QGX Receives Positive Pre-Feasibility Study Result for the Baruun Naran Coking and Thermal Coal Project, Southern Mongolia



    NPV@10% (after tax): US$499 million

    TSX - QGX

    WATERDOWN, ON, Jan. 23 /CNW Telbec/ - QGX Ltd. (TSX: QGX) is pleased to
announce a positive, NI 43-101 compliant, pre-feasibility study ("PFS") for
the Company's 100%-owned Baruun Naran coal project ("the Project") located in
southern Mongolia. Minarco-MineConsult of Sydney, Australia, an independent
mining consultant, prepared the PFS on QGX's behalf.
    The PFS defines a conventional, truck-and-shovel, open-cut mining
operation with coal processed on site using a wash plant to produce both
coking and thermal coal products. The coal products are assumed to be
delivered to markets by rail starting in 2011. The PFS concludes that the
Project is financially robust with an estimated after-tax NPV @ 10% of US$499
million and a discounted cash flow-internal rate of return (DCF-IRR) of 33%.
Project highlights are summarized in Table 1 below.

    
             Table 1. Project Production and Financial Highlights
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Production
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total Mined Coal (ROM Mt)                                            193
    -------------------------------------------------------------------------
    Mine Life (production years)                                          20
    -------------------------------------------------------------------------
    ROM Production Rate (Mtpa)                                          10.0
    -------------------------------------------------------------------------
    Average Stripping Ratio (bcm/ROM mt)                                 5.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Annual Saleable Coal Production(*)
    -------------------------------------------------------------------------
    Coking Coal (11% ash) (Mtpa)                                         3.5
    -------------------------------------------------------------------------
    Thermal Coal (25% ash) (Mtpa)                                        2.4
                                                                        -----
    -------------------------------------------------------------------------
      Average Annual Saleable Coal Production (Mtpa)                     5.9
    -------------------------------------------------------------------------
    Average Annual Costs, Revenues, and Profits
    -------------------------------------------------------------------------
    Cash Mining Cost, including royalty (US$/mt product)              $28.29
    -------------------------------------------------------------------------
    Average Annual Revenue, net VAT (US$ millions)(*)                   $457
    -------------------------------------------------------------------------
    Average Annual After-Tax Net Profit (US$ millions)(*)                $98
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Initial Capital Cost (US$ millions)                                 $404
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Financial Summary
    -------------------------------------------------------------------------
    NPV @ 10% discount rate (US$ millions)                           $499
    -------------------------------------------------------------------------
    DCF-IRR (%)                                                           33%
    -------------------------------------------------------------------------
    Payback (years)(xx)                                                  4.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*) For periods with sales revenue; (xx) From start of mine construction;
        Mtpa = million metric tonnes per year;
        mt = metric tonne; ROM = run of mine


    Paul Zweng, President and CEO of QGX Ltd., commented as follows:

    "We are pleased that the positive results of the Baruun Naran
pre-feasibility study confirm and substantiate the findings of the preliminary
economic assessment announced last July. The new study includes a more
rigorous assessment of the capital costs required to build the coal operation.
We take comfort in the knowledge that these capital costs have been well
vetted by a series of mining experts with experience in Asia. As well, the
study provides updated price forecasts on coking and thermal coal in the
world's greatest coal market-China. The demand for both coking and thermal
coal in China continues to soar. Recent announcements by some of the world's
largest coal companies suggest that the prices for coking and thermal coal
will settle at all-time highs this year. The fundamentals have never been
better for putting a new coalfield into production and we remain very bullish
on the outlook for this project.
    We are also gratified by the value that this project should create for our
shareholders. Equally important, the development of Baruun Naran should
provide substantial benefits for years to come to the people of Mongolia
through taxes, jobs, and infrastructure."

