshan  Area:   Ground  magnetic survey has been completed at the Oujiaba target area. Extensive soil  sampling, geological mapping and sampling are in progress. Geochemical soil  and rock chip sampling revealed anomalies of gold and arsenic over zones of  regional faults. The anomalies are being tested with trenching.   Gobi  Gold Project   The  Company has sold the property in 2010.   Xiaoshan  Project   The  Company has sold the property in 2009.   Gold  Bull Mountain Gold Project   The  Company established a subsidiary company, Yuanling Minco for the purpose of  initiating its exploration and mining activities in the major gold-producing  areas in the West and Southwest Hunan province in 2006.   The  Company is currently exploring the possibility of selling Yuanling Minco and  in the process of renewing its mining license. 11    Liquidity  and Capital Resources   The  Company does not generate revenues from operations. The Company relies on  equity financing for its working capital requirements to fund its exploration,  investment, permitting and administrative activities. The Company depends on a  combination of its current on hand resources; its ability to raise capital,  its ability to work with its minority partners and other joint venture  partners; and its ability to manage the timing of exploration expenses, to  complete its planned exploration business plan and support the basic  operations expenses for the next 12 months.   Any  cash denominated in RMB that is maintained in the People's Republic of China  ("China"), where the remittance of funds to jurisdictions outside China is  subject to government rules and regulations on foreign currency controls. Such  remittance requires approvals by the relevant government authorities or  designated banks in China or both.   Cash  Flow   Operating  Activities   Year  ended December 31, 2010   The  comprehensive loss from continuing operations for the year ended December 31,  2010 was $2.1 million which mainly comprise of an equity loss on investment in  Minco Silver of $1.2 million, a dilution gain of $2.8 million, stock-based  compensation of $0.5 million and a $1.3 million decrease in amounts due from  Minco Silver to arrive at cash used in operating activities of continued  operations of $1.6 million compared to $2.4 million used in the comparative  year of 2009.   Three  months ended December 31, 2010   Comprehensive  loss from continuing operations for the three months ended December 31, 2010  was $0.05 million which was mainly offset by an equity loss on investment in  Minco Silver of $0.5 million, a dilution gain of $1.9 million, an increase in  amounts due from Minco Base Metals of $1.5 million and a decrease in amounts  due from Minco Silver of $1.3 million to arrive at cash used in operating  activities of continuing operations of $1.1 million compared to $0.3 million  cash generated in the comparative year of 2009.   Financing  Activities   Year  ended December 31, 2010   For  the year ended December 31, 2010, the Company received advances of $0.8  million from minority shareholders, proceeds of $1.0 million from the issuance  of shares and $7.6 million advanced from Minco Base Metals to arrive at cash  generated from financing activities from continuing operations of $9.4 million  compared to $4.5 million cash generated in 2009.   Three  months ended December 31, 2010   For  the three months ended December 31, 2010, the Company received proceeds of  $0.7 million from the issuance of shares and received $7.6 million advanced  from Minco Base Metals to arrive at cash used in financing activities from  continuing operations of $6.2 million compared to $4.5 million cash generated  in the comparative period of 2009.   Investing  Activities   Year  ended December 31, 2010   For  the year ended December 31, 2010, the Company used $7.0 million (2009 - $1.6  million) in investing activities from continuing operations. This was due to  proceeds received from the disposal of short-term investments of $2.2 million,  the issuance of a loan to Wuzhongqi Gurige Mining Corporation of $9.1 million  and the acquisition of $0.04 million in equipment. 12    Three  months ended December 31, 2010   For  the three months ended December 31, 2010, the Company used $3.1 million (2009  - $2.5 million) in investing activities from continuing operations. This was  due to proceeds received from the disposal of short-term investments of $6.0  million, the issuance of a loan to Wuzhongqi Gurige Mining Corporation of $9.1  million and the acquisition of $0.01 million in equipment.   Available  Resources   The  Company's cash and short-term investment balance at December 31, 2010  amounted to $6.3 million (2009 - $6.0 million).   Accounts  Payable and Accrued Liabilities   As  at December 31, 2010 the Company recorded RMB 29 million (approximately $4.4  million) as current liability in order to repay the remaining balance of  Chngkeng exploration permit which is owned by Guangzhou Mingzhong Mining Co.,  Ltd. ("Mingzhong").   In  2010, the Company entered into a loan agreement with MBM on December 22, 2010  to borrow a loan in the amount of RMB 50 million ($7.6 million) and agreed to  pledge the Minco Silver Shares as security. The loan will be repayable in full  on or before June 30, 2011 and bear interest at the rate of 10% per annum,  calculated and compounded monthly.   Investment  in Minco Silver Corporation   As  at December 31, 2010 the Company owns 13,000,000 common shares of Minco Silver  (2009 and 2008- 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.   The  Company has not participated in Minco Silver's private placement and  issuance of shares upon exercise of options and warrants and as a result, its  ownership interest has decreased to 26.20% at December 31, 2010.   The  Company is exposed to the transactions undertaken by Minco Silver through its  equity accounting for the Company's investment in Minco Silver.   Dilution  gains and equity losses on the investment in Minco Silver as follows:Year          ended December 31, 
2010
 

 

2009
 

 

2008 Dilution          gain in Minco Silver $2,845,000  $3,479,000  $1,544,454 Equity          loss of Minco Silver Corporation  (1,214,470)  (1,659,280)  (948,750)Income          from investment in Minco Silver $1,630,530  $1,819,720  $595,704    The  carrying value and market value of the Minco Silver shares held by the Company  and accounted for using the equity basis, are as follow:Year          ended December 31, 
2010  
2009
 

 

2008 Investment          in Minco Silver Corporation on an equity basis $7,125,366  $5,494,836  $3,675,116 Market          value of Minco Silver shares $82,550,000  $24,050,000  $18,460,000    As  at December 31, 2010 the closing share price for Minco Silver's shares on  the Toronto Stock Exchange was $6.35 (2009 - $1.85). 13    As  at December 31, 2010, Minco Silver had current assets of $29.9 million,  non-current assets of $13.6 million (including $ 13 million in capitalized  mineral interest costs), current liabilities of $1.4 million and shareholders'  equity of $42.1 million. Minco Silver incurred exploration costs of $Nil,  administration costs of $5.9 million and a loss of $4.3 million during the  year ended December 31, 2010.   As  of December 31, 2009, Minco Silver had current assets of $11.5 million,  non-current assets of $17.5 million (including $9.0 million in capitalized  mineral interest costs), current liabilities of $2.4 million and shareholders'  equity of $26.6 million. Minco Silver incurred exploration costs of $1.4  million, administration costs of $3.3 million and a loss of $4.2 million  during the year ended December 31, 2009.   Minco  Silver had capitalized $13.0 million (2009 - $9.0 million) of development  costs and Minco Gold's equity share of this amount is $3.4 million.   Off-Balance  Sheet Arrangements   The  Company does not have any off-balance sheet arrangements.   Outlook   In  2010, the Company will continue to focus on exploration programs on the  Longnan and Changkeng projects. Aggressive exploration programs will be  conducted to follow up the discoveries made on Oujiaba property and Yejiaba  property. The Company will continue to sell its non-core projects in China to  generate capital for the Company's exploration efforts. In addition, the  Company will continue to seek advanced gold projects for acquisition.   Share  Capital   As  at the date of this MD&A, the Company has 50,243,315 common shares and  5,616,567 stock options outstanding, for a total of 55,859,882 fully diluted  common shares outstanding.   Contractual  Obligations and Contingencies   (a)  The Company has commitments in respect of office leases requiring minimum  payments of $0.7 million as follows:   2011 $150,862 2012  148,922 2013  155,037 2014  161,403 2015  54,518   $670,742              The  Company has entered into sub-lease agreements for a portion of its leased  premises.   Transactions  with Related Parties   At  December 31, 2010, the Company has $839,305 due from Minco Silver (2009 - $2,109,285) in relation to expenditures on the shared of office expenses. The  amount due from Minco Silver is unsecured, non-interest bearing and repayable  on demand.   At  December 31, 2010, the Company has $77,027 due to Minco Base Metals ("MBM")  (2009 -$120,576) in relation to expenditures on the White Silver Mountain  project and shared office expenses. The company is related to Minco Base  Metals through two common directors and two common officers.   In  the year ended December 31, 2010, the Company paid consulting fees totalling  $392,938 (December 31, 2009 - $303,082) to companies controlled by the Chief  Executive Officer, Chief Financial Officer, and Vice President, Exploration of  the Company. 14    In  connection with Minco China's loan of RMB 60 million (approximately $9  million) to the Tugurige Gold Mine as disclosed in note 5, Minco Gold and MBM  entered a loan where Minco Gold borrowed a short term loan of $7,561,779  million (RMB 50 million) in December 2010. The loan is repayable in full on or  before June 30, 2011 and bears interest at the rate of 10% per annum,  calculated and compounded monthly. The loan is secured by 3 million Minco  Silver shares held by Minco Gold.   The  funds were advanced to Minco China by Beijing Zhongjia Kailong Technology  Development Co. Ltd. ("Zhongjia"), the trustee of MBM's cash in China.  Zhongjia is related to Minco China by common management.   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.   Critical  Accounting Estimates   The  preparation of the Company's consolidated 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.   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. 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.   The  Company is required to make estimates of future production costs, future gold  commodity pricing, and currency exchange fluctuations in the process of  testing the impairment of its assets.   In  testing the impairment of its mineral interests the Company is evaluating its  resources and extended determination of gold reserves which requires a number  of assumptions and estimations, including geological sampling and modeling as  well as estimates of future gold prices and future production costs. Estimates  of the resources and ultimately the estimates of reserves may change based on  additional information obtained subsequent to the assessment date. This may  include data obtained from exploration drilling, significant changes in the  price of gold and changes in estimates of the cost of production. A change in  the estimate of reserves could result in a change in the rate of depletion,  development amortization, or impairment of the resources, resulting in a write  down.   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 operation.   Business  Environment and Risks   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 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          and cash equivalents - 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, 2010, the balance of $6.0 million was placed          with three institutions. 15  ii.Short          term investments -These are guaranteed investment certificates with          maturities of greater than ninety days, but less than one year, when          acquired. At December 31, 2010, these totalled $0.3 million and were          placed with one institution yielding 1.15%.    iii.Loan          receivable - The loan receivable is secured by the Tugurige Gold          Mine and is guaranteed by the 208 Team, a subsidiary of CNNC.   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, 2010, the Company has positive working  capital of approximately $2.9 million and therefore has sufficient funds to  meet its current operating and exploration obligations. However, the Company  will require significant additional funds in the future to complete its plan.   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 or US 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 10%  strength in the Canadian dollar against the Chinese RMB will have a before tax  effect of a $0.3 million loss on the financial results.   Interest  rate risk - The effective interest rate on financial liabilities (accounts  payable) ranged up to 1%. 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 Canada will have a net (before tax) income effect of  $0.06 million, assuming the foreign exchange rate remains constant.   Accounting  Policy Changes   International  Financial Reporting Standards ("IFRS")   The  Canadian Accounting Standards Board ("AcSB") has set January 1, 2011 as  the date for publicly-listed companies to adopt IFRS, replacing Canadian GAAP.  Accordingly, IFRS compliant financial statements will be required for the  first quarter of 2011. Comparative figures presented in these financial  statements are also required to comply with IFRS.   Regular  reporting is provided to the Company's senior management and Audit Committee  of the Board of Directors on the progress of the Company's adoption of IFRS.  Discussion has also been held with internal accounting personnel as well as  the Board of Directors to provide education with respect to IFRS and its  effects on the Company.   As  of this MD&A date, the Company has completed the restatement of the  opening balance sheet and the first quarter 2010 financial statements under  IFRS.   Based  on the diagnostic and this component evaluation, the main impact on the  Company's consolidated financial statements from the transition to and  adoption of IFRS are listed below.   IFRS  1, First-Time Adoption of  International Financial Reporting Standards, provides guidance for an  entity's initial adoption of IFRS and generally requires the retrospective  application of all IFRS effective at the end of its first IFRS reporting  period. IFRS 1 however does include certain mandatory exceptions and allows  certain limited optional exemptions from this general requirement of  retrospective application. The Company expects to apply the following  significant optional exemptions available under IFRS 1 on the opening  transition date of January 1, 2010: 16    Mandatory  exemption   IFRS  1 does not allow management to change estimates made before the transition  date to IFRS. Estimates under IFRS at January 1, 2010 remained consistent with  estimates made for Canadian GAAP on that date.   Functional  Currency   Under  Canadian GAAP, all the Company's subsidiaries were integrated foreign  operations. Therefore, monetary items were translated at year-end rates and  non-monetary items were translated at average rates with all foreign currency  gains and losses recognized in profit or loss.   IFRS  requires that the functional currency of each subsidiary of the Company be  determined separately. It was determined that, as at the transition date, the  functional currency of Minco Silver Corporation is Canadian dollars and the  functional currency of the Company's Chinese subsidiaries is RMB.   In  accordance with the IFRS 1 optional exemptions, the Company has elected to  transfer the currency translation differences recognized as a separate  component of shareholders' equity, to accumulated loss on the transition  date.   Stock-based  compensation   Under  Canadian GAAP, for the purpose of accounting for stock-based compensation, an  individual was classified as an employee when the individual was consistently  represented to be an employee under law. Under IFRS, an individual is  classified as an employee when the individual is an employee for legal or tax  purposes (direct employee) or provides services similar to those performed by  a direct employee. This definition of an employee is broader than that  previously applied by the Company and resulted in certain contractors and  consultants being classified as employees under IFRS.   Under  Canadian GAAP, forfeitures were recognized as they occurred. Under IFRS,  forfeiture rate estimated up front and factored into the number of stock  options expected to vest.   Under  Canadian GAAP, the Company recorded stock-based compensation on a  straight-line basis over the vesting period. Under IFRS, the Company records  stock-based compensation for each tranche within an award over the vesting  period of the corresponding tranche.   In  accordance with the IFRS 1 optional exemptions, the Company has elected to  apply IFRS 2 only to unvested options as of January 1, 2010.   Statement  of cash flows   The  transition from Canadian GAAP to IFRS has no significant impact on cash flows  generated by the Company.   The  above are intended to highlight only those areas believed to be the most  significant and is not intended to be a complete and exhaustive list of all  expected changes. In the period leading up to conversion, the International  Accounting Standards Board will continue to issue new accounting standards and  as a result, the final impact of IFRS on the Company's Consolidated  Financial Statements can only be accurately measured once all the IFRS  applicable at the adoption date of January 1, 2010 are known. Consequently,  the analysis and policy decisions have been made based upon the Company's  expectations regarding the accounting standards that the Company anticipates  will be effective upon conversion to IFRS. Readers are cautioned that the  disclosed impacts of IFRS on financial reporting are estimates and may be  subject to change.   Disclosure  Controls and Procedures and Internal Controls over Financial Reporting   Management  is responsible for designing, establishing, and maintaining a system of  internal controls over financial reporting to provide reasonable assurance  that the financial information prepared by the   Company  for external purposes is reliable and has been recorded, processed, and  reported in an accurate and timely manner in accordance with generally  accepted accounting principles.   Management  is also responsible for designing, establishing, and maintaining a system of  disclosure controls and procedures. Disclosure controls and procedures are  designed to provide reasonable assurance that material items requiring  disclosure by the Company are identified and reported in a timely manner. 17    Management's  report on Internal Controls over Financial Reporting and Disclosure Controls   The  Chief Executive Officer and the Chief Financial Officer evaluated the  effectiveness of the Company's disclosure controls and procedures and  assessed the design and the operating effectiveness of the Company's  internal control over financial reporting as of December 31, 2010.   Based  on that assessment, management concluded that, as at December 31, 2010, the  Company's internal control over financial reporting was not effective due to  the existence of a material weakness. A material error was not captured via  review during the Company's financial closing process. This resulted in a  material audit adjustment to the fourth quarter results of the Company for the  year-ended December 31, 2010.   Management  has concluded that the Company will strengthen the rigor of review during its  financial closing process. Other than disclosed above, there has been no  significant change in disclosure controls or in internal controls over  financial reporting from October 1 to December 31, 2010 that has materially  affected, or is reasonably likely to affect, the Company's disclosure  controls or its internal controls over financial reporting.   Subsequent  Events   Effective  January 14, 2011, the Company granted options of over 2,100,000 common shares  to various employees, directors, and contractors at an exercise price of $2.14  that vest over an 18-month period from the issue date and expire in January  2016.   On  March 25, 2011, the RMB 60 million (approximately $9 million) loan provided to  the Tugurige Gold Mine was repaid in full with interest.   Cautionary  Statement on Forward-Looking Information   This  MD&A, which contains certain forward-looking statements, are intended to  provide readers with a reasonable basis for assessing the financial  performance of the Company. All statements, other than statements of  historical fact, are forward-looking statements. The words "believe", "expect",  "anticipate", "contemplate", "target", "plan", "intends", "continue", "budget",  "estimate", "may", "will", "schedule"  and similar expressions identify forward looking statements. Forward-looking  statements are necessarily based upon a number of estimates and assumptions  that, while considered reasonable by the Company, are inherently subject to  significant business, economic and competitive uncertainties and  contingencies. Known and unknown factors could cause actual results to differ  materially from those projected in the forward-looking statements. Such  factors include, but are not limited to, fluctuations in the currency markets  such as Canadian dollar, Chinese RMB and U.S. dollar, fluctuations in the  prices of gold, silver and other commodities, changes in government  legislation, taxation, controls, regulations and political or economic  developments in Canada, the United States, or China or other countries in  which the Company carries or may carry on business in the future, risks  associated with mining or development activities, the speculative nature of  exploration and development, including the risk of obtaining necessary  licenses and permits, and quantities or grades of reserves. Many of these  uncertainties and contingencies can affect the Company's actual results and  could cause actual results to differ materially from those expressed or  implied in any forward-looking statements made by, or on behalf of, the  Company.   Readers  are cautioned that forward-looking statements are not guarantees of future  performance. There can be no assurance that such statements will prove to be  accurate and actual results and future events could differ materially from  those acknowledged in such statements. Specific reference is made to the  Company's most recent Annual Information Form on file with Canadian  provincial securities regulatory authorities for a discussion of some of the  factors underlying forward-looking statements.   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, except to the extent required by applicable laws.   Dr.  Ken Z. Cai   March  30, 2011 18     MINCO          SILVER CORPORATION     MANAGEMENT'S          DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITIONAND          RESULTS OF OPERATIONSFOR          THE TWELVE MONTHS ENDED DECEMBER 31, 2008     This          management's discussion and analysis ("MD&A") of the          operating results and financial position of Minco Silver Corporation          and its subsidiaries ("Minco Silver" or "the Company") is for          the year ended December 31, 2008 compared with the year ended December          31, 2007. Together with the consolidated financial statements and          related notes, the MD&A provides a detailed account and analysis          of the Company's financial and operating performance for the year.          The Company's functional and reporting currency is the Canadian          dollar. This MD&A is current to March 31, 2009 and should also be          read in conjunction with the Company's Annual Information Form and          other corporate filings available at www.sedar.com ("SEDAR").          Management is responsible for the interim consolidated financial          statements referred to in this MD&A, and provides officers          disclosure certifications filed with securities commissions on SEDAR.          The audit committee reviews the interim consolidated financial          statements and MD&A, and recommends approval to the Company's          Board of Directors.     The          MD&A should be read in conjunction with the consolidated financial          statements of the Company and related notes, which have been prepared          in accordance with Canadian generally accepted accounting principles ("GAAP").          Refer to Note 2 of the December 31, 2008 audited consolidated          financial statements for a discussion of changes in accounting          policies and presentation. Refer to Notes 3 and 2 of the December 31,          2008 and 2007 audited consolidated financial statements respectively          for disclosure of the Company's significant accounting policies.     Company          Overview     Minco          Silver (TSX: MSV) was incorporated under the laws of British Columbia,          Canada on August 20, 2004. Minco Silver is engaged in the acquisition,          exploration and development of silver dominant mineral properties. The          Company currently has 100% controlling interest in Foshan Minco with          the 10% carried interest in Foshan Minco being earned by Guangdong          Geological Exploration and Development Corporation ("GGEDC") in          the Fuwan Silver Deposit, situated along the northeast margin of the          highly prospective Fuwan Silver Belt in Guangdong Province, Peoples'          Republic of China ("China"). (See Highlights for the year ended          December 31, 2008, point 7 below.)     