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                                                                   Exhibit 10.21

                                     FORM OF
                            INDEMNIFICATION AGREEMENT

     This Indemnification Agreement ("Agreement") is made as of this ____ day of
__________, 2005 by and between Advanced Life Sciences Holdings, Inc., a
Delaware corporation (the "Company"), and the undersigned officer or director of
the Company ("Indemnitee").

     WHEREAS, the Company and Indemnitee recognize the increasing difficulty in
obtaining directors' and officers' liability insurance, the significant
increases in the cost of such insurance and the general reductions in the
coverage of such insurance;

     WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting officers and directors
to expensive litigation risks at the same time as the availability and coverage
of liability insurance has been severely limited; and

     WHEREAS, the Company desires to attract and retain the services of highly
qualified individuals such as Indemnitee to serve as officers and directors of
the Company and to indemnify its officers and directors so as to provide them
with the maximum protection permitted by law.

     NOW THEREFORE, in consideration for Indemnitee's services as an officer or
director of the Company, the Company and Indemnitee hereby agree as follows:

     1.  INDEMNIFICATION.

             (a)  THIRD PARTY PROCEEDINGS. The Company shall indemnify
Indemnitee if Indemnitee is or was a party or is threatened to be made a party
to any threatened, pending or completed action, suit, proceeding or any
alternative dispute resolution mechanism, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Company) by reason of the fact that Indemnitee is or was a director, officer,
employee or agent of the Company, or any subsidiary of the Company, by reason of
any action or inaction on the part of Indemnitee while an officer or director or
by reason of the fact that Indemnitee is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement (if
such settlement is approved in advance by the Company, which approval shall not
be unreasonably withheld) actually and reasonably incurred by Indemnitee in
connection with such action, suit or proceeding if Indemnitee acted in good
faith and in a manner Indemnitee reasonably believed to be in or not opposed to
the best interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe Indemnitee's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent,
shall not, of itself, create a presumption that Indemnitee did not act in good
faith and in a manner which Indemnitee reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had reasonable cause to believe that Indemnitee's conduct
was unlawful.

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             (b)  PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. The Company
shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Company or any subsidiary of the Company to procure a judgment
in its favor by reason of the fact that Indemnitee is or was a director,
officer, employee or agent of the Company, or any subsidiary of the Company, by
reason of any action or inaction on the part of Indemnitee while an officer or
director or by reason of the fact that Indemnitee is or was serving at the
request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees) and, to the fullest extent permitted by
law, amounts paid in settlement actually and reasonably incurred by Indemnitee
in connection with the defense or settlement of such action or suit if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in or not opposed to the best interests of the Company, except that no
indemnification shall be made in respect of any claim, issue or matter as to
which Indemnitee shall have been adjudged to be liable to the Company unless and
only to the extent that the Court of Chancery of the State of Delaware or the
court in which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the circumstances
of the case, Indemnitee is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery of the State of Delaware or such other
court shall deem proper.

             (c)  MANDATORY PAYMENT OF EXPENSES. To the extent that Indemnitee
has been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Subsections (a) and (b) of this Section 1, or in
defense of any claim, issue or matter therein, Indemnitee shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
Indemnitee in connection therewith.

     2.  EXPENSES; INDEMNIFICATION PROCEDURE.

             (a)  ADVANCEMENT OF EXPENSES. The Company shall advance all
expenses incurred by Indemnitee in connection with the investigation, defense,
settlement or appeal of any civil or criminal action, suit or proceeding
referenced in Section 1(a) or (b) hereof (but not amounts actually paid in
settlement of any such action, suit or proceeding). Indemnitee hereby undertakes
to repay such amounts advanced only if, and to the extent that, it shall
ultimately be determined that Indemnitee is not entitled to be indemnified by
the Company as authorized hereby. The advances to be made hereunder shall be
paid by the Company to Indemnitee within thirty (30) days following delivery of
a written request therefor by Indemnitee to the Company.

             (b)  NOTICE/COOPERATION BY INDEMNITEE. Indemnitee shall, as a
condition precedent to his or her right to be indemnified under this Agreement,
give the Company notice in writing as soon as practicable of any claim made
against Indemnitee for which indemnification will or could be sought under this
Agreement. Notice to the Company shall be directed to the Chief Executive
Officer of the Company at the address shown on the signature page of this
Agreement (or such other address as the Company shall designate in writing to
Indemnitee). Notice shall be deemed received three business days after the date
postmarked if sent by domestic certified or registered mail, properly addressed;
otherwise notice shall be deemed received when such notice shall actually be
received by the Company. In addition, Indemnitee

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shall give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee's power.