    Introduction

    QGX commissioned Minarco-MineConsult ("MMC") to prepare a pre-feasibility
study ("PFS") of their 100%-owned Baruun Naran coal project ("the Project")
located in southernmost Mongolia. This PFS follows from the Project's
preliminary economic assessment (PEA), also prepared by MMC, that was filed on
SEDAR on September 4, 2007. The report is based on the recently completed
geological model by McElroy Bryan Geological Services ("MBGS") (Sydney,
Australia) which identified 252.9 Mt of NI 43-101 compliant measured and
indicated geological resources (see press release of June 13th, 2007). In
addition, A&B Mylec (Brisbane, Australia) updated the coal-quality and
indicative market specifications for the two Baruun Naran coal products as
well as processing information. Shanxi Fenwei Energy Consulting (Taiyuan,
Shanxi, PR China) supplied a 20-year price forecast for Baruun Naran's product
coals, based on CFR delivered prices into various markets in PR China. Shanxi
Fenwei also supplied rail freight rates and distances as part of the market
analysis. QCC Resources ("QCC") (Brisbane, Australia) supplied coke and
thermal wash-plant yields along with various wash plant designs. P.E.A.T.
(Aust) Pty Ltd (Process Engineering and Technology) of Queensland Australia
provided capital and operating costs for the wash plant. Parsons Brinckerhoff
Australia (Sydney, Australia), estimated mine infrastructure costs as well as
capital and operating costs related to mine-site power generation. MMC
completed the mine planning and prepared an economic model based on the
contributions of the other consultants. MMC also documented all results in a
report which will be filed at a later date on SEDAR.

    Mine Development Strategy

    The PFS defines an open-cut mining operation using conventional
truck-and-shovel equipment, using haulback mining to maximize in-pit dumping
and minimize environmental disturbance. Coal processing will be done on site
using a wash plant to produce both coking and thermal coal products. Coal
products are delivered to markets by a third-party owned and operated rail
line, starting in 2011. The total project life is 23 years, comprising a
2-year construction phase (2009 to 2010) followed by a 20-year mining period
with site reclamation in the final year. The initial construction phase
involves site preparation, infrastructure construction, and waste pre-striping
and stockpiling of coal. Major infrastructure to be constructed on site
includes a wash plant (capacity of 10 Mtpa ROM), coal stockpiles and handling
equipment, mine offices, equipment workshops, and a staff camp facility. The
main mining phase from 2011 will be a large-scale mine washing all ROM coal to
yield coking and thermal coal products. All coking and thermal coal has been
assumed to be marketed and sold in China, transported by rail from mine to
various Chinese cities and steel-making centres.

    Coal Resource

    QGX first announced a NI 43-101 compliant resource estimate completed by
MBGS on June 7th, 2006. MBGS later updated the resource estimate on June 13th,
2007. The current resource estimate is shown in Table 2.

         Table 2. Summary of Coal Resources, Baruun Naran, Mongolia
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Measured Resources       Indicated Resources      Total (M+I) Resources
           (Mt)                     (Mt)                        (Mt)
    -------------------------------------------------------------------------
           93.3                     159.6                      252.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Resources are estimated to a maximum depth of 300 m below the surface


    Potential Mineable Coal

    The quantity of open-pit mineable coal was estimated at 193 Mt of
run-of-mine (ROM) coal at a stripping ratio of 5.2 to 1 (waste bcm: coal ROM
mt). The saleable product was estimated at 118 Mt, comprising 70 Mt coking
coal and 48 Mt thermal coal. No inferred resources were included to calculate
the potential mineable coal resource. A summary of the mineable coal quantity
is provided in Table 3.

                       Table 3. Potential Mineable Coal
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                   Waste         Coal        Total       Coking      Thermal
                                           Product         Coal         Coal
                   (Mbcm)     (Mt ROM) (Mt Product) (Mt Product) (Mt Product)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Total          1,076          193          118           70           48
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Abbreviations: ROM = run of mine; Mbcm = million
                   bank cubic metres; Mt = million metric tonnes


    Production Summary

    Mining commences with the stockpiling of small amounts of ROM coal in 2010
and saleable coal production begins in 2011. ROM coal production reaches a
constant 10 Mtpa in 2012, yielding an average life-of-mine annual production
of saleable (washed) coal consisting of 3.5 Mtpa premium 11% ash coking coal,
and 2.4 Mtpa thermal coal.
    The mine plan indicates an overall strip ratio (bcm/ROM mt) of 5.2:1. The
strip ratio remains at an average 5:1 for 13 years before increasing to 6.5:1
for several years late in the mine life.
    The reclamation program begins in the last year of operation, extending
one year beyond final production. Waste haulage from overburden removal will
be conducted throughout the mine life to minimize end-of-mine effort to
reclaim, achieve original contour, and support re-vegetation with native plant
species. The mine site will be reclaimed and facilities will be salvaged or
contributed to local communities, as permitted.