In          2004, the Company, Minco Gold Corporation ("Minco Gold") and          Silver Standard Resources Inc. ("Silver Standard") entered into a          strategic alliance to jointly pursue silver opportunities in China. As          part of the agreement, the Company will be the exclusive entity for          both parties to pursue silver projects in China.     At          the date of this MD&A, Minco Gold (formerly Minco Mining &          Metals Corporation) owns 40.48% of the outstanding shares of the          Company.     Highlights          for the year ended December 31, 2008     For          the year ended December 31, 2008; the Company:     1.Recorded          a net loss of $2.3 million (loss $0.07 per share) compared to a loss          of $7.3 million (loss $0.23 per share) for fiscal 2007. During the          year ended December 31, 2008, the Company changed its accounting          policy relating to mineral interest development expenditures. The          Company now capitalizes development costs identified as associated          with the development stage, in 2008, the amount capitalized was $5.3          million (2007 - $nil).      2.Completed          a drilling program totaling 89 holes for a total of 25,497 metres.          Completed an aggressive infill and step-out drilling campaign on the          Fuwan silver deposit and completed 63 holes for a total of 18,820          metres. The program was designed primarily to increase the level of          confidence in the resource through infill drilling, with the assay          results being released in the first half of the year. Completed          confirmation drilling on Fuwan with 5 holes for a total of 1,007          meters. Completed regional exploration drilling down strike from the          Fuwan Silver Deposit, with 18 holes for a total of 5,003 meters.  1  3.Delivered          an updated resource estimate which expanded the deposit significantly.          Drilling was successful in expanding the indicated resource by 31          ounces of silver to 16.0 million tonnes containing 93.5 million ounces          of silver ("MM oz Ag") from 11.9 million tonnes containing 71.6 MM          oz Ag. The overall resource base (indicated and inferred silver          resources) also increased by 10 ounces of silver to 156.8 MM oz Ag          from 142.9 MM oz Ag.      4.Initiated          an International Feasibility Study ("IFS"). Wardrop Engineering          Inc. ("Wardrop") was retained in April 2008 to conduct an IFS          using the resource update released in May 2008. Significant progress          has been made to date and mine planning and process engineering are          well advanced. Currently, the process flow sheet and metallurgical          test work are nearing completion and surface infrastructure sites are          being finalized. Mine planning, surface layout, and development and          production schedules are progressing well.      5.Made          solid progress in permitting. The Exploration Report on the Fuwan          Silver deposit has been accepted and approved by the Ministry of Land          and Resources ("MOLAR") in Beijing. (March 5, 2008). The Chinese          Preliminary Feasibility Study was completed by Changsha Non-Ferrous          Mine Design Institute and approved by an expert panel (February 4,          2008). The reserve/resource has been registered and received approval          from Guangdong Bureau of Land and Resources and MOLAR in Beijing.      6.Conducted          a regional exploration program. Completed a detailed ground magnetic          survey covering approximately 155 line kilometers as well as 21 line          kilometers of dipole-dipole induced polarization survey over the main          target areas along the Fuwan Silver Belt. Combined with previous          geochemical surveys consisting of 50,000 individual soil samples, a          number of highly prospective targets were generated. Completed          drilling 18 holes over 5,003 meters, testing the prospective targets.          The assay results are pending.      7.In          July established Foshan Minco Fuwan Mining Co. Ltd ("Foshan Minco")          a China based company to manage the Fuwan silver project. Due to          Chinese government regulations this company must have a domestic          Chinese partner. The partner in Foshan Minco is GGEDC.      8.Entered          into a Letter of Intent on July 22, 2008 to acquire 100% of the          outstanding shares of Sterling Mining Company ("Sterling") and          provided a US$15 million Credit Facility with Sterling. On August 27,          2008, the Company terminated the Letter of Intent and the obligation          to advance further funds under the Credit Facility. (See Loan          Receivable from Sterling Mining Company and Subsequent Events).      9.Won          two awards for work completed on the Fuwan Silver project. The Project          Development from Cambridge House International Inc., for the project's          meaningful progress during 2007. The Prospector / Explorer of the Year          Award at the 2008 China Mining Conference for its outstanding progress          of the Fuwan Silver project. This prestigious national Award was          presented to Minco Silver by Mr. Wang Min, the Vice Minister of MOLAR          on November 12, 2008.     Results          of Operations     The          Company's development and exploration costs represent expenditures          undertaken to support the Company's strategic objectives on their          properties. In 2008, the Company changed its accounting policy related          to the accounting treatment accorded to costs incurred for the          development of mineral properties, determined to no longer to be in          the exploration stage.     In          the year ended December 31, 2008, the Company incurred a total of $5.3          million on development (including $1.1 million for the feasibility          study on the Fuwan Silver Deposit) and $1.8 million on exploration          (2007 - $4.8 million for exploration costs).     The          following table summarizes the results of operations for the full year          and quarter ended December 31, 2008 and December 31, 2007.  2               Statement          of Operations and Loss Three          months ended Dec 31, Twelve          months ended Dec 31,             2008 2007 2008 2007           Exploration          costs  521,314  2,277,715  1,814,641  4,783,545 Administrative          expenses  896,967  1,264,082  2,809,596  3,495,038 Foreign          Exchange  (1,528,415) (223,947) (1,440,314) (233,629)Operating          gain (loss)  110,134  (3,317,850) (3,183,923) (8,044,954)              Other          Income (loss)             Interest          and sundry income  479,308  188,110  888,785  769,837               Net          income (loss) for the period  369,174  (3,129,740) (2,295,138) (7,275,117)Basic          and diluted gain loss per share  0.01  (0.10) (0.07) (0.23)Weighted          average number of shares             outstanding  32,118,490  31,134,451  31,647,577  31,054,523  The          following is a summary of exploration costs expensed/incurred:                               2008  2007    Q4   Q3   Q2   Q1   Q4   Q3   Q2   Q1 Consulting                                fees $84,563  $44,783  $18,268  $84,709  $291,322  $96,928  $127,693  $119,484                                  Drilling  303,144   97,715   126,956   627,146   1,266,979   310,183   1,016,131   269,397 Labour          costs  43,012   24,887   4,985   40,196   149,304   55,120   41,155   31,759 Exploration                                costs  90,595   130,376   42,952   50,354   570,110   219,836   194,150   23,994                                    $521,314  $297,761  $193,161  $802,405  $2,277,715  $682,067  $1,379,129  $444,634     The          following is a summary of development costs capitalized/incurred for          the Fuwan Silver Property during the year ended December 31, 2008:                            2008  2007    Q4   Q3   Q2   Q1   Q4   Q3   Q2   Q1 Consulting                                fees $248,859  $117,186  $114,385  $262,052  $-  $-  $-  $- Drilling  390,220   168,372   554,765   624,682   -   -   -   - Labour          costs                                   18,151   40,662   107,492   63,006   -   -   -   - Feasibility                                study          (IFS)  1,113,032   -   -   -   -   -   -   - Stock          based                                compensation  76,954   61,165   104,157   117,810   -   -   -   - Other                                development                                costs  430,266   283,162   355,165   42,555   -   -   -   -                                    $2,277,482  $670,547  $1,235,964  $1,110,105  $-  $-  $-  $-  3  The          following table summarizes selected financial information for the          eight most recently completed quarters.                            2008  2007    Q4   Q3   Q2   Q1   Q4   Q3   Q2   Q1 Interest          &                                sundry          income $462,273  $147,329  $151,925  $127,258  $188,110  $203,236  $176,094  $202,397 Net                                income/(loss)* $369,174   (279,095)  (1,254,102)  (1,131,115) $(3,129,741) $(1,077,074) $(1,943,492) $(1,124,811)Net                                income/(loss)                                per          share                                basic          and                                diluted $0.01   (0.01)  (0.04)  (0.04) $(0.10) $(0.03) $(0.06) $(0.04)    *          During the year ended December 31, 2008, the Company retrospectively          changed its accounting policy to provide more appropriate reflection          as to when the Company has completed the exploration phase on a given          property and has identified a mineral deposit that the Company intends          to develop through to production. From such time forward, mineral          property development costs will be capitalized as mineral interests on          the Company's balance sheet, and subject to the Company's existing          policies related to impairment assessment and analysis. .*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.     During          the periods presented, the Company had no discontinued operations or          extraordinary items. The fluctuations in the quarterly losses are in          direct relation to the drilling activities on the two properties (Fuwan          Silver Deposit and regional exploration). There have been other          activities related to the Fuwan Silver Deposit which have affected          these balances (the additional work to support the IFS) and the          environmental impact study which were both started during 2008 and          both continuing as at the date of this MD&A. In comparison to          2007, the effect of the new accounting policy on expenditures          associated with the Fuwan Silver Deposit is that $5.3 million of          qualifying expenditures have been capitalized in 2008 (2007 - $nil, as          there were no properties that would have qualified for capitalization          in 2007).     Administrative          Expenses     The          Company's administrative expenses include overhead associated with          administering and financing the Company's development and          exploration activities. The Company maintains a field office in          GaoMing County, China and an office in Vancouver, Canada. For the year          ended December 31, 2008, after adjusting for foreign exchange gain of          $1.4 million (2007 - $0.2 million) the Company spent a total of $2.8          million on administrative expenses (2007 - $3.5 million). The Company          shares its Vancouver and Beijing offices with Minco Gold, which          allocates a portion of salaries, rent and office administration          expenses at cost to the Company.     •In          2008, the Company granted 1,132,500 stock options to its directors,          officers, employees and consultants at the price range from $0.46 to          $4.05 per share. The Company recorded $1.1 million of stock based          compensation expense in 2008 (2007 - $1.7 million) and capitalized          $0.3 million to the Fuwan project.      •Consulting          fees increased to $145,219 (2007 - $66,695) as the Company contracted          for "in-house" legal counsel and CFO advisory services.      •Property          Investigation decreased to $40,016 (2007 - $104,445) as the Company          concentrated on the Fuwan Silver Deposit and surrounding regional          area.      •Salaries          and benefits decreases to $253,829 (2007 - $386,792) as the Company          allocated staff and capitalized these costs to Mineral interests for          the Fuwan silver project and replaced departed full time employees          with contractors.      •For          the year ended December 31, 2008, the Company had a foreign exchange          gain of $1.4 million (2007 - $0.2 million) due to the US$5.0 million          loan to Sterling ($1.0 million) and a translation gain from expenses          incurred in RMB and US dollars ($0.4 million)  4  Interest          and Sundry Income     To          date the Company has not earned revenue from operations other than          interest income earned on short-term investments and the Sterling          loan. In 2008, interest and sundry income was $888,785 (2007 -          $769,837). The increase is due to the terms of the Sterling loan          balance (interest $393,659) and expenses/penalties $263,409) off set          by lower interest income than that of the prior year further to a          reduction in short term investments as the Company used cash for the          Sterling loan and supported its exploration, development and          administrative activities.     As          at December 31, 2008, short-term investments comprised cashable          guaranteed investment certificates; bankers' acceptance and          corporate term notes. The yields on these investments were 1.50% to          4.55%.     As          at December 31, 2007, short-term investments comprised cashable          guaranteed investment certificates, commercial paper, provincial          bonds, bankers' acceptances and a corporate bond. The yields on          these investments were 3.75% to 6.75%.     Financial          Position     The          Company's total assets have decreased to $17.7 million (2007 - $19.3          million). The net decrease in total assets is due to the utilization          of cash generated through exercised options and the short term          investment used in development, exploration and administrative          activities ($5.0 million) and the Sterling Loan ($5.1 million (US$5.0          million)).     Properties     The          Company's principal property is the Fuwan Silver Deposit located in          Guangdong Province, China. The Company's objective is to develop the          Fuwan Silver Property with a view to commencing commercial mining          operations on the property. The Company will continue to identify new          silver projects in China for possible exploration and development by          way of joint venture or otherwise.     In          2005, the Company received three reconnaissance survey exploration          permits (exploration licenses) which are located in the Sanzhou basin,          Guangdong Province, China. Two exploration licenses, the          Luoke-Jilinggang (75.55 sq. km.) and the Guyegang-Sanyatang (91.91 sq.          km) with a total area of 167.46 sq. km, cover a major part of the          northeast-trending Fuwan silver belt which hosts the known gold and          silver occurrences in the Sanzhou basin, including the Fuwan silver          and Changkeng gold projects.     P          & E Mining Consultants Inc., a Brampton, Ontario based mining          consulting company, was retained by the Company to prepare an          independent technical report on the Fuwan Silver Property. The report          entitled "Technical Report and Resource Estimate on the Fuwan          Property, Guangdong Province, China" ("The Technical Report and          Resource Estimate") dated November 3, 2005 is available on SEDAR at www.sedar.com.          The report was updated on September 25, 2006 and amended and revised          on November 2, 2006 and these are also available at www.sedar.com.          The Technical Report and Resource Estimate was updated on April 15,          2007 and December 11, 2007 and both updates are also available at www.sedar.com.     A          Preliminary Economic Assessment ("PEA") was completed and released          on October 22, 2007. The positive PEA report was prepared by SRK          Consulting Inc. and is available at www.sedar.com.     Drilling          Programs     In          2008 the Company completed the Phase 6 drilling program on the Fuwan          Silver Deposit, thus completing the program that was started          previously (in 2007, the Company completed the Phase 3 drilling          program; initiated and completed the Phase 4 and 5 programs as well as          a hydro geological drilling program). The 2008 programs are described          below in more detail:  5  -  
Phase          6 drilling program the Phase 6 program primarily consisted of step-out          drilling designed to expand the resource. 89 drill holes for a total          of 25,497 meters have been completed (these numbers include 2          condemnation drill holes). The program is to further test the silver          mineralization within the Fuwan property and attempt to extend the          known mineralization to the southwest and southeast respectively.          Step-out drilling is also planned to potentially further extend the          known mineralization down-dip and along strike of the Fuwan trend.          Drill spacing for the Phase 6 program varies from 40 x 80 meters to          160 x 160 meters.     -  
Condemnation          drilling program this program is a part of the Phase 6 drilling          program. It was initiated in 2008; two drill holes for a total of 571          meters were completed. Condemnation drilling is planned for the          proposed mill site from the Conceptual Site Layout prepared by SRK          Consulting. This area will be tested for mineralization and major          structures, and will provide data for future mill design          considerations. The two drill holes completed to date did not reveal          any mineralization within the tested area.     -  
Feasibility          Study metallurgical drilling program the purpose of this program was          to take coarse material for abrasion tests from intersections which          are typical for the main mineralized zones of the deposit. Two PQ size          drill holes have been completed for a total of 445 metres.     -  
Regional          exploration program the program is designed 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. Eighteen holes totaling 5,003 metres have been completed to          date.     -  
Feasibility          Study verification drilling program this program is designed to verify          existing geologic interpretation and confirm continuity of mineralized          zones in the NE initial mining area. The program was proposed by          Wardrop Engineering as a part of the IFS on the Fuwan Silver property.          Five drill holes for a total of 1,007 meters were completed in          September 2008.      The          2007 drilling programs which were completed:     •Phase          3 drilling program 6 drill holes for a total of 1,352 meters.  •Phase          4 drilling program 41 drill holes for a total of 10,776 meters.  •Phase          5 drilling program 23 drill holes for a total of 5,469 meters.  •Hydrogeological          drilling program 11 drill holes for a total of 2,741 meters.  •Verification          drilling program 6 drill holes for a total of 1,871 meters.      As          of the date of this MD&A, the Company has completed a drilling          program that includes 260 drill holes for a total of 69,074 meters          over both the Fuwan Silver Deposit and the surrounding regional area.          In 2008, the Company completed a drilling program of 89 holes (68          holes in the Fuwan Silver Deposit and 18 holes in the surrounding          regional area) for a total of 25,497 metres.     The          assay results from the Phase 3, Phase 4, Phase 5 and Phase 6 drilling          programs can be reviewed on the Company's website at www.mincosilver.ca or          at www.sedar.com.     Resource          Estimates     On          May 12, 2008, the Company updated the resource estimate for the Fuwan          Silver Deposit taking into consideration the Phases 1 to 6 drilling          programs including the drilling activity in the Changkeng license          area. This resource update has upgraded the indicated resource by 31          ounces of silver to 16.0 million tonnes containing 93.5 million ounces          of silver from 11.9 million tonnes containing 71.6 million ounces of          silver. The total indicated silver resource is reported to be 93.5          million ounces and the total inferred silver resource is 63.3 million          ounces for an overall increase of 10 ounces of silver of 13.8 million          ounces of silver. The purpose of this resource estimate was to expand          the indicated resources for inclusion in the ongoing IFS on the Fuwan          Silver property     1.Expand          the overall Fuwan Silver Deposit resource base  2.Estimate          silver resources that reflect Minco Silver's current exploration          permit holdings.  3.Estimate          silver resources on Minco Silver's 51% interest in the adjoining          Changkeng license area.  6  Diamond          drill data from a total of 422 holes was used for the resource          calculation. These programs were conducted on a 60m x 60m diagonal          spacing within the existing 80m x 80m rectangular drill grid spacing.          These recent drilling programs were designed primarily for the          upgrading of inferred resources to the indicated classification. The          Fuwan Silver Deposit remains open along strike to the southwest and up          and down its relatively flat dip to the northwest and southeast.     The          resource estimate prepared on the Fuwan Silver Deposit includes Au, Pb          and Zn credits and is reported as an Indicated Resource of          approximately 16.0 million tonnes at 182g/t Ag, 0.20g/t Au, 0.20% Pb          and 0.57% Zn and an Inferred Resource of 11.2 million tonnes at 174g/t          Ag, 0.26g/t Au, 0.27% Pb and 0.73% Zn. Details of the resources          residing on the Changkeng and Fuwan properties are shown in the          following table.     Resource          Estimate1          @ 40g/t Ag Cut-Off Grade.                     Resource          Area & Classification Tonnes Ag          (g/t) Ag          (oz) Au          (g/t) Pb Zn           (%) (%) Fuwan          Permits Indicated  13,948,000  188  84,268,000  0.17  0.20  0.56 Changkeng          Permit Indicated**  2,027,000  142  9,235,000  0.40  0.20  0.61 Total          Indicated  15,975,000  182  93,503,000  0.20  0.20  0.57                     Fuwan          Permits Inferred  10,241,000  171  56,147,000  0.26  0.26  0.72 Changkeng          Permit Inferred ***  1,049,000  212  7,136,000  0.29  0.37  0.86 Total          Inferred2  11,290,000  174  63,283,000  0.26  0.27  0.73     **          The indicated resources reported on the Changkeng permit represent 51%          of the actual indicated resources which reflects the proportion of          ownership by Minco Silver Corporation. Total Changkeng indicated          silver resources are 4,054,000 tonnes and 18,470,000 ounces of silver.  ***          The inferred resources reported on the Changkeng permit represent 51%          of the actual inferred resources which reflects the proportion of          ownership by Minco Silver Corporation. Total Changkeng inferred silver          resources are 2,098,000 tonnes and 14,272,000 ounces of silver.  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.  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 the April 2008, 24 month trailing average metal prices of          US$13.69/oz Ag, US$710/oz Au, US$1.01/lb Pb and US$1.48/lb Zn. Costs          of $12.00/tonne for mining, $11.50/tonne for processing/tailings          management and $5.50/tonne for G&A for a total of $29.00/tonne and          a process recovery of 97% for Ag, along with Au, Pb & Zn credits          of approximately $10.00/tonne were utilized to derive a cutoff grade          of 40 g/t Ag.     The          mineral resources were estimated using the Canadian Institute of          Mining, Metallurgy and Petroleum (CIM), Standards on Mineral Resources          and Reserves, Definitions and Guidelines prepared by the CIM Standing          Committee on Reserve Definitions and adopted by the CIM Council on          December 11, 2005.     International          Feasibility Study ("IFS")     Wardrop          was retained in April of 2008 to conduct the IFS using the resource          update released in May of 2008. Significant progress has been made to          date and mine planning and process engineering are well advanced.          