             (c)  PROCEDURE. Any indemnification and advances provided for in
Section 1 and this Section 2 shall be made no later than thirty (30) days after
receipt of the written request of Indemnitee. If a claim under this Agreement,
under any statute, or under any provision of the Company's certificate of
incorporation or bylaws, providing for indemnification, is not paid in full by
the Company within thirty (30) days after a written request for payment thereof
has first been received by the Company, Indemnitee may, but need not, at anytime
thereafter, bring an action against the Company to recover the unpaid amount of
the claim and, subject to Section 12 of this Agreement, Indemnitee shall also be
entitled to be paid for the expenses (including attorneys' fees) of bringing
such action. It shall be a defense to any such action (other than an action
brought to enforce a claim for expenses incurred in connection with any action,
suit or proceeding in advance of its final disposition) that Indemnitee has not
met the standards of conduct which make it permissible under applicable law for
the Company to indemnify Indemnitee for the amount claimed. However, Indemnitee
shall be entitled to receive interim payments of expenses pursuant to Subsection
2(a) unless and until such defense may be finally adjudicated by court order or
judgment from which no further right of appeal exists. It is the parties'
intention that if the Company contests Indemnitee's right to indemnification,
the question of Indemnitee's right to indemnification shall be for the court to
decide, and neither the failure of the Company (including its Board of
Directors, any committee or subgroup of the Board of Directors, independent
legal counsel, or its stockholders) to have made a determination that
indemnification of Indemnitee is proper in the circumstances because Indemnitee
has met the applicable standard of conduct required by applicable law, nor an
actual determination by the Company (including its Board of Directors, any
committee or subgroup of the Board of Directors, independent legal counsel, or
its stockholders) that Indemnitee has not met such applicable standard of
conduct, shall create a presumption that Indemnitee has or has not met the
applicable standard of conduct.

             (d)  NOTICE TO INSURERS. If, at the time of the receipt of a notice
of a claim pursuant to Section 2(b) hereof, the Company has director and officer
liability insurance in effect, the Company shall give prompt notice of the
commencement of such proceeding to the insurers in accordance with the
procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf
of Indemnitee, all amounts payable as a result of such proceeding in accordance
with the terms of such policies.

             (e)  SELECTION OF COUNSEL. In the event the Company shall be
obligated under Section 2(a) hereof to advance the expenses of any proceeding
against Indemnitee, the Company, if appropriate, shall be entitled to assume the
defense of such proceeding, with counsel approved by Indemnitee, upon the
delivery to Indemnitee of written notice of its election to request that the
Company advance expenses to Indemnitee. After delivery of such notice, approval
of such counsel by Indemnitee and the retention of such counsel by the Company,
the Company shall not be liable to Indemnitee under this Agreement for any fees
of counsel subsequently incurred by Indemnitee with respect to the same
proceeding, provided that (i) Indemnitee shall have the right to employ his or
her own counsel in any such proceeding at Indemnitee's expense; and (ii) if (A)
the employment of counsel by Indemnitee has been previously authorized by the
Company, (B)

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Indemnitee shall have reasonably concluded that there may be a material conflict
of interest between the Company and Indemnitee in the conduct of any such
defense, or (C) the Company shall not, in fact, have employed counsel to assume
the defense of such proceeding, then the fees and expenses of Indemnitee's
counsel shall be at the expense of the Company.

     3.  ADDITIONAL INDEMNIFICATION RIGHTS; NONEXCLUSIVITY.

             (a)  SCOPE. Notwithstanding any other provision of this Agreement,
the Company hereby agrees to indemnify Indemnitee to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the other provisions of this Agreement, the Company's certificate
of incorporation, the Company's bylaws or by statute. In the event of any
change, after the date of this Agreement, in any applicable law, statute, or
rule which expands the right of a Delaware corporation to indemnify a member of
its board of directors or an officer, such changes shall be, ipso facto, within
the purview of Indemnitee's rights and Company's obligations, under this
Agreement. In the event of any change in any applicable law, statute or rule
which narrows the right of a Delaware corporation to indemnify a member of its
board of directors or an officer, such changes, to the extent not otherwise
required by such law, statute or rule to be applied to this Agreement shall have
no effect on this Agreement or the parties' rights and obligations hereunder.