    Workforce

    The mining workforce requirements were estimated based on MMC's experience
with similar sized projects and previous studies. QCC and Parsons Brinckerhoff
Australia provided the wash-plant and infrastructure workforce requirements,
respectively. A key assumption was that maintenance personnel for the mining
equipment would be provided by the equipment suppliers under a maintenance
agreement. The remaining workforce, including sufficient staff for all levels
of management, supervision, planning, and equipment operation would be
directly employ by the mine. Table 4 shows a breakdown of the total site
workforce including staff and support services for a typical year. In general,
the workforce will range from 700 to 800 employees.

                  Table 4. Typical Estimated Mine Workforce
    -------------------------------------------------------------------------
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    DEPARTMENT                                                         TOTAL
    -------------------------------------------------------------------------
    Management                                                            47
    Mining Operations                                                    500
    Community Relations                                                   16
    Human Resources and Safety                                            20
    Tech. Services                                                        45
    CHPP                                                                  64
    Infrastructure                                                        41
    -------------------------------------------------------------------------
    TOTAL                                                                733
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Mine Operating Costs

    The mine operating costs reflect a typical truck-and-shovel open-pit
operation with a favourable stripping ratio. Costs are increased by coal
washing because of the direct cost of the washing-and-blending process, and
also because of the loss of tonnage to reject material. This process is
required to separate both the coking-coal fraction from the thermal fraction,
and to lower the ash content of the saleable coal products. Estimated cash
costs are summarized in Table 5.

                   Table 5. Estimated Production Cash Costs
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Unit Cash Costs per Product Tonne                                 US$/mt
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Overburden Removal                                                $14.87
    -------------------------------------------------------------------------
    Coal Mining & Product Haul                                         $1.78
    -------------------------------------------------------------------------
    Field Support Cost                                                 $2.72
    -------------------------------------------------------------------------
    Coal Washing and Handling                                         ($3.46)
    -------------------------------------------------------------------------
    Admin, Royalty & Overheads                                         $5.46
                                                                       ------
    -------------------------------------------------------------------------
      Total Project Operating Costs/tonne                             $28.29
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Coal Transport and Port Costs                            $10.82 - $31.09
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Note: Costs for rail transport vary by distance to associated customer
          locations.
          Costs assume 3rd party provided services, including rail cars, in
          both Mongolia and China.


    Indicative Market Specifications for Baruun Naran Coal Products

    Preliminary market studies indicate that an 11%-ash coking coal product
should be in high demand in the Chinese markets. An even lower 8.5%-ash
coking-coal product can also be derived from the Baruun Naran coals at the
wash plant. However, the PFS indicates that the financial results are
optimized by the production of an 11%-ash coking product that maximizes the
wash plant's coking-coal yield.
    The Baruun Naran thermal coal product is similar to a 5500 kcal/kg Shanxi
premium brand, although somewhat higher in ash. We believe this product will
be competitive in many of the northern Chinese thermal coal markets.
    Product specifications for the two Baruun Naran coal products are shown in
Table 6.