Currently, the process flow sheet and metallurgical test work are          nearing completion and surface infrastructure sites are being          finalized. Mine planning, surface layout, and development and          production schedules are progressing well.     Additional          metallurgical tests to optimise the initial work completed for the          Preliminary Economic Assessment in October of 2007 were also          initiated. Minco Silver received a comprehensive metallurgical report          on Fuwan samples from the Beijing General Research Institute of Mining          & Metallurgy. The results confirmed initial work carried out by          Process Research Associates with overall recoveries of silver, using          conventional flotation, reported as above 96%. Recoveries for lead and          zinc were above 95%.  7  Environmental          Impact Assessment     Environmental          aspects of the feasibility study are being compiled by Environmental          Resources Management ("ERM"), one of the world's leading          providers of environmental consulting services, and will be prepared          in accordance with International Finance Corporation and World Bank          standards. To satisfy Chinese regulatory requirements, Guangdong          Nuclear Design Institute ("GNDI") has been contracted to complete          the Chinese environmental impact assessment which is nearing          completion. GNDI is working closely with ERM to cover all necessary          aspects for national and international environmental acceptance.     Permitting     The          Company has made solid progress in permitting on the Fuwan Silver          Deposit during 2008. Reports completed and in progress are summarized          below:     The          Exploration Report on the Fuwan Silver Deposit has been accepted and          approved by the Ministry of Land and Resources ("MOLAR") in          Beijing.     The          Chinese Preliminary Feasibility Study was completed by Changsha          Non-Ferrous Mine Design Institute and approved by an expert panel.     The          reserve/resource has been registered and received approval from          Guangdong Bureau of Land and Resources and MOLAR in Beijing.     The          mining area application was approved by Gaoming county, Foshan          district, and the Guangdong provincial government. MOLAR's approval          is pending.     The          Soil and Water Conservation Plan is nearing completion.     The          Safety Assessment and Geological Hazard Assessment are well advanced.     The          Land Usage application is being prepared for submission.     Additionally,          the Gaoming county government granted official approval for the          development of the project. Upon completion and approval of all          required reports, the application for the mining permit will be filed          with MOLAR in Beijing.     Liquidity          and Capital Resources     The          Company does not generate revenues. The Company relies on equity          financing for its working capital requirements to fund its          exploration, development, investment, permitting and administrative          activities. The Company has enough cash to complete the feasibility          study and environmental impact assessment for the Fuwan Silver          Deposit. Upon completion of the feasibility study, the Company will          need to raise additional financing to support the continued          development and construction of the mine and related facilities. 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 for the project.     Cash          Flow     Operating          Activities  In          2008, the Company used $3.4 million cash to support operating          activities (2007 - $6.2 million). The decrease in the operational use          of cash is due to the Company changing its accounting policy on          capitalizing certain costs to Mineral interests during 2008 amounting          to $4.7 million (2007 - $nil).     Financing          Activities  In          2008, the Company generated $2.9 million from the exercise of warrants          and options (2007 - $0.3 million)  8  During          the 12-month period year ended December 31, 2008, the Company used          $3.4 million to pay Minco Mining (China) Corporation ("Minco China")          (2007 - $2.3 million due to Minco China) and received $1.9 million          from Minco Gold.     Investing          Activities  In          2008, the Company used $0.01 million in investing activities (2007 -          cash generated of $5.9 million) through the investment in and progress          made on the Fuwan Silver property ($4.7 million), and advancing funds          under the Sterling Loan ($5.8 million) supported by the reduction in          short term investments ($10.5 million).     Available          Resources  The          Company's cash and short-term investment balance as at December 31,          2008 amounted to $4.9 million, which is sufficient to fund the Company's          activities for the IFS and environmental impact assessment for the          Fuwan Silver Deposit. Upon the completion of the bankable feasibility          study the Company will require additional funds to develop the mine          and mill for the Fuwan Silver Deposit. The Company believes that it          will be able to raise the additional capital when required, but there          are not guarantees that with the current global market conditions that          the Company will be able to do so.     Loan          Receivable from Sterling Mining Company ("Sterling")  On          July 22, 2008 the Company announced that Minco Silver executed a          Letter of Intent with 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 was 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.     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)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;  (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; and  (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 perfected secured interest is seconded to a previous loan          in the amount of US$1.4 million whereby another security 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.     Since          Minco Silver terminated its obligation to Sterling, Sterling has:  1.          Ceased mining operations  2.          Delisted from the Toronto Stock Exchange and  3.          Laid off its work force.  9  Subsequent          to year end, 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 favour of Sterling's          filing a voluntary petition under Chapter 11 bankruptcy code in the          Bankruptcy Court for the District of Idaho. Management believes that          we will collect 100% of the balances claimed and recorded in our          financial statements.     Off-Balance          Sheet Arrangements     The          Company does not have any off-balance sheet arrangements.     Outlook     In          2009, Minco Silver will focus its resources on advancing the Fuwan          Silver Deposit and work diligently to complete the IFS and obtain the          required permitting to bring the property to production.     Given          the current economic downturn, the Company has implemented a number of          cost-saving measures to preserve its cash. The Company has suspended          the regional exploration program until market conditions improve.          Additional cost-saving measures include a reduction in non-essential          personnel and streamlining of office space.     Outstanding          Share Data     At          the date of this MD&A, March 31, 2009, the Company has 32,118,490          common shares and 4,799,834 stock options, for a total of 36,918,324          fully diluted common shares outstanding.     During          the year ended December 31, 2008, the Company received proceeds of          $2.6 million on the exercise of share purchase warrants and $0.4          million from the exercise of options. At December 31, 2008 the Company          has no share purchase warrants outstanding (2007 2,875,000) and          4,149,834 options outstanding (2007 3,905,668).     Commitments          and Contingencies     (a)The          Company has commitments in respect of office leases requiring minimum          payments of $0.6 million, as follows:    Commitments 2009 $102,697 2010  99,069 2011  97,642 2012  96,074 2013  96,608 2014  96,608        $588,698     (b)The          Company has committed to the completion of an IFS for the Fuwan Silver          Deposit. The total estimated cost for completing the IFS is $0.5          million. The IFS is expected to be completed within the next six          months.      (c)The          Company has committed in respect of the mine design contract requiring          payments of RMB 8 million (approximately $1.4 million).      (d)The          Company has commitments to complete the registered capital investment          of RMB 30 million into Fushan Minco by April 23, 2010.  10  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. The original          Changkeng exploration permit, which expired in September 2006, has          been renewed until September 10, 2009 and Mingzhong received approval          for the transfer of the exploration permit from its original owners at          the beginning of 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).     Transactions          with Related Parties     (a)Accounts          receivable at December 31, 2008 include $nil (2007 $1.9 million) due          from Minco Gold.      (b)Due          to Minco China at December 31, 2008 was $0.9 million (2007 $4.6          million), used for expenditures on the Fuwan Property, new silver          projects' investigation, and shared office expenses in Minco China.          Due to Minco China by FoShan Minco at December 31, 2008 was $0.1          million (2007 - $nil). The amount due to Minco China, a wholly-owned          subsidiary of Minco Gold, is unsecured, non-interest bearing and          payable on demand.      (c)Due          from Minco Gold at December 31, 2008 was $306,476 (2007 - $nil) in          respect to shared services (rents, staff costs and expenses) in          Canada. The amount due from Minco Gold, is unsecured, non-interest          bearing and payable on demand.      (d)The          Company paid consulting fees of $407,231 (2007 $177,187) 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 and investor relations. The Company          paid director's fees of $55,250 to three independent directors (2007          - $56,833).      (e)The          Company paid or accrued $78,122 (2007 $67,141) in respect of rent,          $249,589 (2007 $237,179) in respect of exploration costs, and $778,833          (2007 $732,441) in respect of shared office expenses to Minco Gold.      (f)The          Company entered into a strategic alliance with Silver Standard, a          company which is a shareholder of the Company. . 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.     Critical          Accounting Estimates     The          preparation of the Company's consolidated 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.     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. 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.  11  The          Company is required to make estimates of future production costs,          future silver commodity pricing, and currency exchange fluctuations in          the process of testing the impairment of its assets.     In          testing the impairment of its mineral interests the Company is testing          its resources and extended determination of silver reserves which          requires a number of assumptions and estimates, including geological          sampling and modeling as well as estimates of future silver prices and          future production costs. Estimates of the resources and ultimately the          estimates of reserves may change based on additional information          obtained subsequent to the assessment date. This may include data          obtained from exploration drilling, significant changes in the price          of silver and changes in estimates of the cost of production. A change          in the estimate of reserves could result in a change in the rate of          depletion, development amortization, or impairment of the resources,          resulting in a write down.     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 other than the loan receivable from Sterling which is          discussed under Note 5 of the December 31, 2008 consolidated financial          statements.     Changes          in Accounting Policies     The          Company's significant accounting policies are described in Note 3 of          the audited consolidated financial statements. There has been a change          to the Company's accounting policies in the current year. The policy          that has had a significant impact on the reported balances as at          December 31, 2008 was the change in accounting policy for Mineral          Interests. During the year ended December 31, 2008, the Company          changed its accounting policy relating to mineral interest          expenditures. The Company now capitalizes costs identified as          associated with the development stage, in 2008, the amount capitalized          was $5.3 million (2007 - $nil).     The          Company believes that this change in accounting policy will provide          the reader of the financial statements with more relevant information.          The Mineral interest asset signifies that the Company has completed          the exploration phase on the property and has identified a mineral          deposit that the Company intends to develop through to production.     Business          Environment and Risks     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 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          2.50% to 4.55%. The fair value is equal to the carrying value.  12  (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 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.     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 a $64,577 effect on the financial results. The          Company has not hedged its foreign exchange exposure.     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 cash          equivalents and 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 has not hedged its interest rate          position.     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.  13  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.     Initial          Adoption of Accounting Policies     On          January 1, 2008, the Company adopted six new 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. (See Note 2 to the consolidated financial          statements.)     (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.     (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.  14  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 completed by 2011. The          official changeover date from Canadian GAAP to IFRS is for interim and          annual audited 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 audited financial statements beginning December 1,          2008. The Company does not expect the adoption of these changes 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 non-controlling 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 audited 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 the EIC 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 has adopted the EIC-174,     Internal          Controls over Financial Reporting     There          has been no significant change in the Company's internal control          over financial reporting during the year 2008 that has materially          affected, or is reasonably likely to materially affect, the Company's          internal control over financial reporting.  15  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.     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          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).     Management          has concluded that the Company did have some financial reporting          weaknesses which have impacted its ability to maintain effective          internal control over financial reporting throughout the year ended          December 31, 2008 based on the criteria set forth in the Committee of          Sponsoring Organization of the Treadway Commission framework.     Remediation          of Material Weaknesses  To          address the material weaknesses described above, management has          started a project to redesign the financial reporting process with a          view to evaluating and designing an implementation strategy of the          redesigned process as part of the first quarter 2009, with the          expected redesigned process being implemented though the third quarter          of 2009. The financial reporting team is being strengthened with the          contracting and hiring of technically competent staff.     Subsequent          Events     Sterling          Loan     Subsequent          to year end, 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 favour of Sterling's          filing a voluntary petition under Chapter 11 bankruptcy code in the          Bankruptcy Court for the District of Idaho.     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.  16  Cautionary          Statement on Forward-Looking Information  This          MD&A, which contains certain forward-looking statements, are          intended to provide readers with a reasonable basis for assessing the          financial performance of the Company. All statements, other than          statements of historical fact, are forward-looking statements. The          words "believe", "expect", "anticipate", "contemplate", "target", "plan",          "intends", "continue", "budget", "estimate", "may", "will", "schedule" and similar          expressions identify forward looking statements. Forward-looking          statements are necessarily based upon a number of estimates and          assumptions that, while considered reasonable by the Company, are          inherently subject to significant business, economic and competitive          uncertainties and contingencies. Known and unknown factors could cause          actual results to differ materially from those projected in the          forward-looking statements. Such factors include, but are not limited          to, fluctuations in the currency markets such as Canadian dollar,          Chinese RMB and U.S. dollar, fluctuations in the prices of Silver and          other commodities, changes in government legislation, taxation,          controls, regulations and political or economic developments in          Canada, the United States, or China or other countries in which the          Company carries or may carry on business in the future, risks          associated with mining or development activities, the speculative          nature of exploration and development, including the risk of obtaining          necessary licenses and permits, and quantities or grades of reserves.          Many of these uncertainties and contingencies can affect the Company's          actual results and could cause actual results to differ materially          from those expressed or implied in any forward-looking statements made          by, or on behalf of, the Company.     Readers          are cautioned that forward-looking statements are not guarantees of          future performance. There can be no assurance that such statements          will prove to be accurate and actual results and future events could          differ materially from those acknowledged in such statements. Specific          reference is made to the Company's most recent Annual Information          Form on file with Canadian provincial securities regulatory          authorities for a discussion of some of the factors underlying          forward-looking statements.     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, except to the extent required by          applicable laws.     Ken          Cai  April          1, 2009  17 MINCO  SILVER CORPORATION   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITIONAND  RESULTS OF OPERATIONSFOR  THE YEAR ENDED DECEMBER 31, 2009   This  management's discussion and analysis ("MD&A") of the operating  results and financial position of Minco Silver Corporation and its  subsidiaries ("Minco Silver" or "the Company") is for the year ended  December 31, 2009 compared with the year ended December 31, 2008. Together  with the consolidated financial statements and related notes, the MD&A  provides a detailed account and analysis of the Company's financial and  operating performance for the year. The Company's functional and reporting  currency is the Canadian dollar. This MD&A is current to March 23, 2010  and should also be read in conjunction with the Company's Annual Information  Form and other corporate filings available at www.sedar.com ("SEDAR").   Management  is responsible for the consolidated financial statements referred to in this  MD&A, and provides officers disclosure certifications filed with  securities commissions on SEDAR. The audit committee reviews the consolidated  financial statements and MD&A, and recommends approval to the Company's  Board of Directors.   The  MD&A should be read in conjunction with the consolidated financial  statements of the Company and related notes, which have been prepared in  accordance with Canadian generally accepted accounting principles ("GAAP").  Refer to Note 2 of the December 31, 2009 and 2008 audited consolidated  financial statements respectively for disclosure of the Company's  significant accounting policies.   Company  Overview   Minco  Silver (TSX: MSV) was incorporated under the laws of British Columbia, Canada  on August 20, 2004. Minco Silver is engaged in the acquisition, exploration  and development of silver dominant mineral properties. The Company currently  has 100% interest in Foshan Minco subject to 10% net profit interest in Foshan  Minco held by Guangdong Geological Bureau ("GGB") in the Fuwan Silver  Deposit, situated along the northeast margin of the highly prospective Fuwan  Silver Belt in Guangdong Province, Peoples' Republic of China ("China").   At  the date of this MD&A, Minco Gold (formerly Minco Mining & Metals  Corporation) owns 32.01% of the outstanding shares of the Company. Highlights  for the year ended December 31, 2009   For  the year ended December 31, 2009; the Company: 1.Recorded          a net loss of $4.2 million (loss $0.13 per share) compared to a loss          of $2.3 million (loss $0.07 per share) for2008 due to the payment          incurred for Changkeng Silver Mineralization. The Company capitalizes          development costs identified as associated with the development stage.          In 2009, the amount capitalized was $3.7 million (2008 - $5.3          million). The cumulative capitalized development as of December 31,          2009 was $9 million.    2.In          April, the application of the Mining Area Permit for the Fuwan Silver          project was approved by the Ministry of Land and Resources ("MOLAR")          in Beijing and will be held for up to 3 years while preparations for          the Mining License Application are made. The Mining Area Permit covers          approximately 0.79 square kilometers, defines the mining limits for          the Fuwan deposit and restricts the use of this land to mining          activities only.     Minco          Silver continues to make significant progress on additional reports          required for the Mining License Application. The Company recently          concluded the environmental baseline studies enabling the completion          of the Chinese Regulatory Environmental Impact Assessment. This          regulatory EIA was generated by Guangdong Nuclear Design Institute("GDNI")          and will be submitted to the Guangdong Provincial Environmental          Administration in the near term. The report identifies the ecological          and physical environmental impacts of the proposed mining operation.     China          Nerin Engineering Co., Ltd. ("NERIN") is progressing well on the          Mineral Resources Development and Utilization Plan. This report          outlines the mining and processing methods and is based on already          approved Exploration Report and Chinese Preliminary Feasibility Study.          Once completed, the report will be submitted to MOLAR in Beijing for          review and approval.     Minco          Silver has advanced the Bankable Feasibility Study ("BFS") to the          point where all planned surface infrastructure sites have been          finalized including milling facilities, access road, waste rock          storage and tailing impoundment.        1          The          Land Use Permit for its Fuwan Silver project was received by Foshan          Minco as at this MDA date. The Land Use Permit is a critical step to          secure the mining license. It consists of surveying, rezoning and          obtaining the quota for proposed surface areas required for the mine          surface infrastructure. The approved Land Use Permit, covering 28.9871          hectares (ha), includes all the areas proposed in the International          Feasibility Study for the industrial site, waste rock dump, tailing          reservoir, and explosive storage warehouse.     The          Company is also well advanced on the Geological Hazard Assessment          which identifies potential geographic and physical hazards that may          pose safety issues to operations including local and regional seismic          activity and any significant geo-technical aspects of the proposed          mining operation.     