             (b)  NONEXCLUSIVITY. The indemnification provided by this Agreement
shall not be deemed exclusive of any rights to which Indemnitee may be entitled
under the Company's certificate of incorporation, its bylaws, any agreement, any
vote of stockholders or disinterested Directors, the General Corporation Law of
the State of Delaware (the "DGCL"), or otherwise, both as to action in
Indemnitee's official capacity and as to action in another capacity while
holding such office. The indemnification provided under this Agreement shall
continue as to Indemnitee for any action taken or not taken while serving in an
indemnified capacity even though he or she may have ceased to serve in such
capacity at the time of any action, suit or other covered proceeding.

     4.  PARTIAL INDEMNIFICATION. If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a portion of the
expenses, judgments, fines or penalties actually or reasonably incurred by him
or her in the investigation, defense, appeal or settlement of any civil or
criminal action, suit or proceeding, but not, however, for the total amount
thereof, the Company shall nevertheless indemnify Indemnitee for the portion of
such expenses, judgments, fines or penalties to which Indemnitee is entitled.

     5.  MUTUAL ACKNOWLEDGEMENT. Both the Company and Indemnitee acknowledge
that in certain instances, Federal law or applicable public policy may prohibit
the Company from indemnifying its directors and officers under this Agreement or
otherwise. Indemnitee understands and acknowledges that the Company has
undertaken or may be required in the future to undertake with the Securities and
Exchange Commission to submit the question of indemnification to a court in
certain circumstances for a determination of the Company's right under public
policy to indemnify Indemnitee.

     6.  OFFICER AND DIRECTOR LIABILITY INSURANCE. The Company shall, from time
to time, make a good faith determination whether or not it is practicable for
the Company to obtain and

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maintain a policy or policies of insurance with reputable insurance companies
providing the officers and directors of the Company with coverage for losses
from wrongful acts, or to ensure the Company's performance of its
indemnification obligations under this Agreement. Among other considerations,
the Company will weigh the costs of obtaining such insurance coverage against
the protection afforded by such coverage. In all policies of director and
officer liability insurance, Indemnitee shall be named as an insured in such a
manner as to provide Indemnitee the same rights and benefits as are accorded to
the most favorably insured of the Company's directors, if Indemnitee is a
director; or the most favorably insured of the Company's officers, if Indemnitee
is not a director of the Company but is an officer. Notwithstanding the
foregoing, the Company shall have no obligation to obtain or maintain such
insurance if the Company determines in good faith that such insurance is not
reasonably available, if the premium costs for such insurance are
disproportionate to the amount of coverage provided, if the coverage provided by
such insurance is limited by exclusions so as to provide an insufficient
benefit, or if Indemnitee is covered by similar insurance maintained by a
subsidiary or parent of the Company.

     7.  SEVERABILITY. Nothing in this Agreement is intended to require or shall
be construed as requiring the Company to do or fail to do any act in violation
of applicable law. The Company's inability, pursuant to court order, to perform
its obligations under this Agreement shall not constitute a breach of this
Agreement. The provisions of this Agreement shall be severable as provided in
this Section 7. If this Agreement or any portion hereof shall be invalidated on
any ground by any court of competent jurisdiction, then the Company shall
nevertheless indemnify Indemnitee to the full extent permitted by any applicable
portion of this Agreement that shall not have been invalidated, and the balance
of this Agreement not so invalidated shall be enforceable in accordance with its
terms.

     8.  EXCEPTIONS. Any other provision herein to the contrary notwithstanding,
the Company shall not be obligated pursuant to the terms of this Agreement:

             (a)  CLAIMS INITIATED BY INDEMNITEE. To indemnify or advance
expenses to Indemnitee with respect to proceedings or claims initiated or
brought voluntarily by Indemnitee and not by way of defense, except with respect
to proceedings brought to establish or enforce a right to indemnification under
this Agreement or any other statute or law or otherwise as required under
Section 145 of the DGCL, but such indemnification or advancement of expenses may
be provided by the Company in specific cases if the Board of Directors has
approved the initiation or bringing of such suit; or

             (b)  LACK OF GOOD FAITH. To indemnify Indemnitee for any expenses
incurred by the Indemnitee with respect to any proceeding instituted by
Indemnitee to enforce or interpret this Agreement, if a court of competent
jurisdiction determines that each of the material assertions made by the
Indemnitee in such proceeding was not made in good faith or was frivolous; or

             (c)  INSURED CLAIMS. To indemnify Indemnitee for expenses or
liabilities of any type whatsoever (including, but not limited to, judgments,
fines, ERISA excise taxes or penalties, and amounts paid in settlement) which
have been paid directly to Indemnitee by an insurance carrier under a policy of
officers' and directors' liability insurance maintained by the Company or any of
its subsidiaries; or

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             (d)  CLAIMS UNDER SECTION 16(b). To indemnify Indemnitee for
expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute.