    Table 6. Indicative Market Specifications for Baruun Naran Coal Products
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Coal Quality   Ash (%)  VM (%)   CSN   Gieseler      Calorific      S (%)
     (washed        (ad)     (ad)          Fluidity        Value        (ad)
     product)                               (Mddm)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Coking Coal      11       31      6   1000-2000   34.6 MJ/kg (daf)   0.6%
    -------------------------------------------------------------------------
    Thermal Coal     25       21     n/a     n/a      5,500 kcal/kg      0.7%
                                                         (gar)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    VM = volatile matter; CSN = crucible swelling
    number; S = Sulphur; ad = air dried;
    daf = dry, ash free; gar = gross, as received;
    34.6 MJ/kg = 8,262.5 kcal/kg


    Coal Markets and Pricing Assumptions

    QGX has investigated various marketing strategies for the sale of the
Baruun Naran coal products into numerous potential markets. The principal
markets selected for the two Baruun Naran coal products are as follows:

    - Coking coal: Chinese steel-making centres along the railway corridor
      between Baotou (Inner Mongolia) and Beijing, plus the steel complexes
      south of Beijing in Hebei and Shandong Provinces;
    - Thermal coal: Also along the railway corridor between Baotou and
      Beijing, to the port at Qinhuangdao, plus Shanxi, Hebei, and Shandong
      Provinces.

    All pricing was based on the price forecast supplied by Shanxi Fenwei
Energy Consulting. This coal marketing and consulting firm applied indicative
coking and thermal coal specifications derived from Baruun Naran coal-quality
data, and forecast delivered (CFR) prices for 20 years into various selected
market cities and steel-making centres. The pricing was inclusive of a 13% VAT
on coal sales in China, and the study assumes that VAT is unrecoverable with
respect to the coal project in Mongolia.
    Pricing was forecast in RMB, and in current (nominal) terms. As the PFS
model was calculated on a constant (real) US dollar basis, the pricing
forecasts were deflated by 2.5%/year to constant dollars and converted at a
long-term exchange rate of 6.4 RMB/US dollar.
    The long-term constant dollar coking coal pricing for these detailed
(city-by-city, year-by-year) forecasts was consistent with MMC's earlier
approach in the PEA of applying the AME Mineral Economics long-term forecast
for semi-hard coking coal, FOB Australia, plus freight to northern China, plus
Chinese VAT. PFS pricing was stronger in the early years in constant dollar
terms, softening beyond 2020. Thermal coal pricing forecasts correlate well to
current pricing data for similar coals sold in the target markets.
    Transportation costs from mine to market were forecast based on existing
Chinese rail freight rates and distances. Higher rail costs were assumed
between the mine and Baotou, China, to reflect the likely higher tariffs
required to encourage rail construction to our minesite and South Gobi
resource projects in general. The PFS relies on a third party rail line which
is anticipated, but has not yet been constructed, to deliver product to China.

         Table 7. Constant Dollar Average CFR Coal Prices (inc. VAT)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Coal Product Prices                                               US$/mt
                                                                     product
    -------------------------------------------------------------------------
    Weighted Average Prices (CFR, inc. Chinese VAT)
    -------------------------------------------------------------------------
    Coking Coal                                                      $103.85
    Thermal Coal                                                      $59.06

    -------------------------------------------------------------------------
    Average Transport Costs (US$/mt product)                          $21.70
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Capital Expenditures

    The mine development plan assumes that capital spending begins in 2008,
with the majority of capital spending (equipment and facilities) occurring
from 2009 to 2011. The plan envisions initial production starting in 2011,
with the mine reaching full coal production in 2012. Initial capital
expenditure was calculated through 2012, the first full production year.
Additional mining equipment continues to be purchased up to the end of 2014 as
the strip ratio increases with the expanding pit. Thereafter there will be
ongoing capital expenditures classified as either replacement or sustaining
capital. The components of capital spending are listed in Table 8.

                Table 8. Initial and Sustaining Capital Costs
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Capital Items                                               US$ millions
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Overburden Removal Equipment                                        $127
    -------------------------------------------------------------------------
    Mining Equipment                                                     $13
    -------------------------------------------------------------------------
    Support Equipment                                                    $22
    -------------------------------------------------------------------------
    Coal Handling/Blending /Wash Plant (CHPP)                           $166
    -------------------------------------------------------------------------
    Mine Site Buildings, Roads & Camp                                    $11
    -------------------------------------------------------------------------
    Infrastructure                                                       $65
    -------------------------------------------------------------------------
       Total Initial Capital Cost                                       $404
    -------------------------------------------------------------------------
    Sustaining Capital/Replacements                                     $340
    -------------------------------------------------------------------------
       Total Project Capital Spending                                   $744
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Taxes and Revenues to Mongolia

    The Project will return substantial financial benefits, estimated at just
over US$1 billion, to the country of Mongolia in the form of various taxes and
royalties payable on the production and sale of coal products. The average
annual life-of-mine figure for royalty and taxation is approximately
US$ 50 million, or 2.5% of current Mongolian GDP. Life-of-mine payments to the
Government of Mongolia are detailed in Table 9 below.