In          September, the Company received positive results of the International          Feasibility Study ("Study") for the Fuwan Silver conducted by          Wardrop Engineering Inc. ("Wardrop") See International Feasibility          Study below.    3.In          February, the Company filed an action to foreclose on Sterling Mining          Company ("Sterling") in the District Court of the First Judicial          District of the State of Idaho for the County of Shoshone. The Company          extended a US$5 million loan to Sterling at an annual simple interest          rate of 10% pursuant to the Credit Facility Agreement the parties          entered into, announced on July 22, 2008. The loan was advanced to          Sterling to meet general working capital and operating expenses of the          Sunshine Mine. The loan was secured by all assets including all the          personal and real property of Sterling, including the Sunshine Mining          Lease. The Company was granted a temporary restraining order          restraining Sterling, its officers, directors, agents and employees          from removing, selling, destroying, disposing of or concealing          collateral consisting of all of the real personal property assets of          the business known as Sterling Mining Company.     On          March 4, 2009, Sterling filed in the US Bankruptcy Court District of          Idaho a Chapter 11 bankruptcy petition     In          June, the Court found that the Lease to the Sunshine Mine was not          terminated and can be assumed and cured by Sterling.     In          August, the Court held that possession of Sunshine Mine was to remain          in the hands of Sterling. The Company continues to work with Sterling          regarding ongoing care and maintenance of the Sunshine Mine.    4.In          October, the Company successfully closed a private placement of          8,175,179 Units at a price of $1.70 per Unit for gross proceeds of          $13,897,804. Each Unit consisted of 1 common share in the capital of          the Company and one-half of one common share purchase warrant. Each          warrant entitles the holder to purchase one common share in the          capital of the Company at an exercise price of $2.15 for a period of          12 months from the closing of the private placement.   Results  of Operations   The  Company's development and exploration costs represent expenditures  undertaken to support the Company's strategic objectives on their  properties. In the year ended December 31, 2009, the Company incurred a total  of $3.7 million on development (2008 - $5.3 million).   The  following table summarizes the results of operations for three years and  quarter ended December 31, 2009, December 31, 2008 and December 31, 2007. 2    Statement          of Operations and Loss Year        ended December 31   2009  2008  2007 Exploration          costs $1,413,008  $1,814,641  $4,783,545 Administrative          expenses  2,133,487   2,809,596   3,495,038 Foreign          exchange (gain) loss  1,141,070   (1,440,314)  (233,629)Operating          loss  4,687,565   3,183,923   8,044,954 Other          loss  6,073   -   19,352 Interest          and sundry income  92,505   888,785   789,189 Loss          before income tax recovery  4,601,133   2,295,138   - Income          tax recovery  354,735   -   - Net          loss for the year $4,246,398  $2,295,138  $7,275,117 Basic          and diluted gain (loss) per share $(0.13) $(0.07) $(0.23)Weighted          average number of shares outstanding  33,855,997   31,767,488   31,054,523    The  following table summarizes selected financial information for the eight most  recently completed quarters.     2009       2008      Q4  Q3  Q2  Q1  Q4  Q3  Q2  Q1 Exploration          costs $- $1,205,298 $- $207,710 $521,314 $414,361 $295,249 $583,717 Administrative          expenses  710,228  478,596  483,130  461,533  1,304,971  475,485  203,103  826,037 Foreign          exchange (gain) loss  296,208  446,852  550,056  (152,046) (1,173,257) (673,351) 557,675  (151,381)Operating          loss  1,006,436  2,130,746  1,033,186  517,197  653,028  216,495  1,056,027  1,258,373 Other          (gain) loss  100,023  (110) 6,338  -  -  (17,035) 1,597  (1,597)Interest          and sundry income  -  562  3,043  189,078  462,273  130,294  153,522  125,661 Loss          before income tax                         recovery  1,106,459  2,130,074  1,036,481  328,119  190,755  69,166  904,102  1,131,115 Income          tax recovery  69,291  285,444  -  -  -  -  -  -                           Net          loss for the period $1,037,168 $1,844,630 $1,036,481 $328,119 $173,720 $69,166 $904,102 $1,131,115 Basic          and diluted loss per share $0.03 $0.06 $0.03 $0.01 $0.00 $0.00 $0.03 $0.04                           Weighted          average number of shares outstanding  38,727,432  32,298,490  32,204,204  32,118,490  31,767,488  31,767,488  31,656,828  31,162,238    The  following is a summary of exploration costs expensed/incurred:     2009          2008    Q4  Q3  Q2  Q1  Q4  Q3  Q2  Q1 Consulting          fees $- $- $- $- $84,563 $44,783 $18,268 $84,709 Exploration          permit  -  1,205,298  -  -  -  -  -  - Drilling  -  -  -  207,710  303,144  97,715  126,956  627,146 Labour          costs  -  -  -  -  43,012  24,887  4,985  40,196 Exploration  -  -  -  -  90,595  130,376  42,952  50,354   $- $1,205,298 $- $207,710 $521,314 $297,761 $193,161 $802,405     3    The  following is a summary of development costs capitalized/incurred for the Fuwan  Silver Property during the year en December 31, 2009:     2009       2008       Q4  Q3  Q2  Q1  Q4  Q3  Q2  Q1 Consulting            fees $119,415 $125,002 $143,907 $136,343 $248,859 $117,186 $114,385 $262,052 Drilling  12,821  27,141  39,816  441  390,220  168,372  554,765  624,682 Labour          costs  112,153  97,017  108,643  130,244  18,151  40,662  107,492  63,006 Feasibility                         study          (IFS)  178,692  165,592  142,472  280,739  1,113,032  -  -  - Stock          based                         compensation  251,790  163,990  171,509  116,832  76,954  61,165  104,157  117,810 Other                         development            costs  371,704  414,979  131,578  263,984  430,266  283,162  355,165  42,555   $1,046,575 $993,721 $737,925 $928,583 $2,277,482 $670,547 $1,235,964 $1,110,105    During  the periods presented, the Company had no discontinued operations or  extraordinary items.   For  the Three Months Ended December 31, 2009 and 2008   For  the three months ended December 31, 2009, after adjusting for foreign exchange  loss of $0.3 million (2008 - gain of $1.2 million) the Company spent a total  of $0.7 million on administrative expenses (2008 - $0.4 million). The Company  shares its Vancouver and Beijing offices with Minco Gold, which allocates a  portion of salaries, rent and office administration expenses at cost to the  Company.   •Investor          relations expenses was $0.14 million (2008 - $0.05 million). The          increase was mainly due to the financing activities in the 4th          quarter of 2009.•Salaries          and benefits were $0.09 million (2008 - $0.02 million). The increase          was mainly due to increase in bonuses for certain employees.   For  the three months ended December 31, 2009, the Company had a foreign exchange  loss of $0.3 million (2008 - gain of $1.2 million) due to the US$5.0 million  loan to Sterling ($8.0 million) and a translation loss from expenses incurred  in RMB and US dollars ($0.4 million)   Administrative  Expenses   For  the Years Ended December 31, 2009 and 2008   The  Company's administrative expenses include overhead associated with  administering and financing the Company's development and exploration  activities. The Company maintains a field office in Gaoming County, China  Beijing and an office in Vancouver, Canada. For the year ended December 31,  2009, after adjusting for foreign exchange loss of $1.1 million (2008 - gain  of $1.4 million) the Company spent a total of $2.1 million on administrative  expenses (2008 - $2.8 million).   •In          2009, the Company granted 1,110,000 stock options to its directors,          officers, employees and consultants with a weighted average exercise          price of $1.40 per share. The Company recorded $0.5 million of stock          based compensation expense in 2009 (2008 - $1.1 million) and          capitalized $0.7 million (2008 - $0.3 million) to the Fuwan project. •Consulting          fees were $0.18 million (2008 - $0.15 million) as the Company          contracted for "in-house" legal counsel and certain other advisory          services. •Accounting          fees were $0.17 million (2008 - $0.08 million). The increase were          mainly due to the under accrual of 2008 audit fee that was expensed in          the year of 2009. •Investor          relations were $0.32 million (2008 - $0.55 million). The decrease was          due to more focus and targeted activities and financing efforts during          the year. •Property          Investigation was $NIL (2008 - $0.04 million) as the Company          concentrated on the Fuwan Silver Deposit and surrounding regional          area. •Field          office expenses were $0.2 million (2008 - $0.12 million). The increase          was mainly due to increased personnel in the Company's China and          Canadian offices.    4    For  the year ended December 31, 2009, the Company had a foreign exchange loss of  $1.1 million (2008 - gain of $1.4 million) due to the US$5.0 million loan to  Sterling ($1.0 million) and a translation loss from expenses incurred in RMB  and US dollars ($0.4 million)   For  the Years Ended December 31, 2008 and 2007   The  Company's administrative expenses include overhead associated with  administering and financing the Company's development and exploration  activities. The Company maintains a field office in GaoMing County, China and  an office in Vancouver, Canada. For the year ended December 31, 2008, after  adjusting for foreign exchange gain of $1.4 million (2007 - $0.2 million) the  Company spent a total of $2.8 million on administrative expenses (2007 - $3.5  million). The Company shares its Vancouver and Beijing offices with Minco  Gold, which allocates a portion of salaries, rent and office administration  expenses at cost to the Company.   •In          2008, the Company granted 1,132,500 stock options to its directors,          officers, employees and consultants at the price range from $0.46 to          $4.05 per share. The Company recorded $1.1 million of stock-based          compensation expense in 2008 (2007 - $1.7 million) and capitalized          $0.3 million to the Fuwan project. •Consulting          fees increased to $0.15 million (2007 - $0.7 million) as the Company          contracted for "in-house" legal counsel and CFO advisory services. •Property          Investigation decreased to $0.04 million (2007 - $0.1 million) as the          Company concentrated on the Fuwan Silver Deposit and surrounding          regional area. •Salaries          and benefits decreases to $0.25 million (2007 - $0.4 million) as the          Company allocated staff and capitalized these costs to Mineral          interests for the Fuwan silver project and replaced departed full time          employees with contractors. •For          the year ended December 31, 2008, the Company had a foreign exchange          gain of $1.4 million (2007 - $0.2 million) due to the US$5.0 million          loan to Sterling ($1.0 million) and a translation gain from expenses          incurred in RMB and US dollars ($0.4 million)   For  the year ended December 31, 2008, the Company had a foreign exchange gain of  $1.4 million (2007 - gain of $0.2 million) due to translation gains from  expenses incurred in RMB and US dollars.   Interest  and Sundry IncomeTo  date the Company has not earned revenue from operations other than interest  income earned on cash and cash equivalents, short-term investments and the  Sterling loan. In 2009, interest and sundry income was $0.1 million (2008 - $0  million). In 2008, the Company earned interest income of $0.4 million from the  loan receivable from Sterling. Since January 2009, no interest income has been  earned due to the financial condition of Sterling. See Loan Receivable from  Sterling Mining Company.   As  at December 31, 2009, short-term investments comprised cashable guaranteed  investment certificates; with a yield ranging from 0.65% to 0.80%. As at  December 31, 2008, short-term investments comprised cashable guaranteed  investment certificates with a yield ranging from 1.5% to 4.55%.   As  at December 31, 2007, short-term investments comprised cashable guaranteed  investment certificates with a yield ranging from 3.8% to 4.35%.   Financial  Position   The  Company's total assets have increased to $29 million (2008 - $17.7 million).  The net increase in total assets is due to the increase in investment in  short-term investments in anticipation of development of the Fuwan Silver  Deposit, additional development cost capitalized in mineral properties and of  the additional advances made to Sterling.   Properties   The  Company's principal property is the Fuwan Silver Deposit located in  Guangdong Province, China. The Company's objective is to develop the Fuwan  Silver Property with a view to commencing commercial mining operations on the  property. The Company will continue to identify new silver projects in China  for possible exploration and development by way of joint venture or otherwise. 5    In  2005, the Company received three reconnaissance survey exploration permits  (exploration licenses) which are located in the Sanzhou basin, Guangdong  Province, China. Two exploration licenses, the Luoke-Jilinggang (75.55 sq.  km.) and the Guyegang-Sanyatang (91.91 sq. km) with a total area of 167.46 sq.  km, cover a major part of the northeast-trending Fuwan silver belt which hosts  the known gold and silver occurrences in the Sanzhou basin, including the  Fuwan silver and Changkeng gold projects. P  & E Mining Consultants Inc., a Brampton, Ontario based mining consulting  company, was retained by the Company to prepare an independent technical  report on the Fuwan Silver Property. The report entitled "Technical Report  and Resource Estimate on the Fuwan Property, Guangdong Province, China" ("The  Technical Report and Resource Estimate") dated November 3, 2005.The report  was updated on September 25, 2006 and amended and revised on November 2, 2006.  The Technical Report and Resource Estimate was updated on April 15, 2007 and  December 11, 2007. A Preliminary Economic Assessment ("PEA") was completed  and released on October 22, 2007. The positive PEA report was prepared by SRK  Consulting Inc.. Wardrop Engineering Inc., a Vancouver, British Columbia based  engineering and technical consulting company, was retained by the Company to  prepare an updated "Feasibility Study Technical Report" dated September 1,  2009. All of the above reports are available at www.sedar.com.   Drilling  Programs   In  2008 the Company completed the Phase 6 drilling program on the Fuwan Silver  Deposit, thus completing the program that was started previously (in 2007, the  Company completed the Phase 3 drilling program; initiated and completed the  Phase 4 and 5 programs as well as a hydro geological drilling program). The  2008 programs are described below in more detail:   •Phase          6 drilling program - the Phase 6 program primarily consisted of          step-out drilling designed to expand the resource. 89 drill holes for          a total of 25,497 meters have been completed (these numbers include 2          condemnation drill holes). The program is to further test the silver          mineralization within the Fuwan property and attempt to extend the          known mineralization to the southwest and southeast respectively.          Step-out drilling is also planned to potentially further extend the          known mineralization down-dip and along strike of the Fuwan trend.          Drill spacing for the Phase 6 program varies from 40 x 80 meters to          160 x 160 meters. •Condemnation          drilling program - this program is a part of the Phase 6 drilling          program. It was initiated in 2008; two drill holes for a total of 571          meters were completed. Condemnation drilling is planned for the          proposed mill site from the Conceptual Site Layout prepared by SRK          Consulting. This area will be tested for mineralization and major          structures, and will provide data for future mill design          considerations. The two drill holes completed to date did not reveal          any mineralization within the tested area. •Feasibility          Study metallurgical drilling program - the purpose of this program          was to take coarse material for abrasion tests from intersections          which are typical for the main mineralized zones of the deposit. Two          PQ size drill holes have been completed for a total of 445 meters. •Regional          exploration program - the program is designed 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. Eighteen holes totaling 5,003 meters have been completed to          date. •Feasibility          Study verification drilling program - this program is designed to          verify existing geologic interpretation and confirm continuity of          mineralized zones in the NE initial mining area. The program was          proposed by Wardrop Engineering as a part of the IFS on the Fuwan          Silver property. Five drill holes for a total of 1,007 meters were          completed in September 2008.   At  the end of 2008, the Company has completed a drilling program that includes  260 drill holes for a total of 69,074 meters over both the Fuwan Silver  Deposit and the surrounding regional area. The assay results from the Phase 6  drilling programs can be reviewed on the Company's website at www.mincosilver.ca  or at www.sedar.com.    6    Resource  Estimates   In  a report dated May 12, 2008, the Company updated the resource estimate for the  Fuwan Silver Deposit taking into consideration the Phases 1 to 6 drilling  programs including the drilling activity in the Changkeng license area. This  resource update has upgraded the indicated resource by 31 million ounces of  silver to 16.0 million tonnes containing 93.5 million ounces of silver from  11.9 million tonnes containing 71.6 million ounces of silver. The total  indicated silver resource is reported to be 93.5 million ounces and the total  inferred silver resource is 63.3 million ounces. The purpose of this resource  estimate was to expand the indicated resources for inclusion in the ongoing  IFS on the Fuwan Silver property and   1.Expand          the overall Fuwan Silver Deposit resource base.2.Estimate          silver resources that reflect Minco Silver's current exploration          permit holdings.3.Estimate          silver resources on Minco Silver's 51% interest in the adjoining          Changkeng license area.   Diamond  drill data from a total of 422 holes was used for the resource calculation.  These programs were conducted on a 60m x 60m diagonal spacing within the  existing 80m x 80m rectangular drill grid spacing. The Fuwan Silver Deposit  remains open along strike to the southwest and up and down its relatively flat  dip to the northwest and southeast. The resource estimate prepared on the  Fuwan Silver Deposit includes Au, Pb and Zn credits and is reported as an  Indicated Resource of approximately 16.0 million tonnes at 182g/t Ag, 0.20g/t  Au, 0.20% Pb and 0.57% Zn and an Inferred Resource of 11.2 million tonnes at  174g/t Ag, 0.26g/t Au, 0.27% Pb and 0.73% Zn. Details of the resources  residing on the Changkeng and Fuwan properties are shown in the following  table. Resource Estimate1  @ 40g/t Ag Cut-Off Grade.   Resource          Area & Classification  Tonnes  Ag          (g/t) Ag          (oz) Au          (g/t) Pb  Zn                (%) (%)Fuwan          Permits Indicated  13,948,000  188  84,268,000  0.17  0.20  0.56 Changkeng          Permit Indicated**  2,027,000  142  9,235,000  0.40  0.20  0.61 Total          Indicated  15,975,000  182  93,503,000  0.20  0.20  0.57                     Fuwan          Permits Inferred  10,241,000  171  56,147,000  0.26  0.26  0.72 Changkeng          Permit Inferred ***  1,049,000  212  7,136,000  0.29  0.37  0.86 Total          Inferred2  11,290,000  174  63,283,000  0.26  0.27  0.73    **  The indicated resources reported on the Changkeng permit represent 51% of the  actual indicated resources which reflects the proportion of ownership by Minco  Silver Corporation. Total Changkeng indicated silver resources are 4,054,000  tonnes and 18,470,000 ounces of silver. ***  The inferred resources reported on the Changkeng permit represent 51% of the  actual inferred resources which reflects the proportion of ownership by Minco  Silver Corporation. Total Changkeng inferred silver resources are 2,098,000  tonnes and 14,272,000 ounces of silver. 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.  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 the  April 2008, 24 month trailing average metal prices of US$13.69/oz Ag,  US$710/oz Au, US$1.01/lb Pb and US$1.48/lb Zn. Costs of $12.00/tonne for  mining, $11.50/tonne for processing/tailings management and $5.50/tonne for  G&A for a total of $29.00/tonne and a process recovery of 97% for Ag,  along with Au, Pb & Zn credits of approximately $10.00/tonne were utilized  to derive a cut-off grade of 40 g/t Ag. The  mineral resources were estimated using the Canadian Institute of Mining,  Metallurgy and Petroleum (CIM), Standards on Mineral Resources and Reserves,  Definitions and Guidelines prepared by the CIM Standing Committee on Reserve  Definitions and adopted by the CIM Council on December 11, 2005.    7    International  Feasibility Study ("IFS")   Wardrop  was retained in April of 2008 to conduct the IFS using the resource update  released in May of 2008.   Additional  metallurgical tests to optimize the initial work completed for the Preliminary  Economic Assessment in October of 2007 were also initiated. Minco Silver  received a comprehensive metallurgical report on Fuwan samples from the  Beijing General Research Institute of Mining & Metallurgy. The results  confirmed initial work carried out by Process Research Associates with overall  recoveries of silver, using conventional flotation, reported as above 96%.  Recoveries for lead and zinc were above 95%.   In  the first quarter of 2009, the Feasibility Study progressed with the basic  engineering, requests for quotation and preparation of the capital cost  estimate.   In  the second quarter of 2009, the costs were optimized and preparations were  being made to commence the feasibility report.   By  September 1, 2009, the Feasibility Study was effectively completed. The  results of this study were released to the public through a press release on  September 28, 2009. The Study defines an operation based on underground mining  and milling of the ore producing a silver/lead concentrate and a zinc  concentrate on site in the township of Fuwan, approximately 45km southwest of  the provincial capital of Guangzhou, China.   The  highlights of the study are noted as follows:   Highlights  of Feasibility Study:  Feasibility          Study Highlights (Pre-Tax)Feasibility          ResultsProbable          Mineral Reserve9.118          Mt averaging 189 g/t AgMine          Life9.2          YearsDaily          Mine Throughput3,000          tpdMill          Recovery (Ag Recovered in both concentrates)91%Average          Annual Recovered Ag in both concentrates5.5          M ozTotal          Recovered Ag in both concentrates50.4          M ozTotal          Operating Cost/t Ore MilledUS$34.42/tTotal          Cash Cost per Payable oz AgUS$5.65/ozPre-Production          Capital CostsUS$73.1          MSilver          Price Used for Feasibility Study EconomicsUS$13.57/oz          AgTotal          RevenueUS$648.2          MTotal          Operating CostUS$313.8          MTotal          Royalty PaymentUS$24.3          MTotal          Operating Cash FlowUS$310.0          MNet          Present Value Before Tax @ 6% Discount RateUS$111.5          MNet          Present Value Before Tax @ 8% Discount RateUS$95.3          MInternal          Rate of Return Before Tax33.2%Payback          Period of Pre-Production Capital Costs2.3          yearsConstruction          Period20          - 24 months    8  Project  Overview   Deposit   The  Fuwan silver deposit (the "Deposit") falls into the broad category of  sediment-hosted epithermal deposits and is characterized by 8 zones of vein  and veinlet mineralization within zones of silicification. Zones 7 and 8 are  not included in the reserve estimate. The predominant sulphide minerals are  sphalerite and galena with lesser pyrite, as well as rare arsenopyrite,  chalcopyrite, and bornite. The deposit is poor in gold.   Resource  Estimation   P&E  completed five resource estimates for the Fuwan silver deposit in November  2005, November 2006, June 2007, December 2007 and May 2008. The May 2008  estimate, which is an update of the December 2007 estimate on the basis of  infill drilling, formed the basis of the Study. All resource estimation  technical reports were done in compliance with NI 43-101 and CIM standards,  most of which were filed on SEDAR. There has been no additional drilling on  the deposit area since that time.   