Gold Dragon Resources Corporation is pleased to announce the results of a technical report recently completed in accordance with National Instrument 43-101 by its majority controlled subsidiary, Potash Dragon Inc. in respect of PDI’s potash property in the Salar de Llamara in northern Chile. The PDI Report includes a maiden solid evaporite mineral resource estimate and a new preliminary economic assessment for the water soluble solid minerals, such as sulphate of potash (SOP) and nitrates, which occur in a number of extensive surface outcrops on PDI’s potash properties in northern Chile. These minerals are used to produce a variety of premium fertilizer products, collectively referred to as Specialty Plant Nutrients (“SPN”). The extensive deposits are amenable to recovery by inexpensive surface strip mining and heap leaching with water followed by solar evaporation to selectively concentrate specific fertilizer products.
 

PDI’s primary focus is its heap leach project in northern Chile which combines a significant resource with low cost mining and a premium product. In the current base case, the capital estimate for the LHLP Project is US$57 million, with a construction period of 1.8 years, ramping up to an annual EBITDA rate of US$70 million over an optimised life of mine of 9.3 years. The base case NPV for the LHLP Project is US$274 million at an 8% discount rate with an IRR of 113%. The base case includes inferred resources only. In the upside case for the LHLP Project, which includes inferred resources and exploration potential, the capital estimate is US$80 million, with a construction period of 1.8 years, ramping up to an annual EBITDA rate of US$75 million over an optimised life of mine of 12.8 years. The upside case NPV for the LHLP Project is US$426 million at an 8% discount rate with an IRR of 176%. Below is a summary of the LHLP Project inferred resources and exploration potential. The PDI Report is available on GDR’s website at http://www.golddragonresources.ca.

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Llamara Heap Leach Project Resource                                         

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                                                Four mixed fertilizers (4MF)

                                                         statistics         

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                                    In situ ore                             

Resource Category                        tonnes          K2SO4(t)  Na2SO4(t)

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Inferred                            111,477,194    t    2,098,071  5,489,073

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                                                 ppm       18,821     49,239

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Exploration. Potential              115,900,250    t    2,436,570  5,820,132

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                                                 ppm       21,023     50,217

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Llamara Heap Leach Project Resource                                         

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                                    Four mixed fertilizers (4MF)            

                                             statistics              SPN    

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                                              NaNO3     Total 4MF    K2SO4 +

Resource Category                 MgCl2 (t)      (t)  Product (t)  NaNO3 (t)

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Inferred                            645,942  143,665    8,376,751  2,241,737

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                                      5,794    1,289       75,143     20,109

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Exploration. Potential              503,337  643,185    9,403,223  3,079,755

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                                      4,343    5,549       81,132     26,572

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Gordon Miller, President and Chief Executive Officer of GDR and PDI, commented that “we are very excited about the results to date from our work on the LHLP Project and believe that it represents a significant new world-class potash discovery. The projected low capital costs associated with the LHLP Project as compared to many other potash developments is a major advantage in the existing financial climate. We look forward to further advancing the LHLP Project to a feasibility stage as soon as possible.”
 

Mineral resources are not mineral reserves and do not have demonstrated economic viability. The PEA is preliminary in nature, as it includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary economic assessment will be realized. The upside case for the LHLP Project is not included in the PDI Report as it is not compliant with NI 43-101.
 

Mr John Alan Gould, B.Sc., B.Sc. (Hons), Pr.Sci.Nat., Executive Vice President for GDR, is the Qualified Person who has reviewed this news release and is responsible for the technical information reported herein, including verification of the data disclosed.
 

About GDR

GDR is a private Canadian company founded by former South African and Canadian mining executives. Our vision is to establish a geographically diversified multi-commodity mining house focused on the acquisition and development of near term gold, uranium, base metal and industrial minerals projects in South Africa, Namibia, Zambia, Chile, Peru, Ontario and elsewhere.