      Table 9. Tax and Royalty Cash Flows to the Government of Mongolia
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Taxes and Royalties Payable on Production                  US$ (millions)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Project Income Taxes Payable                                       $ 638
    -------------------------------------------------------------------------
    Coal Royalties Payable (export and domestic)                       $ 328
    -------------------------------------------------------------------------
    Social and Income Tax from Salaries (labor)                         $ 35
                                                                        -----
    -------------------------------------------------------------------------
      Total Distributions to Government Entities                     $ 1,001
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Project Financial Summary

    The project generates substantial revenues and profits and delivers
attractive financial returns based on the details and assumptions as set out
above. Table 10 summarizes the key financial highlights.

                   Table 10. Financial Project Highlights
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Financial Metric
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Average Annual Revenue(*) (net of VAT)                    US$457 million
    -------------------------------------------------------------------------
    Average Annual After-Tax Net Profit(*)                     US$98 million
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    NPV @ 10% discount rate                                US$499 million
    -------------------------------------------------------------------------
    DCF-IRR                                                               33%
    -------------------------------------------------------------------------
    Payback(xx)                                                    4.1 years
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*)for periods with sales revenue; (xx)from start of mine construction


    Project Sensitivities

    The primary revenue generator from this project is washed coking coal,
representing 72% of CFR revenue recognized over the life of the project. As
such, long-term coking coal prices are the critical variable regarding the
projected financial returns for the Project. Project sensitivities to various
long-term coking coal prices are shown in Table 11 below.

    Table 11. Sensitivity of NPV (10%) to Changes in Long-Term Delivered
              (CFR) Coal Prices
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
           NPV (10% discount rate) figures shown in US$ (millions)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Long-Term
    CFR Thermal            Long-Term CFR Coking Coal Price (US$/mt)(1)
    Coal Price      ---------------------------------------------------------
    (US$/mt)(1)     $ 80         $ 90         $100         $110         $120
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
         $40        $(57)        $ 87         $230         $375         $519
    -------------------------------------------------------------------------
         $50        $ 55         $200         $344         $488         $632
    -------------------------------------------------------------------------
         $60        $168         $313         $457         $601         $745
    -------------------------------------------------------------------------
         $70        $281         $426         $570         $714         $858
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) CFR coal prices delivered to China (not FOB prices) and thus includes
        freight charges and Chinese VAT of 13%


    Table 12 below provides information regarding the impact on the Project's
NPV (10%) related to a US$5/mt change in the long-term coal prices for each of
Baruun Naran's coal products. For example, if the long-term CFR pricing
assumption for the premium coking coal product increases by US$5/mt, then the
NPV (10%) would increase by US$72 million to US$571 million from
US$499 million (see Table 10 above). If the long-term CFR price assumption
were instead reduced by US$5/mt, then the NPV (10%) would decrease by US$72
million to US$427 million from US$499 million.

       Table 12. NPV Impact per US$5/mt Change in Long-Term Coal Prices
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Baruun Naran Coal Product                                    NPV (at 10%)
    -------------------------------------------------------------------------
    Coking Coal                                                US$72 million
    -------------------------------------------------------------------------
    Thermal Coal                                               US$56 million
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Project returns are also affected by changes in operating and capital
costs. The project is not highly sensitive to changes in capital costs, but is
sensitive to changes in operating cost and to wash-plant yields that determine
the ratio of saleable coking coal to thermal coal tonnages. Some of the key
operating and capital sensitivities are presented in Table 13.