Contained  Mineral Resources (at a 40g/t Silver cut-off)       Resource          Area & Classification(does not include Changkeng mineralization)tonnes(M          t)Ag(g/t)Ag(M          oz)Au(g/t)Pb(%)Zn(%)Fuwan          Permit Indicated13.9518884.30.170.200.56Fuwan          Permit Inferred10.2417156.10.260.260.72   Reserve  Estimation   The  resource estimate provided by P&E classified the resources for the Fuwan  Zones 1 to 4 as indicated and inferred. The reserve does not include any  resources from the Changkeng property. Only indicated mineral resources as  defined in NI 43-101 were used to establish the probable mineral reserves. No  reserves were categorized as proven. Wardrop used a stope recovery factor of  95%, an average mining extraction rate of 97%, and an average 7% internal  dilution, 8% external dilution, and 3% fill dilution to estimate the total  amount of diluted probable mineral reserves. Ore reserve calculations  conservatively assumed dilution to contain no metal.Probable  Mineral Reserves (Diluted and In-situ)       ZonetonnesAg          (g/t)Ag          (M oz)Au(g/t)Pb(%)Zn(%)   In-situ   11,328,000186 7.90.180.060.3224,806,00019229.70.170.180.5732,452,00019215.10.110.260.644            532,000150 2.60.070.420.82Total9,118,00018955.30.150.200.57   Notes:  Reserve based on: Silver 13.00 US$/oz; Gold 688 US$/oz; Lead 0.88 US$/lb; Zinc  1.28 US$/lb; Operating cost of 37.13 US$/t   Mining   The  mine will be accessed by a single decline developed at a gradient of -15%.  Mining will be with conventional trackless mechanized equipment.   A  2 m minimum mining height was adopted for mechanized mining and mining methods  will vary and be dependent upon orebody geometry, ground conditions, and ore  grade.   Drift-and-fill  mining, and a small amount of room-and-pillar mining, will be used for flat  lying zones. As the orebody has reasonably good grades, a trade-off study was  undertaken to assess at what grade it would be worth backfilling with cemented  fill and carrying out a primary/secondary drift-and-fill type mining method  allowing 100% extraction without leaving any ore pillars.   Ore  zones with lower grades will be mined by the room-and-pillar method. This  method is selective and zones of low grade can be left as pillars. Stope and  pillar dimensions, ground support in development headings, and stopes will  depend on orebody geometry and ground condition.    9    The    cut-and-fill method will be used for ore zones dipping between 15° and    50°.       All    stopes will be backfilled after mining is completed. Free draining hydraulic    backfill was selected as the most appropriate method due to the flat-lying    and relatively large horizontal extent of the orebody, coupled with the    distant location of the process plant and difficulties with access above the    orebody.       This    backfilling method will allow up to 45% to 50% of the tailings to be    disposed of as hydraulic backfillunderground, reducing the required size of    the surface tailings pond. Backfill will be prepared from tailings produced    in the plant and distributed to the underground stopes by a pipeline through    the main access ramp. For primary stope filling in drift-and-fill, 5% cement    will be added. Backfill for cut-and-fill, room-and pillar, and secondary    stopes of drift-and-fill mining will not be cemented. Mine    production of 3000 tpd is based on a crew rotation of three 8 hour shifts    and over 330 days per year. A mining contractor is assumed for    pre-production development as well as ongoing mine development.       Metallurgy       A    3,000 tpd process plant has been designed for the Fuwan Project to process    silver, lead and zinc bearing sulphide mineralization. The main value metals    in the mineralization are silver,    lead, zinc, and    gold. The process plant will operate 330 d/a at an annual process rate of    990,000 t/a and three shifts per day. Overall process plant availability    will be approximately 90%.       The    run-of-mine (ROM) from the underground mine will be crushed by a jaw crusher    to 80% passing 150 mm, and then ground to 80% passing 100 μm    in a semi-autogenous grinding (SAG)-ball mill-pebble crushing circuit    (SABC). The silver, lead, and zinc minerals will be recovered by a    conventional differential flotation process.       The    tailings produced from the zinc rougher scavenger flotation circuit will be    sent to the tailings storage facility (TSF) for storage and to the    underground mine for hydraulic backfilling. The produced silver-lead    concentrate and zinc concentrate will be thickened and then pressure    filtered separately prior to being transported to smelters. Depending on the    lead head grade, the silver-lead concentrate may be further processed to    produce a silver concentrate and a lead-silver concentrate.       The    average dry concentrate production is forecast to be as follows:•silver-lead            concentrate - 15,900 t/a, including: -154,700            kg/a (4,975,000 oz/a) silver -1,600            t/a lead•zinc            concentrate - 9,300 t/a including: -4,700            t/a zinc -15,400            kg/a (495,000 oz/a) silver.       Infrastructure       The    Fuwan property is located approximately 45 km southwest of Guangzhou, the    capital city of Guangdong province. Access to the property is via the    Guangzhou - Zhuhai highway, which passes through Gaoming City. The property    is located 2 km via gravel road northwest of the town of Fuwan (population    30,000). The town of Fuwan is well connected by paved highway and    expressways to major cities, including Guangzhou (70 km highway distance),    Gaoming (15 km), and Jiangmen (60 km), The Fuwan property is also accessible    by water on the Xijiang River to major cities like Guangzhou, Zhaoqing and    Jiangmen, as well as to international waterways in the South China Sea.    Electrical power, water, telephone service, and supplies are available in    Fuwan. The proposed minesite is large enough to accommodate tailings and    waste disposal areas, and processing plant sites. 10        Operating    Costs       The    operating cost estimates are based on a process rate of 990,000 tonnes of    ore annually or 3,000 tpd of ore.        Mining US$18.01/t  Processing US$9.90/t  Tailings US$1.13/t  G&A US$4.78/t  Surface            Services US$0.60/t  Total US$34.42/t        Capital    Costs       The    estimate has been completed partially by NERIN and partially by Wardrop. The    majority of the information used in the estimate is based on the quantities    and pricing provided by NERIN to Wardrop.        Area            Cost (US$            x 1,000) Direct            Works    A            - Mining (Wardrop) 21,637  B            - Primary Crushing 660  C            - Crushed Ore Stockpile and Reclaim 305  D            - Secondary and Tertiary Crushing 52  E            - Grinding, Flotation, Dewatering, Reagents & Service 9,140  F            - Tailings Disposal Facilities 4,250  G            - Plant Site, Infrastructure & Ancillary Facilities 8,627  H            - Temporary Services 35  L            - Site/Plant Mobile Equipment 1,190  N            - Power Lines (Included in G1 - Power Supply)                  Included in G1 Direct            Works Subtotal 45,896       Indirect    X            - Project Indirect 13,330  Y1            - Land Acquisition 2,120  Y1            - Owner's Costs 5,663  Z            - Contingency 6,051       Indirect            Subtotal 27,164       TOTAL            PRE-PRODUCTION CAPITAL COSTS (US$) 73,060       Working            Capital 8,300       Sustaining            Capital 59,900  11        Financial    Analysis       An    economic evaluation of the Fuwan Project was prepared by Wardrop based on a    pre-tax financial model. For the 9.2 year mine life and 9.1 Mt reserve, the    following pre-tax financial parameters were calculated:        •            33.2% IRR •            2.3 years payback on $73.1 M capital •            US$111.5 M net present value (NPV) at a 6% discount rate.       The    base case prices were as follows based on the 3 year historical average    metal prices from the London Metal Exchange (LME) as of April 29, 2009: •            Silver-            US$13.57/oz •            Gold-            US$767.72/oz •            Zinc-            US$1.18/lb •            Lead-            US$0.91/lb       No    allowance has been made for inflation or escalation.       Sensitivity    Analysis       The    project economics are sensitive to silver price, Operating costs and Capital    expenditures. The sensitivity analysis results are in the table below: Parameter Economic  Change     Indicator-20%-10%Base            Case10%20% Silver            Price NPV            (US$M)3372112151190   IRR            (%)1525334148 Opex NPV            (US$M)1571341128966   IRR            (%)4137332924 Capex NPV            (US$M)12611911210597   IRR            (%)4237333027       Mr.    Christopher N. Zahovskis, P. Eng., former Chief Operating Officer for Minco    Silver, is the Qualified Person responsible for overall supervision of the    Feasibility Study and has reviewed and approved the contents of this report.       Mr.    Dwayne L. Melrose, P. Geo., Vice President Exploration for Minco Silver, is    the Qualified Person responsible for verification and quality assurance of    the company's exploration data, analytical results and resource statements    and has reviewed and approved the contents of this report.       Mr.    Eugene Puritch, P. Eng., President of P&E Mining Consultants Inc. is an    independent Qualified Person responsible for the Fuwan resource estimate and    has reviewed and approved the contents of this report.       Mr.    Jianhui Huang, Ph.D., P. Eng., of Wardrop Engineering Inc. is an independent    Qualified Person as defined by NI 43-101. Mr. Huang has reviewed and    approved the contents of this report.       Mr.    Byron Stewart, P. Eng., of Wardrop Engineering Inc. is an independent    Qualified Person as defined by NI 43-101.       Mr.    Stewart has reviewed and approved the contents of this report.       Mr.    Scott Cowie, B. Eng., MAusIMM., of Wardrop Engineering Inc. is an    independent Qualified Person as defined by NI 43-101. Mr. Cowie has reviewed    and approved the contents of this report. 12        Environmental    Impact Assessment       Environmental    aspects of the feasibility study are being compiled by Environmental    Resources Management ("ERM"), one of the world's leading providers of    environmental consulting services, and will be prepared in accordance with    International Finance Corporation and World Bank standards.       To    satisfy Chinese regulatory requirements, Guangdong Nuclear Design Institute    ("GNDI") has been contracted to complete the Chinese environmental    impact assessment ("Regulatory EIA").       The    Company recently concluded the environmental baseline studies enabling the    completion of the "Regulatory EIA", which will be submitted to the    Guangdong Provincial Environmental Protection Administration in the near    term. The report identifies the ecological and physical environmental    impacts of the proposed mining operation.       In    the third quarter of 2009, a draft report of the Regulatory EIA report had    been completed.       The    EHSIA (Environmental, Health, Safety Impact Assessment) by ERM was also    completed in September and the final report was being prepared. This report    forms a part of the Feasibility Report.       Permitting       The    Company has made significant progress in permitting on the Fuwan Silver    Deposit. At the date of this MD&A, the progress in permitting summarized    as follows:       •The            Exploration Report on the Fuwan Silver Deposit has been accepted and            approved by the Ministry of Land and Resources ("MOLAR") in            Beijing.  •The            Chinese Preliminary Feasibility Study was completed by Changsha            Non-Ferrous Mine Design Institute and approved by an expert panel.             •The            reserve/resource has been registered and received approval from            Guangdong Bureau of Land and Resources and MOLAR in Beijing •The            Gaoming county government granted official approval for the            development of the project. •The            application for the Mining Area Permit was approved by MOLAR in            Beijing and will be held for up to 3 years while preparation for the            Mining License Application is made. The Mining Area Permit covers            approximately 0.79 square kilometers, defines the mining limits of            the Fuwan deposit and restricts the use of this land to mining            activities. •China            Nerin Engineering Co., Ltd. ("NERIN") is progressing well on the            Mineral Resources Development and Utilization Plan. This report            outlines the mining and processing methods and is based on the            already approved Exploration Report and Chinese Preliminary            Feasibility Study. Once completed, the report will be submitted to            MOLAR in Beijing for review and approval. •The            Solar and Water Conservation Plan is completed and approved. •The            Safety Assessment is well advanced and a draft report completed. •The            Geological Hazard Assessment has been completed and approved in            September 2009. •The            Company continues to make significant progress on additional reports            required for the Mining License Application. •On            September 9 and 10, a meeting was held in Nanchang with a panel of            experts along with NERIN, Wardrop and Minco. The purpose of the            meeting was to review the outcome of the Feasibility Study. The            panel endorsed the findings which allow NERIN to complete the Mine            Development and Utilization Report. This report is critical in            obtaining the Mining License. •The            Land Usage Permit was approved by Gaoming County, Foshan District,            and Guangdong provincial governments. 13        Liquidity    and Capital Resources       The    Company does not generate revenues. The Company relies on equity financing    for its working capital requirements to fund its exploration, development,    investment, permitting and administrative activities. In 2009, the Company    closed a private placement financing for gross proceeds of $13,897,804    therefore the Company has enough cash to complete the environmental impact    assessment for the Fuwan Silver Deposit and continue development and    construction of the mine and related facilities.       Cash    Flow       Operating    ActivitiesThe    comprehensive loss for the year ended December 31, 2009 was a total of    $4,246,398 which was partially offset by amortization expenses of $49,729,    stock based compensation of $459,389, future income tax recovery of $354,735    and foreign exchange loss of $1,000,866 to have $2,504,670 cash used in    operating activities, compared to $4,407,843 cash used in the comparative    period of 2008. Financing Activities In 2009, the Company generated $13.9    million from a non-brokered private placement financing and the exercise of    options (2008 - $2.94 million).       Investing    ActivitiesIn    2009, the Company used $11.7 million in investing activities (2008 - cash    used of $0.01 million) through the investment in and progress made on the    Fuwan Silver property 2.6 million,, advancing funds under the Sterling Loan    ($2.5 million) and investment in short term investments ($6.6 million).       Available    ResourcesThe    Company's cash and short-term investment balance as at December 31, 2009    amounted to $11.1 million (2008 - $4.9 million), which is sufficient to fund    the Company's activities for the IFS and environmental impact assessment    for the Fuwan Silver Deposit. Upon the completion of the bankable    feasibility study the Company will require additional funds to develop the    mine and mill for the Fuwan Silver Deposit. The Company believes that it    will be able to raise the additional capital when required, but there are    not guarantees that with the current global market conditions that the    Company will be able to do so.       Loan    Receivable from Sterling Mining Company ("Sterling")       On    July 22, 2008 the Company announced the execution of 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 Sterling share, based upon Minco Silver's closing price on    July 21, 2008.       The    Company also extended a line of credit in the amount of US$15 million under    the terms of a Credit Facility Agreement dated July 21, 2008 ("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 million was advanced on July 30, 2008; bearing 10% simple    interest plus fees and expenses. It was a term of the Letter of Intent and    the Facility that Minco Silver's obligation to amalgamate with Sterling    and the payment of any and all subsequent advances was conditional upon the    successful completion of a due diligence review of Sterling's operations    and the execution of a definitive agreement.       On    August 27, 2008, at the conclusion of Minco Silver's due diligence review,    the Company terminated its obligation to amalgamate with Sterling and its    obligation to advance the additional US$10 million under the Facility. To    secure the US$5 million advance (plus interest and fees), Minco Silver and    Sterling executed the following: (a)Promissory            Note to secure and evidence the US$5 million advance in which            Sterling promises to pay to the order of the Company;    (b)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; and    (c)Assignment            and Assumption Agreement in which Sterling assigns the Sunshine Mine            under a lease dated June 6, 2003 between Sterling and Sunshine            Precious Metals, Inc. (the "Sunshine Lease") to the Company. 14        The    Company's secured interest is seconded to a previous loan in the amount of    US$1.4 million whereby another secured creditor has a priority secured    interest over Sterling's assets. The Company also has a perfected secured    interest in the Sunshine Lease.       On    February 18, 2009 Minco Silver filed an action in the District Court of the    First Judicial District of the State of Idaho commencing a foreclosure    proceeding to foreclose on Sterling and appoint a receiver to realize on the    US$5 million advance. On March 3, 2009 Minco Silver's foreclosure action    was stayed in favour of Sterling's filing of a voluntary petition under    Chapter 11 of the United States Bankruptcy Code in the United States    Bankruptcy Court for the District of the State of Idaho (the "Bankruptcy    Court").       On    May 15, 2009 the Bankruptcy Court rendered its first decision declaring that    Sterling has the right to re-assume all of Sterling's lease hold interests    including the Sunshine Lease. The Court held that as a condition to    re-assuming the Sunshine lease, Sterling must cure all monetary defaults    pursuant to the terms of the Sunshine Lease as determined by the Court.       On    May 15, 2009, the Court also approved, on an interim basis, a US$1 million    post petition financing offer by Minco Silver to Sterling to fund Sterling's    administration costs during its bankruptcy and to start covering the costs    to cure to be determined by the Bankruptcy Court any defaults under the    Sunshine Lease.       On    August 21, 2009 the Court rendered its second decision declaring (with the    exception of penalties payable on a 7% Net Smelter Royalty ("NSR")    pursuant to the terms of a Consent Decree Judgment between Sterling, The    Environmental Protection Agency (the "EPA") and the Coeur d'Alene    Indian Tribe (the "Tribe") (see Subsequent Events) the preliminary    amount to cure and bring the Sunshine Lease into good standing at US$1.32    million.       On    October 14, 2009 the Court approved a supplemental post petition financing    offer from Minco Silver to Sterling in the amount of US $3 million, an    increase of US $2 million, to finance the costs associated with the care and    maintenance of the Sunshine Mine, and preliminary costs as determined by the    Bankruptcy Court to cure the Sunshine Lease.       On    December 2, 2009 Sterling filed with the United States Bankruptcy Court in    the District of Idaho a second amended disclosure statement providing    information concerning Sterling's proposed plan of reorganization.    Pursuant to the provisions of Sterling's plan of reorganization Minco    Silver has made a bid to purchase Sterling in the amount of US $12.5    million. Purchase consideration will be satisfied by the secured claim    against the assets of Sterling with the balance paid in cash.       Sterling            Loan December            31, 2009  December            31, 2008 Principal            (US$5,000,000) $5,247,000  $6,114,000 Interest            on principal (US$332,125)  330,610   386,231    5,577,610   6,500,231          Post            petition financing and expenses (US$2,550,176)  2,613,355   155,916 Interest            on expenses (US$7,078)  7,428   7,428    2,620,783   163,344          Late            payment penalty (US$87,715)  92,048   107,493   $8,290,441  $6,771,068        The    Company believes that the estimated fair value of Sterling's assets in    which it holds a security interest is in excess of the carrying value of the    loan as at December 31, 2009. The Company's loan receivable from Sterling    is recorded at the estimated realizable amount. The determination of this    amount involves assessing the potential outcomes for settlement of the loan    and the value to be received under each outcome. This process involves    significant estimates in respect of the timing, amounts and nature of    payments to be received by the Company.       Off-Balance    Sheet Arrangements       The    Company does not have any off-balance sheet arrangements.       Outlook       In    2010, Minco Silver will focus its resources on advancing the Fuwan Silver    Deposit by obtaining the required permitting to bring the property to    production, securing the financing required and commence construction of the    mine. 15        As    well, the Company believes a conclusion shall be reach in early or mid 2010    for the Sterling loan matter by the Court that the Company shall come out    much stronger, either financially or in terms of mineral resources.       Outstanding    Share Data       At    the date of this MD&A, March 23, 2010, the Company has 40,613,669 common    shares, 4,087,590 warrants and 4,273,666 stock options, for a total of    48,974,925 fully diluted common shares outstanding.       Commitments    and Contingencies(a)The            Company has commitments in respect of office leases in China and            Canada, requiring minimum payments of $1.0 million, as follows:       Commitments    2010 $167,039 2011  167,039 2012  167,039 2013  167,100 2014  167,223 2015  167,223   $1,002,663        (b)The            Company has a commitment in respect of the Fuwan mine design            contract requiring payment of RMB 8 million (approximately $1.23            million)       Transactions    with Related Parties       Amount    due to Minco China as at December 31, 2009 was $0.7 million (December 31,    2008 - $0.94 million). It represents the expenditures on the Fuwan    Property and shared office expenses. The amount is unsecured, non-interest    bearing and payable on demand.       Amount    due to Minco Gold as at December 31, 2009 was $1.4 million (December 31,    2008 - $0.3 million). It represents the exploration expenditures on the    Changkeng Silver Mineralization, shared expenses for the Vancouver office    and the sharing of salaries and administration costs. The amount is    unsecured, non-interest bearing and payable on demand.       In    the twelve month period ended December 31, 2009, the Company paid or accrued    $0.13 million (December 31, 2008 - $0.08 million) in respect of rent, $1.2    million (December 31, 2008 - $Nil) in respect of exploration permit costs    and $0.2 million in respect of sharing of exploration costs of Changkeng    Silver Mineralization, and $0.43 million (December 31, 2008 - $0.78    million) in respect of shared office expenses and administration costs to    Minco Gold.       In    the twelve months period ended December 31, 2009, the Company paid    consulting fees totaling $0.58 million (December 31, 2008 - $0.4 million)    to companies controlled by the Chief Executive Officer, Chief Operating    Officer, Chief Financial Officer and Vice President, Exploration of the    Company. Out of which, $0.17 million were recorded in the income statement    (December 31, 2008 - $145,219) and $402,280 were capitalized in the    development cost (December 31, 2008 - $0.26 million)       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.       Critical    Accounting Estimates       The    preparation of the Company's consolidated 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.       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. 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. 16        The    Company is required to make estimates of future production costs, future    silver commodity pricing, and currency exchange fluctuations in the process    of testing the impairment of its assets.       In    testing the impairment of its mineral interests the Company is testing its    resources and extended determination of silver reserves which requires a    number of assumptions and estimates, including geological sampling and    modeling as well as estimates of future silver prices and future production    costs. Estimates of the resources and ultimately the estimates of reserves    may change based on additional information obtained subsequent to the    assessment date. This may include data obtained from exploration drilling,    significant changes in the price of silver and changes in estimates of the    cost of production. A change in the estimate of reserves could result in a    change in the rate of depletion, development amortization, or impairment of    the resources, resulting in a write down.       