     9.  CONSTRUCTION OF CERTAIN PHRASES.

             (a)  For purposes of this Agreement, references to the "Company"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger with the Company, which constituent corporation, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that if
Indemnitee is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.

             (b)  For purposes of this Agreement, references to "other
enterprises" shall include employee benefit plans; and references to "serving at
the request of the Company" shall include any service as a director, officer,
employee or agent of the Company which imposes duties on, or involves services
by, such director, officer, employee or agent with respect to an employee
benefit plan, its participants, or beneficiaries; and if Indemnitee acted in
good faith and in a manner Indemnitee reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan, Indemnitee
shall be deemed to have acted in a manner "not opposed to the best interests of
the Company" as referred to in this Agreement.

     10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.

     11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Company and its successors and assigns, and shall inure to the benefit of
Indemnitee and Indemnitee's estate, heirs, legal representatives and assigns.

     12. ATTORNEYS' FEES. In the event that any action is instituted by
Indemnitee under this Agreement to enforce or interpret any of the terms hereof,
Indemnitee shall be entitled to be paid all court costs and expenses, including
reasonable attorneys' fees, incurred by Indemnitee with respect to such action,
unless as a part of such action, the court of competent jurisdiction determines
that each of the material assertions made by Indemnitee as a basis for such
action were not made in good faith or were frivolous. In the event of an action
instituted by or in the name of the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Indemnitee shall be entitled to
be paid all court costs and expenses, including attorneys' fees, incurred by
Indemnitee in defense of such action (including with respect to Indemnitee's
counterclaims and cross-claims made in such action), unless as a part of such
action the court determines that each of Indemnitee's material defenses to such
action were made in bad faith or were frivolous.

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     13. NOTICE. Except as provided in Section 2(b), all notices, requests,
demands and other communications under this Agreement shall be in writing and
shall be deemed duly given (i) if delivered by hand and receipted for by the
party addressee on the date of such receipt, or (ii) if mailed by domestic
certified or registered mail with postage prepaid, on the third business day
after the date postmarked. Addresses for notice to either party are as shown on
the signature page of this Agreement, or as subsequently modified by written
notice.

     14. CONSENT TO JURISDICTION. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be brought only in the state courts of the State of Delaware.

     15. CHOICE OF LAW. This Agreement shall be governed by and its provisions
construed in accordance with the laws of the State of Delaware, as applied to
contracts between Delaware residents entered into and to be performed entirely
within Delaware without regard to the conflict of law principles thereof.

     16. PERIOD OF LIMITATIONS. No legal action shall be brought and no cause of
action shall be asserted by or in the right of the Company against Indemnitee,
Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two-year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.

     17. SUBROGATION. In the event of payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.

     18. AMENDMENT AND TERMINATION. No amendment, modification, termination or
cancellation of this Agreement shall be effective unless it is in writing signed
by both of the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provisions
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver.

     19. INTEGRATION AND ENTIRE AGREEMENT. Subject to the provisions of Section
3 hereof, this Agreement sets forth the entire understanding between the parties
hereto and supersedes and merges all previous written and oral negotiations,
commitments, understandings and agreements relating to the subject matter hereof
between the parties hereto.

                            [signature page follows]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.

                                   ADVANCED LIFE SCIENCES
                                   HOLDINGS, INC.,
                                   a Delaware Corporation

                                   By:
                                        -------------------------------
                                   Name:  Michael T. Flavin
                                   Title: Chairman, President and Chief
                                          Executive Officer

                                   ADDRESS FOR NOTICE:

                                   1440 Davey Road
                                   Woodridge, Illinois 60517

     AGREED TO AND ACCEPTED:

     INDEMNITEE:

     By:
         --------------------------------
     Name:
           ------------------------------
     Title:
            -----------------------------Filed by Automated Filing Services Inc. (604) 609-0244 - Sterling Group Ventures, Inc. - Exhibit 10.4

 SUMMARY REPORT ON THE

  DX POLYMETALLIC PROPERTY 

 LINXI COUNTY, INNER MONGOLIA

  PEOPLE’S REPUBLIC OF CHINA 

May 25, 2005 

Prepared for 

 MAKAELO LIMITED

  (a subsidiary of Sterling Group Ventures, Inc. ,

  a Nevada company based in Vancouver, B.C.) 

