Since reopening the Lamaque gold project in early January 2010, the Company has rehired and brought on a mining team in excess of 115 employees, and continues to fill vacant positions. The underground development crews continue to make excellent progress by re-opening the existing workings and are currently mining in #90 and #107 stopes, gearing up for the opening of #115 stope, and mining in several jumbo development headings that are located in ore. The development crews continue to stockpile underground ore at surface next to the crusher in preparation of production.

The Company has received a significant amount of the new equipment required for the re-opening of the Lamaque gold mine including the jaw crusher, cone crusher and crusher motors for the milling facility, and a 6 yard scooptram, a single boom jumbo drill, a 35 tonne truck, two scissor lifts and a boom truck for use underground. The new low profile equipment is expected to arrive on site in April, and the engineering team is in the process of procuring and installing the long term mine electrical system.

The crushing circuit is currently undergoing commissioning. We are expecting a report from SBM verifying that the cone crusher is ready for service and the installation of the lubrication system is within specification.

The jaw crusher,vibrating screen and various conveyor belts have been tested and appear to be problem-free. Longer running times are required, however, to ensure moving parts will not overheat during operations. Additional lubrication has been ordered for this purpose.

The 8x6 ball mill was started empty and the speed was measured at 22rpm. At this speed, it represents a little over 80% of critical so its capacity has been optimized. Ball charge is expected to range from 12 to 16 tons depending on the % desired loading.

Samples were taken from mainly HQ sized (hole outside diameter 96mm, hole inside diameter 63.5mm) and some NQ sized (hole outside diameter 75.8mm, hold inside diameter 47.6mm) drill core. The selected sample intervals were halved by diamond saw and half the core was bagged, numbered and sent to the Company laboratory. In a small number of cases to confirm the geological logging, the selected interval was re-split and 1/4 core re-submitted for assay.

Initial sample preparation and assaying was undertaken at the Company's on-site laboratory. Samples were dried at 105 degrees C for 6 to 8 hours, crushed to less than 1.25 cm by jaw crusher, re-crushed to less than 3 mm using a secondary crusher followed by ring grinding of 700 to 800 grams of sample to nominal particle size of less than 200 mesh. Barren rock wash is used between samples in the preparation equipment. The samples were assayed by fire assay with Atomic Absorption Spectrometer (AAS) finish on a 30 gram sample. All assays over 5 g/t gold were re-assayed using gravimetric fire assay techniques on a 30 gram sample.
Sample preparation was completed by Chemical and Analytical Laboratory Quartz LLP located in Stepnogorsk using the following procedure: samples were pulverized in a jaw crusher to minus 1 mm, mixed and split into two 0.75 kilogram sub-samples. One sub-sample is ground to – 200 mesh and the other sub-sample is retained for reference purposes. A 10 gram sample of the –200 mesh material is used for atomic absorption analysis and the balance is retained for fire assaying and reference purposes. Chemical and Analytical Laboratory Quartz LLP is independent of Alhambra, is certified in the Republic of Kazakhstan and does not have an International Standard Organization ("ISO") rating.