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 other than the loan    receivable from Sterling which is discussed under Note 4 of the December 31,    2009 consolidated financial statements.       Business    Environment and Risks       The    Company's operations consist of the acquisition, exploration and    development of mineral 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 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 cash balance of    $0.85 million as at December 31, 2009 was placed with three institutions.    The fair value is equal to the carrying value.       (ii)    Short term investments - Guaranteed investment certificate with maturities    of greater than 90 days when acquired. At December 31, 2009, the balance of    short term investments is $10.3 million. The yields received are 0.65% to    0.80%. The fair value is equal to the carrying value       (iii)    Loan Receivable - The interest rate 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, 2009, the Company has    positive working capital of $9.1 million and therefore the Company 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 - This balance is unsecured and non-interest bearing.    The fair value is equal to carrying value.       (iii)    Due to Minco Gold - This balance is unsecured and non-interest bearing.    The fair value is equal to carrying value. 17  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 the Chinese RMB and the Canadian    dollar will have a $0.05 million effect on the financial results. A 1%    fluctuation in the exchange rate between the US dollar and the Canadian    dollar will have an $0.08 million 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 cash equivalents and 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 development 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 and interest    rate risk.       Newly    Adopted Accounting Policies       On    January 1, 2009, the Company adopted three new standards that were issued by    the Canadian Institute of Chartered Accountants. These standards were    adopted on a prospective basis without restatement of prior periods.       Goodwill    and Intangible Assets       Effective    from January 1, 2009, the Company adopted the recommendations included in    Section 3064, "Goodwill    and Intangible Assets", of the CICA Handbook, which replaced CICA    Section 3062, "Goodwill    and Other Intangible Assets". The adoption of the Section has no    material impact on the Company's financial statements.       Credit    Risk and Fair Value of Financial Assets and Financial Liabilities       Effective    from January 1, 2009, the Company adopted EIC 173,"Credit    Risk and Fair Value of Financial Assets and Financial Liabilities".    This guidance clarified than an entity's own credit risk and the credit    risk of the counterparty should be taken into account in determining the    fair value of financial assets and financial liabilities including    derivative instruments. The adoption of this Section has not material impact    on the Company's financial statements.       Mining    Exploration Costs       Effect    March 27, 2009, the Company adopted EIC 174, "Mining    Exploration Costs". This standard provides guidance on the    capitalization of exploration costs related to mining properties, in    particular, and on impairment of long-lived assets. The adoption of this    standard did not have a material impact on the Company's financial    statements.       New    Accounting Pronouncements       International    Financial Reporting Standards ("IFRS")       The    Canadian Accounting Standards Board ("AcSB") has set January 1, 2011 as    the date for publicly listed companies to adopt IFRS, replacing Canadian    GAAP. Accordingly, IFRS compliant financial statements will be required for    the first quarter of 2011. Comparative figures presented in these financial    statements are also required to comply with IFRS. 18        In    January 2010, the Company initiated an IFRS diagnostic study to assess the    impact of the transition to IFRS. A number of key accounting areas where    IFRS differs and accounting alternatives were to be reviewed. The Company    has planned to start the process to make a determination of the impact of    transition to IFRS on its financial statements and systems, if any, during    the first half of 2010. The second phase of the conversion plan will include    detailed assessments and technical analysis that will result in    understanding potential impacts, decision on accounting policy choices and    the drafting of accounting polices. The Company expects this phase to be    completed in the first half of 2010. The final phase of implementation and    transitioning to IFRS is being planned for 2010.       At    this time, the comprehensive impact of the changeover on the Company's    future financial position and results of operations is not yet determinable.    The Company continues to monitor and assess the impact of evolving    differences between IFRS and Canadian GAAP, since the International    Accounting Standards Board is expected to continue issuing new accounting    standards during the transition period. As a result, the final impact of    IFRS on the Company's financial statements can only be measured once all    the applicable IFRS at the conversion date are known.       Sections    1582, Business Combinations, 1601, Consolidations and 1602, Non-controlling    Interests       In    January 2009, the CICA issued three 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 non-controlling 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 audited financial    statements unless the Company enters into a business acquisition subsequent    to January 1, 2011.       Internal    Controls over Financial Reporting       There    has been no significant change in the Company's internal control over    financial reporting during the year 2009 that has materially affected, or is    reasonably likely to materially affect, the Company's internal control    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.       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    deficiencies in the financial reporting process as of December 31, 2009.    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).       Management    has concluded that the Company did have some financial reporting weaknesses    which have impacted its ability to maintain effective internal control over    financial reporting throughout the year ended December 31, 2009 based on the    criteria set forth in the Committee of Sponsoring Organization of the    Treadway Commission framework. 19        Remediation    of Material Weaknesses       To    address the material weaknesses described above, management has started a    project to redesign the financial reporting process with a view to    evaluating and designing an implementation strategy of the redesigned    process as part of the first quarter 2009, with the expected redesigned    process being implemented through the last quarter of 2009. The financial    reporting team is being strengthened with the contracting and hiring of    technically competent staff.       Subsequent    Events       On    January 26, 2010, the Company settled with the EPA and the Tribe penalties    in the amount of US$1.25 million on the 7% NSR royalty payable pursuant to    the Consent Decree Judgment between Sterling, the EPA and the Tribe ("the    Settlement"). The Settlement completes the outstanding cure amount to the    Sunshine Lease. On March 2, 2010, the Bankruptcy Court approved a settlement    achieved in principle on January 26, 2010 of the penalties due and owing to    the Tribe and the EPA on the 7% NSR pursuant to the Consent Decree Judgment    in the amount of US$1.25 million bringing the Sunshine Lease into good    standing. The Bankruptcy Court also approved a third post petition    supplemental financing offer from the Company to finance the settlement and    Sterling's continued administrative and the care and maintenance costs of    the Sunshine Mine to April 15, 2010 in the amount of US$2 million. Subsequent    to the year-end, the Company paid back the amounts due to Minco Gold    totaling approximately $1,395,553.       Cautionary    Statement on Forward-Looking Information       This    MD&A, which contains certain forward-looking statements, are intended to    provide readers with a reasonable basis for assessing the financial    performance of the Company. All statements, other than statements of    historical fact, are forward-looking statements. The words "believe", "expect",    "anticipate", "contemplate", "target", "plan", "intends", "continue", "budget",    "estimate", "may", "will", "schedule" and similar expressions identify forward looking statements.    Forward-looking statements are necessarily based upon a number of estimates    and assumptions that, while considered reasonable by the Company, are    inherently subject to significant business, economic and competitive    uncertainties and contingencies. Known and unknown factors could cause    actual results to differ materially from those projected in the    forward-looking statements. Such factors include, but are not limited to,    fluctuations in the currency markets such as Canadian dollar, Chinese RMB    and U.S. dollar, fluctuations in the prices of Silver and other commodities,    changes in government legislation, taxation, controls, regulations and    political or economic developments in Canada, the United States, or China or    other countries in which the Company carries or may carry on business in the    future, risks associated with mining or development activities, the    speculative nature of exploration and development, including the risk of    obtaining necessary licenses and permits, and quantities or grades of    reserves. Many of these uncertainties and contingencies can affect the    Company's actual results and could cause actual results to differ    materially from those expressed or implied in any forward-looking statements    made by, or on behalf of, the Company.       Readers    are cautioned that forward-looking statements are not guarantees of future    performance. There can be no assurance that such statements will prove to be    accurate and actual results and future events could differ materially from    those acknowledged in such statements. Specific reference is made to the    Company's most recent Annual Information Form on file with Canadian    provincial securities regulatory authorities for a discussion of some of the    factors underlying forward-looking statements.       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, except to the extent required by applicable laws.       Dr.    Ken CaiMarch    23, 2010 20 MINCO  SILVER CORPORATION   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITIONAND  RESULTS OF OPERATIONSFOR  THE YEAR ENDED DECEMBER 31, 2010   This  management's discussion and analysis ("MD&A") of the operating  results and financial position of Minco Silver Corporation and its  subsidiaries ("Minco Silver" or "the Company") is for the year ended  December 31, 2010 compared with the year ended December 31, 2009. The  MD&A, dated March 30, 2011 should be read in conjunction with the  accompanying audited consolidated financial statements and notes prepared by  management for the years ended December 31, 2010 and 2009 Refer to Note 2 of  the December 31, 2010 and 2009 audited consolidated financial statements  respectively for disclosure of the Company's significant accounting  policies. The Company's financial statements are prepared in accordance with  Canadian generally accepted accounting principles ("GAAP") Except as  noted, all financial amounts are expressed in Canadian dollars.   Management  is responsible for the consolidated financial statements referred to in this  MD&A, and provides officers disclosure certifications filed with  securities commissions on SEDAR. The audit committee reviews the consolidated  financial statements and MD&A, and recommends approval to the Company's  Board of Directors.   Additional  information, including the above mentioned audited consolidated financial  statements for the year ended December 31, 2009 and the MD&A and annual  information form (AIF) for the same period, which contain extensive disclosure  of the history and properties of the Company, are available on SEDAR and may  be accessed at www.sedar.com.   As  at December 31, 2010, the Company had 49,618,619 common shares outstanding. As  at March 30, 2011, the Company has 57,526,086 common shares outstanding.   Company  Overview   Minco  Silver (TSX: MSV) was incorporated under the laws of British Columbia, Canada  on August 20, 2004. Minco Silver is engaged in the acquisition, exploration  and development of silver dominant mineral properties. The Company currently  has 100% beneficial interest in the assets of the Foshan Minco Mining Co. Ltd.  ("Foshan Minco") subject to 10% net profits interest in Foshan Minco held  by Guangdong Geological Bureau ("GGB") in the Fuwan Silver Deposit,  situated along the northeast margin of the highly prospective Fuwan Silver  Belt in Guangdong Province, People's Republic of China ("China").   At  the date of this MD&A, Minco Gold Corporation ("Minco Gold") owns  26.2% of the outstanding shares of the Company.   Highlights  for the year ended December 31, 2010   For  the year ended December 31, 2010; the Company: 1.Recorded          a net loss of $4.2 million (loss $0.09 per share) compared to a loss          of $4.2 million (loss $0.13 per share) for fiscal 2009. In 2010, the          amount capitalized as development costs was $4 million (2009 - $3.7          million). The cumulative capitalized development as of December 31,          2009 was $13 million.    2.The          Company continues to make significant progress on additional reports          required for the Mining License Application.     The          Geological Hazard Assessment for the project was approved by the          Department of Land and Resources of Guangdong Province.     The          regulatory Environmental Impact Assessment ("EIA") has been          completed and submitted to the Department of Environmental Protection          of Guangdong Province.     The          Mine Development Plan ("MDP") has been prepared by China Nerin          Engineering Co., Ltd. ("NERIN") on behalf of the Company. The Plan          is currently being registered with the Ministry of Land and Resource ("MOLAR")     China          Nerin Engineering Co., Ltd. ("NERIN") has been engaged to carry          out the preliminary design for the Fuwan project. Design work is          expected to complete in April 2011.    1        3.Even          though the Company was unsuccessful in its bid to acquire 100% of the          shares of Sterling Mining Corporation ("Sterling") during the          bankruptcy auction held on April 21, 2010, the Company made a claim to          receive the repayment of all amounts advanced and incurred, with          interest, in the aggregate amount of approximately US$11.7 million. On          June 4, 2010 the Company received the full amount of its claim of          US$11.7 million ($12.1 million) from Sterling.    4.On          April 14 and April 22, 2010, the Company successfully closed          non-brokered private placement of 2,300,000 units at a price of $1.71          per unit for gross proceeds of $3,933,000. Each unit consists of one          common share and one half of one common share purchase warrant. Each          whole warrant entitles the subscriber to purchase a common share at a          price of $2.15 for a period of twelve months from the date of the          closing.    5.Subsequent          to December 31, 2010, the Company announced a bought deal with a          syndicate of underwriters (see Subsequent Event).   Selected  Annual Information   The  following table summarizes selected financial information for the most recent  three years ended December 31.    201020092008Total          revenue---Net          loss$(4,159,983)$(4,246,398)$(2,295,138)Earnings          (loss) per share basic and diluted$(0.09)$(0.13)$(0.07)Total          assets$43,646,493$29,020,399$17,729,485Total          long-term financial liabilities---Cash          dividends declared per share for each class of share---   The  Company continues to operate in the development stage and, therefore, did not  generate any revenues.   Results  of OperationsThe  Company's development and exploration costs represent expenditures  undertaken to support the Company's strategic objectives on their  properties.   The  following table summarizes selected financial information for the eight most  recent quarters.    2     2010 2009   Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Exploration          costs $- $- $- $- $- $1,205,298 $- $207,710 Administration          costs  1,681,779  1,159,568  988,033  1,152,832  652,928  478,596  483,130  518,833 Foreign          exchange (gain) loss  492,069  385,941  (404,091) 333,270  285,225  446,852  550,056  (141,063)Operating          income (loss)  (2,173,848) (1,545,509) (583,942) (1,486,102) (938,153) (2,130,746) (1,033,186) (585,480)Gain          on Sterling loan  -  -  1,198,417  -  -  -  -  - Interest          and sundry income (loss)  85,847  18,568  13,479  7,675  52,873  672  (3,295) 36,182 Income          (loss) before income tax  (2,088,001) (1,526,941) 627,954  (1,478,427) (885,280) (2,130,074) (1,036,481) (549,298)Income          tax recovery  101,152  107,817  54,664  41,799  69,291  285,444  -  - Net          Income (Loss) $(1,986,849)$(1,419,124)$682,618 $(1,436,628)$(815,989)$(1,844,630)$(1,036,481)$(549,298)Basic          and diluted loss per share $(0.04)$(0.03)$0.02 $(0.04)$(0.02)$(0.06)$(0.03)$(0.02)Weighted          average number of shares outstanding  47,957,860  43,537,955  42,695,674  40,727,061  38,727,432  32,298,490  32,204,204  32,118,490    Exploration  Costs   During  the year ended December 31, 2010, the Company did not conduct any regional  exploration activities.   The  following is a summary of exploration costs incurred for the eight most recent  quarters:  2010 2009   Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Consulting          fees $- $- $- $- $- $- $- $- Exploration          permit  -  -  -  -  -  1,205,298  -  - Drilling  -  -  -  -  -  -  -  207,710 Labour  -  -  -  -  -  -  -  - Others  -  -  -  -  -  -  -  -   $- $- $- $- $- $1,205,298 $- $207,710    Development  Cost on Fuwan Silver Deposit   In  the year ended December 31, 2010, the Company incurred a total of $3,959,260  (2009 - $3,706,804) on development for the Fuwan Silver Deposit for total  accumulated costs of $12,960,162 (2009 - $9,000,902) on development as at  December 31, 2010. The increase was primarily due to:    •an          increase in consulting fees for consultants who provided mine          development services for the project.   •an          increase in stock-based compensation.   •preliminary          work in the mine design for the project.   •an          increase in expenditures related to the mining license application          process.   •an          increase in travel to the project site.    3    In  the three months ended December 31, 2010, the Company incurred a total of  $1,599,921 (2009 - $881,365) on development for the Fuwan Silver Deposit and  recorded an accumulated cost of $12,960,162 (2009 - $9,000,902) on development  as at December 31, 2010. The quarterly increase was due to the same factors  outlined for the annual increase.   The  following is a summary of development costs capitalized or incurred for the  Fuwan Silver Deposit for the eight quarters from January 1, 2009.  2010 2009   Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Consulting          fees $347,075 $219,865 $62,635 $257,574 $119,415 $125,002 $143,907 $136,343 Drilling  3,209  -  21,662  14,461  12,821  27,141  39,816  442 Labour          costs  145,544  100,371  96,296  84,708  112,153  97,017  108,643  130,244 Feasibility          study (IFS)  -  -  -  -  178,692  165,592  142,472  280,739 Stock          based compensation  303,456  323,451  163,994  125,394  251,790  163,990  171,509  116,832 Stock          based compensation future income tax  101,152  107,817  54,665  41,798  -  285,444  -  - Mining          design costs  265,896  -  -  -  -  -  -  - Mining          license application  185,267  81,062  63,356  128,702  65,414  44,464  15,714  31,903 Environmental          Impact Assessment  30,589  23,464  59,829  71,351  63,323  165,211  26,190  32,221 Investor          relations and travel  68,059  69,071  40,030  36,399  -  -  -  - Others  149,674  46,447  46,703  18,234  173,676  85,071  89,674  103,939   $1,599,921 $971,548 $609,170 $778,621 $977,284 $1,158,932 $737,925 $832,663    During  the periods presented, the Company had no discontinued operations or  extraordinary items.   Administrative  Expenses   For  the Years Ended December 31, 2010 and 2009   The  Company's administrative expenses include overhead associated with  administering and financing of the Company's development and exploration  activities. The Company maintains a field office in Gaoming County, China, an  office in Beijing, China and an office in Vancouver, Canada. For the year  ended December 31, 2010, after adjusting for foreign exchange loss of $807,189  (2009 $1,141,070) the Company incurred a total of $4,982,212 of administrative  expenses (2009 - $2,133,487). The Company shares its Vancouver and Beijing  offices with Minco Gold, which allocates a portion of salaries, rent and  office administration expenses at cost to the Company.    •In          2010, the Company granted 1,662,731 stock options to its directors,          officers, employees and consultants with a weighted average exercise          price of $2.90 per share. The Company recognized a total of $3,283,381          as stock-based compensation, with $2,339,863 being recorded in the          income statement (2009 - $459,389), $916,295 capitalized to mineral          interests (2009 - $704,121) and $27,223 (2009 - $Nil) recorded as          share issue costs due to granted stock options related to a private          placement of common shares.   •Investor          relations were $699,209 (2009 - $319,227). This increased expenditure          was due to the increase in investor relations activities including          increased attendance at promotional events, road shows and analyst          tours to the Fuwan project.   •Consulting          fees were $512,300 (2009 - $173,311). This increase was due to          increased input from external and internal consultants to provide          corporate development services and an increase in legal services.   •Property          investigation costs were $40,682 in (2009 - $NIL). This increase was          due to investigation of various third party mineral properties.    4     •Field          office expenses were $359,286 (2009 - $194,536). This increase is due          to the increase in salaries, office administration and travel expenses          of the field office in Guangming.   For  the year ended December 31, 2010, the Company had a foreign exchange loss of  $807,189 (2009 $1,141,070) due to Company's holding of short term  investments denominated in US dollars, which depreciated during the year  causing a decrease in the asset balances in Canadian dollar.   For  the Years Ended December 31, 2009 and 2008   For  the year ended December 31, 2009, after adjusting for foreign exchange loss of  $1,141,070 (2008 gain of $1,440,314) the Company incurred a total of  $2,133,487 of administrative expenses (2008 - $2,809,596). •In          2009, the Company granted 1,110,000 stock options to its directors,          officers, employees and consultants with a weighted average exercise          price of $1.40 per share. The Company recorded $459,389 of stock based          compensation expense in 2009 (2008 - $1,123,350) and capitalized          $704,121 (2008 - $360,086) to the Fuwan project.   •Consulting          fees were $173,311 (2008 - $145,219). This increase was due to          additional consultants required to provide corporate development          services.   •Accounting          fees were $165,122 (2008 - $76,155).   •Investor          relations were $319,227 (2008 - $545,518). The decrease was due to          decrease in certain activities and financing efforts during the year.   •Property          Investigation was $NIL (2008 - $40,016) as the Company concentrated on          the Fuwan Silver Deposit and surrounding regional area.   •Field          office expenses were $194,536 (2008 - $119,996). The increase was          mainly due to increased number of personnel in the Company's China          and Canadian offices.   For  the year ended December 31, 2009, the Company had a foreign exchange loss of  $1,141,070 (2008 gain of $1,440,314) due to the US$5.0 million loan to  Sterling ($1.0 million) and a translation loss from expenses incurred in RMB  and US dollars ($0.4 million)   For  the Three Months Ended December 31, 2010 and 2009   For  the three months ended December 31, 2010, after adjusting for a foreign  exchange loss of $492,069 (2009 $285,226) the Company incurred $1,681,779 in  administrative expenses (2009 - $652,927). •For          the three months ended December 31, 2010, the Company granted 60,000          stock options to its directors, officers, employees and consultants          with a weighted average exercise price of $5.45 per share. The Company          recognized a total of $1,208,000 as stock-based compensation, with          $904,544 being recorded in the income statement (2009 - $99,786) and          $303,456 capitalized to mineral interests (2009 - $155,871).   •Consulting          fees were $203,613 (2009 - $57,715). This increase was due to          additional consultants required to provide corporate development          services.   •Field          office expenses were $149,560 (2009 - $58,322). This increase is due          to the increase of salaries, office administration and travel expenses          of the field office in Guangming.   For  the three months ended December 31, 2009, the Company had a foreign exchange  loss of $492,096 (2009 $285,226) due to the short term investment in US  dollar, which has depreciated during the fourth quarter causing a decrease in  the asset balances in Canadian dollar.   Other  Income   To  date the Company has not earned revenue from operations other than interest  income earned on short-term investments and a gain through the settlement of  the loan to Sterling. In the year ended December 31, 2010 other income was  $1,323,986 (2009 - $86,432). The increase in 2010 is mainly due to the gain on  the settlement of the loan to Sterling of $1,198,417 (2009 - $NIL).   Financial  Position   The  Company's total assets have increased to $43,646,493 (2009 - $29,020,399).  The net increase in total assets was mainly due to increased cash and  short-term investments which resulted from the receipt of the Sterling loan  settlement, proceeds of the private placement in April 2010 and proceeds from  the exercise of stock options and warrants throughout the year.    5    Properties   The  Company's principal property is the Fuwan Silver Deposit located in  Guangdong Province, China. The Company's objective is to develop the Fuwan  Silver Property with a view to commencing commercial mining operations on the  property. The Company will continue to identify new silver projects for  possible exploration and development by way of joint venture or otherwise.   The  Company currently has four reconnaissance survey exploration permits  (exploration licenses) which are located in the Sanzhou basin, Guangdong  Province, China. The permits have a total area of 205.63 sq. km, covering a  major part of the northeast-trending Fuwan silver belt which hosts the known  gold and silver occurrences in the Sanzhou basin, including the Fuwan silver  and Changkeng gold projects. The exploration license for the Fuwan main  deposit area is the Luoke-Jilinggang (76.62 sq. km.). Another three additional  silver exploration permits on the Fuwan belt are referred to as the  Guyegang-Sanyatang (37.29 sq. km.); the Hecun (16.96 sq.km.) and Guanhuatang  (74.76 sq.km.).   P  & E Mining Consultants Inc., a Brampton, Ontario based mining consulting  company, was retained by the Company to prepare an independent technical  report on the Fuwan Silver Property. The report entitled "Technical Report  and Resource Estimate on the Fuwan Property, Guangdong Province, China" ("The  Technical Report and Resource Estimate") dated November 3, 2005. The report  was updated and/or revised on September 25, 2006, November 2, 2006, April 15,  2007 and December 11, 2007. A Preliminary Economic Assessment ("PEA")  report prepared by SRK Consulting Inc. was completed and released on October  22, 2007. Wardrop Engineering Inc., a Vancouver, British Columbia based  engineering and technical consulting company, was retained by the Company to  prepare an updated "Feasibility Study Technical Report" dated September 1,  2009. All of the above reports are available at www.sedar.com.   Drilling  Programs   To  date, six phases of drilling totaling 260 drill holes comprising 69,074 meters  of diamond drilling over both the Fuwan Silver Deposit and the surrounding  regional area have been completed. The drill results were used to calculate  the resource estimates as contained in the Feasibility Study and summarized in  the section titled "International Feasibility Study" ("IFS") below.   The  assay results from the drilling programs can be reviewed on the Company's  website at www.mincosilver.ca  or at www.sedar.com.   Resource  Estimates   In  a report dated May 12, 2008, the Company updated the resource estimate for the  Fuwan Silver Deposit taking into consideration the Phases 1 to 6 drilling  programs including the drilling activity in the Changkeng license area. This  resource update has upgraded the indicated resource by 31 million ounces of  silver to 16 million tonnes containing 93.5 million ounces of silver from 11.9  million tonnes containing 71.6 million ounces of silver. The total indicated  silver resource is 93.5 million ounces and the total inferred silver resource  is 63.3 million ounces. The purpose of this resource estimate was to expand  the indicated resources for inclusion in the ongoing IFS on the Fuwan Silver  property and    1.Expand          the overall Fuwan Silver Deposit resource base.    2.Estimate          silver resources that reflect Minco Silver's current exploration          permit holdings.    3.Estimate          silver resources on Minco Silver's 51% interest in the adjoining          Changkeng license area.   Diamond  drill data from a total of 422 holes was used for the resource calculation.  These programs were conducted on a 60m x 60m diagonal spacing within the  existing 80m x 80m rectangular drill grid spacing. The Fuwan Silver Deposit  remains open along strike to the southwest and up and down its relatively flat  dip to the northwest and southeast.   The  resource estimate for the Fuwan Silver Deposit includes Au, Pb and Zn credits  and has an Indicated Resource of approximately 16.0 million tonnes at 182g/t  Ag, 0.20g/t Au, 0.20% Pb and 0.57% Zn and an Inferred Resource of 11.2 million  tonnes at 174g/t Ag, 0.26g/t Au, 0.27% Pb and 0.73% Zn. Details of the  resources for the Changkeng and Fuwan properties are shown in the following  table.    6    Resource  Estimate1  @ 40g/t Ag Cut-Off Grade.                      Tonnes Ag          (g/t) Ag          (oz) Au          (g/t) Pb          (%) Zn          (%) Fuwan          Permits Indicated  13,948,000  188  84,268,000  0.17  0.20  0.56 Changkeng          Permit Indicated**  2,027,000  142  9,235,000  0.40  0.20  0.61 Total          Indicated  15,975,000  182  93,503,000  0.20  0.20  0.57                     Fuwan          Permits Inferred  10,241,000  171  56,147,000  0.26  0.26  0.72 Changkeng          Permit Inferred ***  1,049,000  212  7,136,000  0.29  0.37  0.86 Total          Inferred2  11,290,000  174  63,283,000  0.26  0.27  0.73    **  The indicated resources reported on the Changkeng permit represent 51% of the  actual indicated resources which reflects the proportion of ownership by Minco  Silver Corporation. Total Changkeng indicated silver resources are 4,054,000  tonnes and 18,470,000 ounces of silver.   ***  The inferred resources reported on the Changkeng permit represent 51% of the  actual inferred resources which reflects the proportion of ownership by Minco  Silver Corporation. Total Changkeng inferred silver resources are 2,098,000  tonnes and 14,272,000 ounces of silver.   1Mineral  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.   2The  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 the  April 2008, 24 month trailing average metal prices of US$13.69/oz Ag,  US$710/oz Au, US$1.01/lb Pb and US$1.48/lb Zn. Costs of $12.00/tonne for  mining, $11.50/tonne for processing/tailings management and $5.50/tonne for  G&A for a total of $29.00/tonne and a process recovery of 97% for Ag,  along with Au, Pb & Zn credits of approximately $10.00/tonne were utilized  to derive a cut-off grade of 40 g/t Ag.   The  mineral resources were estimated using the Canadian Institute of Mining,  Metallurgy and Petroleum (CIM), Standards on Mineral Resources and Reserves,  Definitions and Guidelines prepared by the CIM Standing Committee on Reserve  Definitions and adopted by the CIM Council on December 11, 2005.   International  Feasibility Study ("IFS")   Wardrop  was retained in April of 2008 to conduct the IFS using the resource update  released in May of 2008.   Additional  metallurgical tests to optimize the initial work completed for the Preliminary  Economic Assessment in October of 2007 were also initiated. Minco Silver  received a comprehensive metallurgical report on Fuwan samples from the  Beijing General Research Institute of Mining & Metallurgy. The results  confirmed initial work carried out by Process Research Associates with overall  recoveries of silver, using conventional flotation, reported as above 96%.  Recoveries for lead and zinc were above 95%.   In  the first quarter of 2009, the Feasibility Study progressed with the basic  engineering, requests for quotation and preparation of the capital cost  estimate.   In  the second quarter of 2009, the costs were optimized and preparations were  being made to commence the feasibility report.   By  September 1, 2009, the Feasibility Study was effectively completed. The  results of this study were released to the public through a press release on  September 28, 2009. The Study defines an operation based on underground mining  and milling of the ore producing a silver/lead concentrate and a zinc  concentrate on site in the township of Fuwan, approximately 45km southwest of  the provincial capital of Guangzhou, China. 7    Highlights  of Feasibility Study:Feasibility          Study Highlights (Pre-Tax) Feasibility          ResultsProbable          Mineral Reserve 9.118          Mt averaging 189 g/t AgMine          Life 9.2          YearsDaily          Mine Throughput 3,000          tpdMill          Recovery (Ag Recovered in both concentrates) 91%Average          Annual Recovered Ag in both concentrates 5.5          M ozTotal          Recovered Ag in both concentrates 50.4          M ozTotal          Operating Cost/t Ore Milled US$34.42/tTotal          Cash Cost per Payable oz Ag US$5.65/ozPre-Production          Capital Costs US$73.1          MSilver          Price Used for Feasibility Study Economics US$13.57/oz          AgTotal          Revenue US$648.2          MTotal          Operating Cost US$313.8          MTotal          Royalty Payment US$24.3          MTotal          Operating Cash Flow US$310.0          MNet          Present Value Before Tax @ 6% Discount Rate US$111.5          MNet          Present Value Before Tax @ 8% Discount Rate US$95.3          MInternal          Rate of Return Before Tax 33.2%Payback          Period of Pre-Production Capital Costs 2.3          yearsConstruction          Period 20          24 months   Project  Overview   Deposit   The  Fuwan silver deposit (the "Deposit") falls into the broad category of  sediment-hosted epithermal deposits and is characterized by 8 zones of vein  and veinlet mineralization within zones of silicification. Zones 7 and 8 are  not included in the reserve estimate. The predominant sulphide minerals are  sphalerite and galena with lesser pyrite, as well as rare arsenopyrite,  chalcopyrite, and bornite. The deposit is poor in gold.   Resource  Estimation   P&E  completed five resource estimates for the Fuwan silver deposit in November  2005, November 2006, June 2007, December 2007 and May 2008. The May 2008  estimate, which is an update of the December 2007 estimate on the basis of  infill drilling, formed the basis of the Study. All resource estimation  technical reports were done in compliance with NI 43-101 and CIM standards,  most of which were filed on SEDAR. There has been no additional drilling on  the deposit area since that time.   Contained  Mineral Resources (at a 40g/t Silver cut-off)                    Resource          Area & Classification (does not include Changkeng mineralization) tones(M          t) Ag(g/t) Ag(M          oz) Au(g/t) Pb(%) Zn(%) Fuwan          Permit Indicated  13.95  188  84.3  0.17  0.20  0.56 Fuwan          Permit Inferred  10.24  171  56.1  0.26  0.26  0.72   8    Reserve  Estimation   The  resource estimate provided by P&E classified the resources for the Fuwan  Zones 1 to 4 as indicated and inferred. The reserve does not include any  resources from the Changkeng property. Only indicated mineral resources as  defined in NI 43-101 were used to establish the probable mineral reserves. No  reserves were categorized as proven.   Wardrop  used a stope recovery factor of 95%, an average mining extraction rate of 97%,  and an average 7% internal dilution, 8% external dilution, and 3% fill  dilution to estimate the total amount of diluted probable mineral reserves.  Ore reserve calculations conservatively assumed dilution to contain no metal.   Probable  Mineral Reserves (Diluted and In-situ)                    Zone Tonnes Ag          (g/t) Ag          (M oz) In- situ Au(g/t) Pb(%) Zn(%) 1  1,328,000  186  7.9  0.18  0.06  0.32 2  4,806,000  192  29.7  0.17  0.18  0.57 3  2,452,000  192  15.1  0.11  0.26  0.64 4  532,000  150  2.6  0.07  0.42  0.82 Total  9,118,000  189  55.3  0.15  0.20  0.57    Notes:  Reserve based on: Silver 13.00 US$/oz; Gold 688 US$/oz; Lead 0.88 US$/lb; Zinc  1.28 US$/lb; Operating cost of 37.13 US$/t   Mining   The  mine will be accessed by a single decline developed at a gradient of -15%.  Mining will be with conventional trackless mechanized equipment.   A  2 m minimum mining height was adopted for mechanized mining and mining methods  will vary and be dependent upon orebody geometry, ground conditions, and ore  grade.   Drift-and-fill  mining, and a small amount of room-and-pillar mining, will be used for flat  lying zones. As the orebody has reasonably good grades, a trade-off study was  undertaken to assess at what grade it would be worth backfilling with cemented  fill and carrying out a primary/secondary drift-and-fill type mining method  allowing 100% extraction without leaving any ore pillars.   Ore  zones with lower grades will be mined by the room-and-pillar method. This  method is selective and zones of low grade can be left as pillars. Stope and  pillar dimensions, ground support in development headings, and stopes will  depend on orebody geometry and ground condition.   The  cut-and-fill method will be used for ore zones dipping between 15° and 50°.   All  stopes will be backfilled after mining is completed. Free draining hydraulic  backfill was selected as the most appropriate method due to the flat-lying and  relatively large horizontal extent of the orebody, coupled with the distant  location of the process plant and difficulties with access above the orebody.   This  backfilling method will allow up to 45% to 50% of the tailings to be disposed  of as hydraulic backfill underground, reducing the required size of the  surface tailings pond. Backfill will be prepared from tailings produced in the  plant and distributed to the underground stopes by a pipeline through the main  access ramp. For primary stope filling in drift-and-fill, 5% cement will be  added. Backfill for cut-and-fill, room-and pillar, and secondary stopes of  drift-and-fill mining will not be cemented.   Mine  production of 3000 tpd is based on a crew rotation of three 8 hour shifts and  over 330 days per year. A mining contractor is assumed for pre-production  development as well as ongoing mine development.   Metallurgy   A  3,000 tpd process plant has been designed for the Fuwan Project to process  silver, lead and zinc bearing sulphide mineralization. The main value metals  in the mineralization are silver, lead and zinc. The process plant will  operate three shifts per day for 330 d/a at an annual process rate of 990,000  t/a. Overall process plant availability will be approximately 90%.   The  run-of-mine (ROM) from the underground mine will be crushed by a jaw crusher  to 80% passing 150 mm, and then ground to 80% passing 100 μm  in a semi-autogenous grinding (SAG)-ball mill-pebble crushing circuit (SABC).  The silver, lead, and zinc minerals will be recovered by a conventional  differential flotation process. 9    The  tailings produced from the zinc rougher scavenger flotation circuit will be  sent to the tailings storage facility (TSF) for storage and to the underground  mine for hydraulic backfilling. The produced silver-lead concentrate and zinc  concentrate will be thickened and then pressure filtered separately prior to  being transported to smelters. Depending on the lead head grade, the  silver-lead concentrate may be further processed to produce a silver  concentrate and a lead-silver concentrate.   The  average dry concentrate production is forecast to be as follows:   •silver-lead          concentrate 15,900 t/a, including: -154,700          kg/a (4,975,000 oz/a) silver -1,600          t/a lead•zinc          concentrate 9,300 t/a including: -4,700          t/a zinc -15,400          kg/a (495,000 oz/a) silver.   Infrastructure   The  Fuwan property is located approximately 45 km southwest of Guangzhou, the  capital city of Guangdong province. Access to the property is via the  Guangzhou - Zhuhai highway, which passes through Gaoming City. The property is  located 2 km via gravel road northwest of the town of Fuwan (population  30,000). The town of Fuwan is well connected by paved highway and expressways  to major cities, including Guangzhou (70 km highway distance), Gaoming (15  km), and Jiangmen (60 km), The Fuwan property is also accessible by water on  the Xijiang River to major cities like Guangzhou, Zhaoqing and Jiangmen, as  well as to international waterways in the South China Sea. Electrical power,  water, telephone service, and supplies are available in Fuwan. The proposed  minesite is large enough to accommodate tailings and waste disposal areas, and  processing plant sites.   Operating  Costs   The  operating cost estimates are based on a process rate of 990,000 tonnes of ore  annually or 3,000 tpd of ore.Mining US$18.01/tProcessing US$9.90/tTailings US$1.13/tG&A US$4.78/tSurface          Services US$0.60/tTotal US$34.42/t   Preliminary  Design and Geotechnical Investigations   NERIN  was engaged to carry out the preliminary design for the Fuwan project. The  work was started in September 2010. The main mining and processing techniques  have been defined and main design work completed by the end of the year. The  whole design work is expected to finish in April 2011.   To  provide necessary geotechnical information for the preliminary design a  geotechnical investigation program was initiated in November 2010. By December  31, 2010 a total of 168m was completed in four diamonds drill holes and core  logged.   Capital  Costs   The  estimate was completed partially by NERIN and partially by Wardrop. The  majority of the information used in the estimate is based on the quantities  and pricing provided by NERIN to Wardrop. 10    Area          Cost Direct Works (US$          x 1,000) Mining          (Wardrop)  21,637 Primary          Crushing  660 Crushed          Ore Stockpile and Reclaim  305 Secondary          and Tertiary Crushing  52 Grinding,          Flotation, Dewatering, Reagents & Service  9,140 Tailings          Disposal Facilities  4,250 Plant          Site, Infrastructure & Ancillary Facilities  8,627 Temporary          Services  35 Site/Plant          Mobile Equipment  1,190 Power          Lines (Included in Power Supply)  -      Direct          Works Subtotal  45,896 Indirect         Project          Indirect  13,330 Land          Acquisition  2,120 Owner's          Costs  5,663 Contingency  6,051 Indirect          Subtotal  27,164      TOTAL          PRE-PRODUCTION CAPITAL COSTS (US$)  73,060      Working          Capital and Pre-Production Interest  8,300      Sustaining          Capital  59,900    Financial  Analysis   An  economic evaluation of the Fuwan Project was prepared by Wardrop based on a  pre-tax financial model. For the 9.2 year mine life and 9.1 Mt reserve, the  following pre-tax financial parameters were calculated:    •33.2%          IRR   •2.3          years payback on $73.1 M capital   •US$111.5          M net present value (NPV) at a 6% discount rate.   The  base case metal prices were as follows based on the 3 year historical average  prices from the London Metal Exchange (LME) as of April 29, 2009:    •Silver          US$13.57/oz •Gold          US$767.72/oz •Zinc          US$1.18/lb •Lead          US$0.91/lb   No  allowance has been made for inflation or escalation.   Sensitivity  Analysis   The  project economics are sensitive to silver price, operating costs and capital  expenditures. The sensitivity analysis results are in the table below:ParameterEconomicChange Indicator-20%-10%Base          Case10%20%Silver          PriceNPV          (US$M)3372112151190 IRR          (%)1525334148OpexNPV          (US$M)1571341128966 IRR          (%)4137332924CapexNPV          (US$M)12611911210597 IRR          (%)4237333027    11    Environmental  Impact Assessment   Environmental  aspects of the feasibility study were compiled by Environmental Resources  Management ("ERM"), one of the world's leading providers of  environmental consulting services, and was prepared in accordance with  International Finance Corporation and World Bank standards.   To  satisfy Chinese regulatory requirements, Guangdong Nuclear Design Institute ("GNDI")  has been contracted to complete the Chinese environmental impact assessment ("Regulator  EIA").   The  Company concluded the environmental baseline studies enabling the completion  of the "Regulator EIA", which has been summarized in the Regulatory EIA  and will be submitted to the Guangdong Provincial Environmental Protection  Administration in the near term. The report identifies the ecological and  physical environmental impacts of the proposed mining operation.   The  regulatory Environmental Impact Assessment has been submitted to the  Department of Environmental Protection of Guangdong Province. A technical  panel consisting of eight experts appointed by the Department was established.  After detailed review and examination of the EIA the technical panel concluded  that the Fuwan Silver Project is environmentally valid, and approved the EIA  submission from a technical point of view on March 7, 2010. The company  received comments on the EIA from the technical panel and the revised EIA  report has been submitted to the Department for administrative approval.   The  EHSIA (Environmental, Health, Safety Impact Assessment) by ERM was also  completed in September 2009 and the final report was submitted. This report  forms a part of the Feasibility Report.   Permitting   The  Company has made significant progress in permitting on the Fuwan Silver  Deposit. At the date of this MD&A, the progress in permitting is  summarized as follows:    •The          Exploration Report on the Fuwan Silver Deposit has been accepted and          approved by the Ministry of Land and Resources ("MOLAR") in          Beijing.   •The          Chinese Preliminary Feasibility Study was completed by Changsha          Non-Ferrous Mine Design Institute and approved by an expert panel.   •The          reserve/resource has been registered and received approval from          Guangdong Bureau of Land and Resources and MOLAR in Beijing.   •The          Gaoming county government granted official approval for the          development of the project.   •The          application for the Mining Area Permit was approved by MOLAR in          Beijing and will be held for up to 3 years while preparation for the          Mining License Application are made. The Mining Area Permit covers          approximately 0.79 square kilometers, defines the mining limits of the          Fuwan deposit and restricts the use of this land to mining activities.   •China          NERIN Engineering Co., Ltd. ("NERIN") has completed the Mineral          Resources Development and Utilization Plan. The plan was reviewed and          approved by an expert panel from the Non-ferrous Metal Association on          behalf of MOLAR in Beijing.   •The          Soil and Water Conservation Plan is completed and approved.   •The          Safety Assessment is well advanced and a draft report completed.   •The          Geological Hazard Assessment has been completed and approved in          September 2009.   •The          Fuwan project feasibility study conducted by Wardrop and NERIN is          complete. This report was used in the preparation of the Mine          Development and Utilization Report. This report is critical in          obtaining the Mining License.   •The          Land Usage Permit was approved by Gaoming County, Foshan City, and          Guangdong provincial governments.   •The          Mine Geological Environment Treatment Plan was reviewed and approved          by the Environment Committee of China Geology Association. The final          approval by MOLAR in Beijing is expected in the first half year of          2011.   •The          Company continues to make significant progress on additional reports          required for the Mining License Application.    12    Liquidity  and Capital Resources   The  Company does not generate revenues. The Company relies on equity and debt  financing for its working capital requirements to fund its exploration,  development, investment, permitting and administrative activities. Subsequent  to December 31, 2010, the Company announced a bought deal with a syndicate of  underwriters (see Subsequent Event).   As  of this MD & A date, The Company has enough cash to complete the  environmental impact assessment for the Fuwan Silver Deposit and continue  development and construction of the mine and related facilities.   