Project Overview

Lotus Resources Plc, through its wholly owned subsidiary Lotus Minerals Mongolia LLC (LMML) and associated Joint Venture Companies, currently holds a number of exploration and mining licences located within the best fluorspar producing districts in Mongolia which entitle it to explore and to undertake fluorspar mining.

Lotus Resources' fluorspar assets comprise four project areas known as the Dai-Uul, Chuluut, Gat and Tsagaan Chuluut projects. All projects are located in the country's central eastern region. The projects include two exploration licences (Gat and Dai-Uul) and two mining licences (Chuluut and Tsagaan Chuluut). Brief summaries of these projects are given below. Further details are set out on separate pages for each project.

Lotus Amgalan LLC ('Chuluut Project')

Lotus Amgalan LLC is a joint venture between LMML and Amguulan LLC, a Mongolian company. The Company owns 51 per cent of Lotus Amgalan LLC. The JV Company holds a mining licence covering 35 hectares which is located approximately 410km southeast of Ulaanbaatar. It is anticipated that mine development work will be able to commence in March 2010 subject to the necessary consents being obtained.

Detailed exploration work for fluorspar in the Orgon district was conducted by the Choyr Geological and Exploration Bureau in 1986 to 1989. An approved resource of 170,000 tonnes of fluorspar ore has been defined in the licence area with fluorspar grades of 30.1-53.1 per cent. This resource estimate is considered to be conservative by the Directors, who believe that there is good potential to add further resources.

Lotus Dai Uul LLC ('Dai Uul Project')

Lotus Dai Uul LLC was originally established as a Joint Venture with a Mongolian company but in January 2010 LMML acquired the 49 per cent of the JV owned by its joint venture partner and now owns 100 per cent of this project.  Lotus Dai Uul LLC holds an exploration licence ('Dai Uul') covering 83 hectares approximately 300km southeast of Ulaanbaatar. It is located near the Bor-Ondor Mine (the biggest fluorspar mine in Mongolia) in the Bor-Ondor fluorspar district.  An application for the grant of a mining licence is being prepared.  It is anticipated that mine development work will be able to commence in mid 2010 subject to the necessary consents being obtained.

Potential reserves of 2.53 Mt. with an average grade of 32.6 per cent CaF2 were identified during previous Russian exploration and classified as category B and C1 and C2 (Explored) under the GKZ reporting system. In April 2009 the Company undertook a limited exploration programme in the area. The trench and drill data from that exploration work confirmed the validity of the results recorded by the Russians in the 1980s.

Lotus Bayalag Fluorspar LLC ('GAT Project')

Lotus Bayalag Fluorspar LLC is a joint venture between LMML and Mr Orgil Enkh-Onon, a local Mongolian businessman. LMML owns 80 per cent. of the joint venture company. The exploration licence held by Lotus Bayalag Fluorspar LLC covers 1,066.7 hectares and is located approximately 225km east of Ulaanbaatar.

Limited exploration work, which involved trenching and test pitting on three outcropping fluorite veins, has been carried out on this licence so far. The Directors believe that these initial investigations indicate that there is good exploration potential. An exploration programme has been prepared to cover mapping and trenching which it is intended to commence in Spring 2010.

Tsagaan Chuluut ('Tsagaan Chuluut Project')

The Tsagaan Chuluut project is a recent addition to the Company's portfolio of fluorspar projects. The Tsagaan Chuluut licence is wholly owned by LMML and was acquired on 30 December 2009. The property comprises a mining licence covering an area of 33 hectares. It is located approximately 400km south east of Ulaanbaatar and 70km north east of the town and fluorspar mining centre of Bor-Ondor.

Exploration work was carried out by joint Mongolian-Russian geological teams between the 1950s and 1980, and by the Mongolian-Russian fluorspar joint venture company Mongolrostsvetmet between 1988 and 1990. An approved resource of 167,000 tonnes of fluorspar ore has been defined in the licence area down to a depth of 90m with an average grade of 45.79 per cent. CaF2. Additional resources have been identified within the licence boundary but require further exploration. The reported resources are amenable to small scale open pit and underground mining.