BacTech Mining Corporation - Projects

Projects

Recently, BacTech signed agreements with Yamana Gold Inc. and Gold Aura Limited, two companies who have been working on two gold projects in Papua New Guinea for the past 10 years. The gold deposits are refractory in nature, so they fit our strategy of acquiring metallurgically challenging deposits. It's our first acquisition of what we hope will be many more. Our goal is to amass over 1 million ounces in the ground by year end.

Under the terms of the agreement, BacTech will issue 15 million common shares to Yamana as compensation for the purchase. Yamana will own a 19.97% equity interest (non-diluted) in BacTech post closing of the transaction. We will also provide bioleach consulting on one Yamana project going forward. On closing, the existing agreement between Gold Aura Limited ("GOA") and Yamana will be cancelled to accommodate BacTech's participation.

A new joint venture, between BacTech and GOA has been created to replace the previous arrangement between GOA and Yamana. Under the terms of the new agreement, BacTech will pay CAD$1M directly to GOA to increase its stake in the deposits to 43%. The initial payment of CAD$500,000 will be made on the later of 60 days after signing the agreement and 30 days after the receipt of all requisite regulatory approvals, including the approval of the transfer of the licenses by the Papua New Guinea ("PNG") government. The balance of the funds will be due in 12 months from the transfer. The final payment will be either 5,000,000 shares of BacTech or cash. In addition, BacTech will spend CAD$1.5M over the next 24 months directly on the project to raise its stake to 50%.

As part of the agreement, BacTech will retain GOA's current management team to continue to explore and develop the project. GOA will charge BacTech a 12% management fee on the exploration funds to continue to operate the program. We have done this because it is much less expensive than mobilizing our own staff of geologists and engineers and sending them to PNG to work.

The underlying assets in PNG are the Gameta and Wapolu deposits, both located on the north shore of Fergusson Island and approximately 30 km apart. Since 1996, over $15M has been spent by GOA and Yamana on the properties. Historically, both projects have been serviced by water access due to their close proximity to the coast.

The completion of the purchase agreement with Yamana and the joint venture agreement with GOA are subject to certain conditions which include requisite regulatory consents from mining authorities in Papua New Guinea, and the receipt by BacTech of the approval of the TSX Venture Exchange to the transaction and the issuance of the common shares to Yamana and to GOA.

The Properties

Gameta: At this time, GOA is conducting an infill drill program to define a JORC resource. One of the highlights of the current program has been the discovery of much thicker mineralization at depth. To date, the JV has drilled 192 RC holes, 273 air-core holes and 32 diamond drill holes.

Wapolu: Located approximately 30 kms from Gameta. As the feasibility study begins at Gameta, Wapolu will be drilled more aggressively to outline a JORC compliant resource. To date, the joint venture has drilled 227 RC holes, 272 air-core drill holes and 97 diamond drill holes.

We anticipate getting active on the project once the necessary approvals have been obtained, likely September/October of this year. The ultimate goal is to obtain an NI 43-101 compliant resource by year end. In concert with the drilling program, we will also begin our bioleaching test work on the ores of the 2 deposits. Oddly enough, we actually did some work on these ores roughly 10 years ago which obviously had a positive influence on our decision to purchase these assets.

About Papua New Guinea

Papua New Guinea is a collection of islands that sit northeast of Queensland, Australia, and is the host to many well known gold mines such as Porgera (20M oz), Lihir (45M oz), Ok Tedi (17M oz) and Bougainville (16M oz). Due to the number of world class large deposits in PNG, the government of PNG is now strongly championing the development of smaller mines.

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