                  Table 13. Other Key Project Sensitivities
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Sensitivities to Changes in
    Capital and Operating Costs                NPV(10% discount)US$ millions
                                             --------------------------------
                                                    NPV Impact   NPV Project
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Base Case                                              N/A          $499
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Operational Sensitivities
    -------------------------------------------------------------------------
    Reduced Total Yield in Wash Plant to 50% from 60%    ($169)         $330
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Operating Cost Sensitivities
    -------------------------------------------------------------------------
    10% Cost Increase                                    ($144)         $355
    -------------------------------------------------------------------------
    10% Cost Decrease                                     $144          $643
    -------------------------------------------------------------------------
    Fuel Cost Increase (US$0.25/litre)(*)                 ($79)         $420
    -------------------------------------------------------------------------
    Fuel Cost Decrease (US$0.25/litre)(*)                  $78          $577
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Capital Cost Sensitivities
    -------------------------------------------------------------------------
    10% Cost Increase                                     ($42)         $457
    -------------------------------------------------------------------------
    10% Cost Decrease                                      $41          $540
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (*) Note: Diesel fuel costs assumption in base case is US$0.75/litre

    Additional Project Opportunities

    Several opportunities remain at Baruun Naran for generating additional
revenues and profits, as well as for lowering costs. These opportunities were
considered outside the scope of the work, but will be addressed in the
subsequent feasibility study. These opportunities include:

    - Increase the quantity of saleable coals through resource additions
      achieved by exploration drilling. Additional resource drilling, if
      successful, could either expand the mine size or extend mine life;
    - Forgo washing of high-quality coking coal from Seams H and T to reduce
      processing costs, recognizing this will require careful selective
      mining to control ash levels;
    - Improve washing yields through selective mining;
    - Develop greater access to the domestic Mongolian markets, and
    - Develop possible export markets in Russia., and
    - Continue to develop possible coal-to-methanol/DME opportunities to
      realized greater value from the thermal coal
    

    As noted, the NI 43-101 'measured and indicated' resource only includes
coal located below a 30-m minimum depth. While the existing drilling data at
present do not allow for the inclusion of the shallow coal located between the
surface and the 30-m depth to be included in the NI 43-101 resource, such coal
in the area is known to be marketable (un-oxidized) at depths as shallow as
5 metres. The possibility that shallow coal resources may be included in the
NI 43-101 resource in the future represents an opportunity to improve the
Project's NPV (10% discount) by as much as $85 million. Because coking coal is
more susceptible to weathering at shallow depth than is thermal coal, more
drilling and laboratory analyses must be conducted on the shallow coals to
understand the viability of this opportunity.

    Qualified Person

    Mr. Igor Bojanic of Minarco-MineConsult (Sydney, Australia), qualified
person as defined by NI 43-101, has reviewed and approved the relevant
information contained in this release. Mr. John Thompson, Vice President
Operations of QGX Ltd. and a qualified person as defined by NI 43-101, has
reviewed and approved the information contained in this release.