 VANCOUVER, CANADA 

By 

 Ruben S. Verzosa, P.Eng.

  23064 – 50th Avenue

  Langley, B.C. V2Z 2R7 

 i 

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

 ii

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

SUMMARY 

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

History 

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

General Geology 

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

 Conclusions and Recommendations 

	 1.      	 The Gradient IP survey conducted over the DX Property
        suggest the potential of more extensive and larger polymetallic mineralisation
        than those existing at Dajing and Xiaochengzi mine areas. Furthermore,
        independent mining operations on the intervening ground between the Dajing
        and Xiaochengzi mines and the DX 

	 
	 	 Property appear to demonstrate geological extensions of mineralisation
      towards the DX Property. 
	 
	 2.      	 The DX Property is a property of merit. It possess a high exploration
      potential and therefore warrants further work. 
	 
	 3.      	 Based on the results of the IP Survey on the DX Property, an initial
      drilling program of 2500 meters spaced at 500 m is recommended as the next
      stage of exploration. 

 1

INTRODUCTION AND TERMS OF REFERENCE 

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

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

Sources of Information 

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

Disclaimer 

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

PROPERTY DESCRIPTION AND LOCATION 

Property Location 

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

   

    

    Figure 1. Location Map 

   

 2

Property Description 

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

Table 1: Exploration Licenses Comprising the DX Property

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

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

Joint Venture Agreement 

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

 Royalties and Liabilities 

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

ACCESSIBILITY, CLIMATE AND PHYSIOGRAPHY, LOCAL RESOURCES AND INFRASTRUCTURE 

Access 

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

 

 

  Figure 2. Concession Map Showing Local Access and Infrastructure 

  

  

 3

Local Resources and Infrastructure 

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

Climate and Physiography 

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

HISTORY 

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

 Gradient IP Survey 

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

 

 

  Figure 3. Regional Geochemical and Geophysical Anomalies 

  

  

    

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

  

    Figure 4b Gradient IP showing relative chargeability levels

    

  

4 

Geochemistry 

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

GEOLOGICAL SETTING 

Regional Geology 

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

Local Geology 

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

 

  

  Figure 5. Interpretive Cross Section showing
  relative IP anomalies

  

  

 

   

  

 

   

  

 

   

  

 5

DEPOSIT TYPES AND MINERALISATION 

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

EXPLORATION 

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

SAMPLING METHOD AND APPROACH 

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

SAMPLE PREPARATION, ANALYSIS AND SECURITY 

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

DATA VERIFICATION 

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

 6

 ADJACENT PROPERTIES

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

 Table 2: Polymetallic Resource of the Dajing and Xiaochengzi Mines

	  	 	 Dajing  	 Xiaochengzi 	 Price,
 US$/lb
    	 US $ 	 % of 

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

Source: China Geological Report 

MINERAL PROCESSING AND METALLURGICAL TESTING 

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

MINERAL RESOURCE AND MINERAL RESERVE ESTIMATE 

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

INTERPRETATION AND CONCLUSIONS 

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

 7

RECOMMENDATIONS 

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

 8

SELECTED REFERENCES 

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

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

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

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

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

 9

STATEMENT OF QUALIFICATIONS 

I, Ruben S. Verzosa, hereby state that: 

	 I am an independent Consulting Geologist with office and residence at 23064
    – 50th Avenue, Langley, BC V2Z 2R7. 

  
	 I graduated with a Bachelor of Science degree in Geology from the University
    of the Philippines and I have more than 35 years experience in the mineral
    exploration and mining industry. 

  
	 I have been a member in good standing of the Association of Professional
    Engineers of British Columbia since 1970. 

  
	 I am the author of the report “Summary Report on the DX Polymetallic
    Property” 

  
	 I spent one day on April 19, 2005 on the property. 

  
	
     I have no interest, direct or indirect in the DX Property
      and neither do I have any affiliation whatsoever under any form or arrangement
      with Makaelo Limited and neither do I expect to have any future affiliation
      whatsoever under any form or arrangement with the company. 

    

  
	 I am not aware of any material fact or material change that is not reflected
    in the report, the omission of which would make the report misleading.

  
	 I consent to the report being used by Makaelo Limited for disclosure purposes.
  

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

 APPENDIX I

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