Any  cash denominated in RMB that is maintained in the People's Republic of China  ("China"), where the remittance of funds to jurisdictions outside China is  subject to government rules and regulations on foreign currency controls. Such  remittance requires approvals by the relevant government authorities or  designated banks in China or both. The Company has a capital commitment in  respect of the Fuwan mine design and construction in an amount of $50,000,000  within two years.   Cash  Flow   Operating  Activities   Year  ended December 31, 2010   The  comprehensive loss for the year ended December 31, 2010 was $4,159,983 which  was mainly adjuted by stock-based compensation of $2,339,863, future income  tax recovery of $305,432, the gain on the Sterling loan of $1,198,417 and  repayments of amounts due to related parties of $1,269,982 to arrive at cash  used in operating activities in the amount of $4,752,868, compared to  $2,504,670 cash used in the comparative year of 2009.   Three  months ended December 31, 2010   Comprehensive  loss for the three months ended December 31, 2010 was $1,986,849 which was  mainly adjusted by stock-based compensation of $905,554, increases in prepaid  expenses and deposits of $362,645, increases in accounts payable and accrued  liabilities of $268,534, repayments of amounts due to related parties of  $2,404,891 to arrive at cash generated in operating activities in the amount  of $1,583,978, compared to $1,084,453 cash used in the comparative year of  2009.   Financing  Activities   Year  ended December 31, 2010   For  the year ended December 31, 2010, the Company received proceeds of $12,689,724  from the exercise of common shares and share purchase warrants and proceeds of  $3,884,636 from the issuance of common shares for total cash generated from  financing activities of $16,574,360 compared to $13,918,020 cash generated in  2009.   Three  months ended December 31, 2010   For  the three months ended December 31, 2010, the Company received proceeds of  $10,605,880 from the exercise of stock options and share purchase warrants,  compared to $13,082,303 cash generated in 2009.   Investing  Activities   Year  ended December 31, 2010   For  the year ended December 31, 2010, the Company used $7,558,377 (2009 -  $11,739,932) in investing activities. This was primarily due to proceeds  received from the Sterling loan settlement of $12,121,340 offset by purchases  of short-term investments of $13,798,399, development costs of $2,737,533 and  debtor-in-possession financing made available to Sterling during bankruptcy  proceedings of $2,632,482.   Three  months ended December 31, 2010   For  the three months ended December 31, 2010, the Company used $10,928,832 (2009 -  $11,232,004) in investing activities. This decrease was primarily due to  purchases of short-term investments of $9,469,512 and development costs of  $1,067,699.   Loan  Receivable from Sterling   On  July 22, 2008 the Company announced that it had executed a letter of intent  with Sterling to acquire 100% of the issued and outstanding common shares of  Sterling.    13    The  Company also extended a line of credit in the amount of US$15 million under  the terms of a Credit Facility Agreement dated July 21, 2008 (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 million  was advanced on July 30, 2008, bearing 10% simple interest plus fees and  expenses. It was a term of the Letter of Intent and the Facility that Minco  Silver's obligation to amalgamate with Sterling and the payment of any and  all subsequent advances were conditional upon the successful completion of a  due diligence review of Sterling's operations and the execution of a  definitive agreement.   On  August 27, 2008, at the conclusion of Minco Silver's due diligence review,  the Company terminated its obligation to amalgamate with Sterling and its  obligation to advance the additional US$10 million under the Facility.   On  February 18, 2009, Minco Silver filed an action in the District Court of the  First Judicial District of the State of Idaho commencing a foreclosure  proceeding to foreclose on Sterling and appoint a receiver to realize on the  US$5 million advance. On March 3, 2009 Minco Silver's foreclosure action was  stayed in favour of Sterling's filing of a voluntary position under Chapter  11 of the United States  Bankruptcy Code in the United States Bankruptcy Court for the District  of the State of Idaho (the "Bankruptcy Court").   During  the bankruptcy proceedings the Company advanced a total of US$4.8 million to  Sterling by way of post-petition financing to fund Sterling's administration  costs and cure monetary defaults pursuant to the terms of the Sunshine Lease.   On  December 2, 2009 Sterling filed with the United States Bankruptcy Court a  second amended disclosure statement and plan of reorganization (the "Plan")  providing information concerning Sterling's bankruptcy and its proposed  reorganization. Pursuant to the provisions of the Plan, Minco Silver made a  bid to purchase Sterling in the amount of US$12.5 million.   The  Company was unsuccessful in its bid to acquire 100% of the shares of Sterling  during the bankruptcy auction held on April 21, 2010. As a result, the Company  made a claim to receive the repayment of all amounts advanced and incurred,  with interest, in the aggregate amount of approximately US$11.7 million. The  Court confirmed the winning bid and the sale of Sterling to the winning bidder  on May 7, 2010.   By  June 4, 2010 the Company received US$11.7 million ($12.1 million) from  Sterling for the repayment of the loan. The Company recognized a gain in the  amount of $1.2 million which represents the difference between the funds  received and the amount recorded as loan receivable immediately prior to the  receipt of the repayment.   Off-Balance  Sheet Arrangements   The  Company does not have any off-balance sheet arrangements.   Outstanding  Share Data   At  the date of this MD&A, the Company has 57,526,086 common shares, 5,154,369  stock options and 941,500 common share purchase warrants outstanding, for a  total of 63,621,955 fully diluted common shares outstanding.   Commitments   The  Company has commitments in respect of office leases in China and Canada,  requiring minimum payments of $1,303,317, as follows:     2011 $391,539 2012  387,028 2013  308,829 2014  161,403 2015  54,518        $1,303,317    The  Company has a commitment in respect of the Fuwan mine design contract  requiring payments of RMB 7.02 million (approximately $1.06 million). The  payments are anticipated to continue through to 2013.    14  Transactions  with Related Parties    (a)Amounts          due to related parties as at December 31, 2010 are $839,304 (December          31, 2009 - $2,109,285) and consist of the following:     Amount          due to Minco Mining (China) Corporation ("Minco China") as at          December 31, 2010 of $754,066 (December 31, 2009 - $713,732)          representing the expenditures on the Fuwan Property and shared office          expenses.     Amount          due to Minco Gold as at December 31, 2010 of $85,238 (December 31,          2009 - $1,395,553) representing shared office expenses and the          expenditure on Changkeng Silver Mineralization accrued in 2009.     The          amounts due are unsecured, non-interest bearing and payable on demand.    (b)In          the year ended December 31, 2010, the Company paid consulting fees          totaling $1,169,454 (December 31, 2009 $575,591) to companies          controlled by the Chief Executive Officer, Chief Financial Officer,          Chief Operating Officer, President, Foshan Minco and Vice President,          Exploration of the Company. These amounts are included in exploration          costs, consulting costs and development costs.     For          the three months ended December 31, 2010, the Company paid consulting          fees $591,797 (December 31, 2009 - $170,557) to companies controlled          by the Chief Executive Officer, Chief Financial Officer, Chief          Operating Officer, President, Foshan Minco and Vice President,          Exploration of the Company. These amounts are included in exploration          costs, consulting costs and development costs.    (c)In          the year ended December 31, 2010, the Company paid or accrued $87,309          (December 31, 2009 $127,897) in respect of rent, $NIL (December 31,          2009 $1,413,008) in respect of exploration costs and $372,692          (December 31, 2009 $429,794) in respect of shared office expenses and          administration costs to Minco Gold.     For          the three months ended December 31, 2010, the Company paid or accrued          $22,452 (December 31, 2009 - $41,530) in respect of rent, $NIL          (December 31, 2009 - $1,413,008) in respect of exploration costs and          $106,245 (December 31, 2009 - $123,577) in respect of shared office          expenses and administration costs due to Minco Gold.    (d)During          the year, the Company advanced US$2.1 million to Minco Gold to          increase the registered capital of Minco Gold's subsidiary as          prescribed by the Chinese authorities. In December 2010, Minco Gold          repaid this advance.   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.   Critical  Accounting Estimates   The  preparation of the Company's consolidated 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. Transactions requiring significant  degrees of estimation on the useful life of capital assets   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. 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.   The  Company is required to make estimates of future production costs, future  silver commodity pricing, and currency exchange fluctuations in the process of  testing the impairment of its assets.   In  testing the impairment of its mineral interests the Company is testing its  resources and extended determination of silver reserves which requires a  number of assumptions and estimates, including geological sampling and  modeling as well as estimates of future silver prices and future production  costs. Estimates of the resources and ultimately the estimates of reserves may  change based on additional information obtained subsequent to the assessment  date. This may include data obtained from exploration drilling, significant  changes in the price of silver and changes in estimates of the cost of  production. A change in the estimate of reserves could result in a change in  the rate of depletion, development amortization, or impairment of the  resources, resulting in a write down.    15    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.   Accounting  Policy Changes   International  Financial Reporting Standards ("IFRS")   The  Canadian Accounting Standards Board ("AcSB") has set January 1, 2011 as  the date for publicly-listed companies to adopt IFRS, replacing Canadian GAAP.  Accordingly, IFRS compliant financial statements will be required for the  first quarter of 2011. Comparative figures presented in these financial  statements are also required to comply with IFRS.   Regular  reporting is provided to the Company's senior management and Audit Committee  of the Board of Directors on the progress of the Company's adoption of IFRS.  Discussion has also been held with internal accounting personnel as well as  the Board of Directors to provide education with respect to IFRS and its  effects on the Company.   As  of this MD&A date, the Company has completed the restatement of the  opening balance and the first quarter 2010 financial statements under IFRS.   Based  on the diagnostic and this component evaluation, the main impact on the  Company's consolidated financial statements from the transition to and  adoption of IFRS are listed below.   IFRS  1, First-Time Adoption of  International Financial Reporting Standards, provides guidance for an  entity's initial adoption of IFRS and generally requires the retrospective  application of all IFRS effective at the end of its first IFRS reporting  period. IFRS 1 however does include certain mandatory exceptions and allows  certain limited optional exemptions from this general requirement of  retrospective application. The Company expects to apply the following  significant optional exemptions available under IFRS 1 on the opening  transition date of January 1, 2010:   Mandatory  exemption   IFRS  1 does not allow management to change estimates made before the transition  date to IFRS. Estimates under IFRS at January 1, 2010 remained consistent with  estimates made for Canadian GAAP on that date.   Functional  Currency   Under  Canadian GAAP, all the Company's subsidiaries were integrated foreign  operations. Therefore, monetary items were translated at year-end rates and  non-monetary items were translated at average rates with all foreign currency  gains and losses recognized in profit or loss.   IFRS  requires that the functional currency of each subsidiary of the Company be  determined separately. It was determined that, as at the transition date, the  functional currency of Minco Silver Corporation is Canadian dollars and the  functional currency of the Company's Chinese subsidiaries is RMB.   In  accordance with the IFRS 1 optional exemptions, the Company has elected to  transfer the currency translation differences recognized as a separate  component of shareholders' equity, to accumulated loss on the transition  date.   Stock-based  compensation   Under  Canadian GAAP, for the purpose of accounting for stock-based compensation, an  individual was classified as an employee when the individual was consistently  represented to be an employee under law. Under IFRS, an individual is  classified as an employee when the individual is an employee for legal or tax  purposes (direct employee) or provides services similar to those performed by  a direct employee. This definition of an employee is broader than that  previously applied by the Company and resulted in certain contractors and  consultants being classified as employees under IFRS.   Under  Canadian GAAP, forfeitures were recognized as they occurred. Under IFRS,  forfeiture rate estimated up front and factored into the number of stock  options expected to vest.   Under  Canadian GAAP, the Company recorded stock-based compensation on a  straight-line basis over the vesting period. Under IFRS, the Company records  stock-based compensation for each tranche within an award over the vesting  period of the corresponding tranche.   In  accordance with the IFRS 1 optional exemptions, the Company has elected to  apply IFRS 2 only to unvested options as of January 1, 2010.    16    Deferred  tax on mineral properties   Under  Canadian GAAP, the Company recorded deferred tax liabilities on stock based  payments capitalized in mineral interests, as the stock based payments is not  deductible for tax purpose. IAS 12 exempts the Company from recognizing  deferred tax liability arising from the initial recognition of an asset or  liability in a transaction which is not a business acquisition that affects  neither accounting profit nor tax profit. Capitalization of stock based  payments falls under this exemption. The Company reversed all deferred tax  liabilities relating to share based payments under IFRS.   Statement  of cash flows   The  transition from Canadian GAAP to IFRS has no significant impact on cash flows  generated by the Company   The  above are intended to highlight only those areas believed to be the most  significant and is not intended to be a complete and exhaustive list of all  expected changes. In the period leading up to conversion, the International  Accounting Standards Board will continue to issue new accounting standards and  as a result, the final impact of IFRS on the Company's Consolidated  Financial Statements can only be accurately measured once all the IFRS  applicable at the adoption date of January 1, 2010 are known. Consequently,  the analysis and policy decisions have been made based upon the Company's  expectations regarding the accounting standards that the Company anticipates  will be effective upon conversion to IFRS. Readers are cautioned that the  disclosed impacts of IFRS on financial reporting are estimates and may be  subject to change.   Business  Environment and Risks   The  Company's operations consist of the acquisition, exploration and development  of mineral 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 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          and cash equivalents In order to manage credit and liquidity risk, the          Company places its cash and cash equivalents into Canadian and Chinese          chequing and savings accounts. At December 31, 2010, the balance of          $5.1 million was placed with three institutions.    ii.Short          term investments are discount notes and guaranteed investment          certificates with maturities of greater than 90 days when acquired. At          December 31, 2010, these totalled $24.1 million and were placed with          three institutions. The yields on these investments were 0.4% to          1.60%.   The  Company does not have any derivative financial instruments nor has it invested  in asset backed paper instruments.Fair value measurement   It  is required that the classification of fair value measurements uses a fair  value hierarchy that reflects the significance of the inputs used in making  the measurements, including the following levels:   Level  1 quoted prices in active markets for identical assets or liabilities,   Level  2 valuation methods that make use of directly or indirectly observable inputs,  and   Level  3 valuation methods that make use of unobservable market data used as inputs.   The  fair value of the Company's cash and cash equivalents and short-term  investments is their carrying value (level 2). The marketable securities are  measured on its fair value based on quoted market price (level 1). The fair  value of the Company's receivables and payables approximates their carrying  value given their short-term nature.    17    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, 2010, the Company has positive working  capital of approximately $28.5 million and therefore has sufficient funds to  meet its current operating and exploration and development obligations.  However, the Company will require significant additional funds to complete its  plans for the Construction of Fuwan silver mine.   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 invests in 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 US 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.   Interest  rate risk - Financial instruments that expose the Company to interest rate  risk are the cash and cash equivalents, short-term investments and loan  receivable owned by the Company.   The  Company has completed a sensitivity analysis to estimate the impact that a  change in foreign exchange rates would have on the net loss of the Company,  based on the Company's net RMB 21.5 million monetary assets at year- end.  This sensitivity analysis shows that a change of +/- 10% in RMB foreign  exchange rate would have a +/- $0.3 million impact on net loss for the year  ended December 31, 2010. This impact is primarily as a result of the Company  having cash balances denominated in RMB. In addition, a change in foreign  exchange rates would have on the net loss of the Company, based on the Company's  net US$16 million assets at year- end. This sensitivity analysis shows that a  change of +/- 10% in US$ foreign exchange rate would have a +/- US$1.6 million  impact on net loss for the year ended December 31, 2010. This impact is  primarily as a result of the Company having year- end short term investment  balances denominated in US dollars.   The  Company has also completed a sensitivity analysis to estimate the impact that  a change in interest rates would have on the net loss of the Company. This  sensitivity analysis shows that a change of +/- 100 basis points in interest  rate would have a +/- $0.4 million impact on net loss for the year ended  December 31, 2010. This impact is primarily as a result of the Company holding  short-term investments such as guaranteed investment certificates and discount  notes. As a result of the Company having cash and short-term investments  invested in interest bearing accounts. The financial position of the Company  may vary at the time that a change in interest rates occurs causing the impact  on the Company's results to differ from that shown above.   Disclosure  Controls and Procedures and Internal Controls over Financial Reporting   Management  has established disclosure controls and procedures to ensure that information  disclosed in this MD&A and the related financial statements was properly  recorded, processed, summarized and reported to the Company's Board and  Audit Committee. Management has evaluated the effectiveness of the Company's  disclosure controls and procedures as at December 31, 2010 and has concluded,  based on its evaluation, that these controls and procedures provide reasonable  assurance that material information relating to the Company is made known to  management and reported as required.   Management  is also responsible for establishing and maintaining adequate internal  controls over financial reporting. Any system of internal control over  financial reporting, no matter how well designed, has inherent limitations.  Therefore, even those systems determined to be effective can provide only  reasonable assurance with respect to financial statement preparation and  presentation.   The  control framework used to design the Company's internal control over  financial reporting is the Internal Control - Integrated Framework issued by  the Committee of Sponsoring Organizations of the Treadway Commission   (COSO).  Management has evaluated the effectiveness of design and operation of the  Company's internal controls over financial reporting as at December 31,  2010. Based on the result of this assessment, management has concluded that  the Company's internal controls over financial reporting are effective.   During  the year ended December 31, 2010, there have been no material changes in the  Company's internal control over financial reporting except for the  following:   The  Company hired more accounting staff during the year to ensure there is proper  segregation of duty in the financial reporting function.    18    Subsequent  Events   On  February 9, 2011, the Company announced that it has entered into an agreement  with a syndicate of underwriters , under which the underwriters have agreed to  buy, on a bought deal basis by way of a short form prospectus, 7,600,000  common shares (the "Common Shares"), at a price of $5.95 per Common Share  for gross proceeds of $45,220,000. In addition, the underwriters will also  have an option exercisable at any time until 30 days following the closing of  the offering to increase the size of this offering by up to an additional 15%  of the offering to cover over-allotments, if any. On March 3, 2011, the  Company received the gross proceeds of $45,220,000. The Company paid a 5.5%  commission totaling $2,487,100 and $100,000 in legal fees to complete the  bought deal.   Effective  January 14, 2011, the Company granted options of over 2,003,000 common shares  to various employees and directors, at an exercise price of $5.36 that vest  over an 18-month period from the issue date and expire in January 2016.   Cautionary  Statement on Forward-Looking Information   This  MD&A, which contains certain forward-looking statements, are intended to  provide readers with a reasonable basis for assessing the financial  performance of the Company. All statements, other than statements of  historical fact, are forward-looking statements. The words "believe", "expect",  "anticipate", "contemplate", "target", "plan", "intends", "continue", "budget",  "estimate", "may", "will", "schedule"  and similar expressions identify forward looking statements. Forward-looking  statements are necessarily based upon a number of estimates and assumptions  that, while considered reasonable by the Company, are inherently subject to  significant business, economic and competitive uncertainties and  contingencies. Known and unknown factors could cause actual results to differ  materially from those projected in the forward-looking statements. Such  factors include, but are not limited to, fluctuations in the currency markets  such as Canadian dollar, Chinese RMB and U.S. dollar, fluctuations in the  prices of Silver and other commodities, changes in government legislation,  taxation, controls, regulations and political or economic developments in  Canada, the United States, or China or other countries in which the Company  carries or may carry on business in the future, risks associated with mining  or development activities, the speculative nature of exploration and  development, including the risk of obtaining necessary licenses and permits,  and quantities or grades of reserves. Many of these uncertainties and  contingencies can affect the Company's actual results and could cause actual  results to differ materially from those expressed or implied in any  forward-looking statements made by, or on behalf of, the Company.   Readers  are cautioned that forward-looking statements are not guarantees of future  performance. There can be no assurance that such statements will prove to be  accurate and actual results and future events could differ materially from  those acknowledged in such statements. Specific reference is made to the  Company's most recent Annual Information Form on file with Canadian  provincial securities regulatory authorities for a discussion of some of the  factors underlying forward-looking statements.   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, except to the extent required by applicable laws.   Dr.  Ken Z. CaiMarch  30, 2011    19