    Cautionary and Forward Looking Statement Information

    All information contained in this press release relating to the contents
of the PFS, are "forward looking statements" within the definition of the
United States Private Securities Litigation Reform Act of 1995 and applicable
Canadian securities legislation. Generally, these forward-looking statements
can be identified by the use of forward-looking terminology such as "plans",
"expects" or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not anticipate",
or "believes", or variations of such words and phrases or state that certain
actions, events or results "may", "can", "could", "would", "might" or "will be
taken", "occur" or "be achieved".
    The PFS was prepared to quantify broadly the project's capital and
operating cost parameters and to provide guidance on the type and scale of
future project engineering and development work that will be needed to
ultimately define the project's likelihood of feasibility and optimal
production rate. It was not prepared to be used as a valuation of the project
nor should it be considered to be a feasibility study. The capital and
operating cost estimates which were used have been developed only to an
approximate order of magnitude based on generally understood
capital-cost-to-production level relationships and they are not based on any
systematic engineering studies. The ultimate costs may vary widely from the
amounts set out in the PFS. This could materially and adversely impact the
projected economics of the project. As is normal at this stage of a project,
data are incomplete and estimates were developed based solely on the expertise
of the individuals involved as well as the assessments of other persons who
were involved with previous operators of the project. At this level of
engineering, the criteria, methods and estimates are preliminary and result in
a high level of subjective judgment being employed.
    The following are the principal risk factors and uncertainties which, in
management's opinion, are likely to most directly affect the conclusions of
the PFS and the ultimate feasibility of the project. The mineralized material
at the project is currently classified as resources and it is not reserves.
The mineralized material in the Study is based only on the resource model
developed by McElroy Bryan Geological Services ("MBGS"), a professional coal
geological consultancy firm in Sydney, Australia in June 2007. Considerable
additional work, including in-fill drilling, additional process tests, and
other engineering and geologic work will be required to determine if the
mineralized material is an economically exploitable reserve. There can be no
assurance that this mineralized material can become a reserve or that the
amount may be converted to a reserve or the grade thereof. Final feasibility
work has not been done to confirm the mine design, mining methods, and
processing methods assumed in the PFS. In addition, key tasks that require
further work include coal-quality parameters and wash plant yield, final
geotechnical design, mine planning, coal marketing, and transport. The Project
economics are sensitive to these parameters and hence until finalized deliver
an inherent risk to the results. Final feasibility could determine that the
assumed mine design, mining methods, and processing methods are not correct.
Construction and operation of the mine and processing facilities depends on
securing environmental and other permits on a timely basis. No permits have
been applied for and there can be no assurance that required permits can be
secured or secured on a timely basis. Data are incomplete and cost estimates
have been developed in part based on the expertise of the individuals
participating in the preparation of the PFS and on costs at projects believed
to be comparable, and not based on firm price quotes. Costs, including design,
procurement, construction, and on-going operating costs and metal recoveries
could be materially different from those contained in the PFS. There can be no
assurance that mining can be conducted at the rates and grades assumed in the
PFS. PFS assumes specified, long-term prices levels for coking and thermal
coal. Prices for these commodities are historically volatile, and QGX Ltd. has
no control of or influence on those prices, all of which are determined in
international markets. There can be no assurance that the prices of these
commodities will continue at current levels or that they will not decline
below the prices assumed in the PFS. Prices for coking and thermal coal have
been below the price ranges assumed in PFS at times during the past ten years,
and for extended periods of time. A key transportation assumption underlying
the financial results is that a rail line will be constructed and available
for use by 2011. Should this not occur, transport of coal products would
likely be by truck haulage at a higher operating cost relative to rail
haulage. The project capital estimate assumes a third party will build a small
power plant to service the needs of the mine and CHPP facility. The mine
project financial model assumes a US$0.05/kwh power cost - a tariff that will
provide adequate operating and capital returns to an independently owned,
leveraged coal-fired power facility over the mine life. The project will
require substantial quantities of water to service coal processing and the
consumption requirements of a wash plant to produce coking coal. The project
will require major financing, probably a combination of debt and equity
financing. Interest rates are at historically low levels. There can be no
assurance that debt and/or equity financing will be available on acceptable
terms. A significant increase in costs of capital could materially and
adversely affect the value and feasibility of constructing the project. Other
general risks include those ordinary to large construction projects including
the general uncertainties inherent in engineering and construction cost, the
need to comply with generally increasing environmental obligations, and
accommodation of local and community concerns.
    In addition, there are sovereign risks to the project based on it's
location in Mongolia. The Mining Law of 2006 provides for government ownership
of up to 34% of mining assets it considers 'strategic' in nature, and Baruun
Naran may qualify as a "strategic" deposit under the government's definition.
The Mining Law also states that the government is required to obtain its
interest on a "commercial basis", however there is no guidance as to how this
might be calculated or implemented. For those deposits that were discovered
and developed with State funds during the Soviet period in Mongolia's history,
the government has the right to secure a 50% interest. We do not believe
Baruun Naran qualifies for this higher level of government participation, but
cannot be absolutely certain of this until an investment agreement is signed
and specific government participation and compensation, if any, is agreed
upon. The net present values and rates of return calculated in the PFS do not
take into account the potential impact of any government participation in the
project.

    About QGX

    QGX is a Canadian-based company that has been exploring for mineral
deposits in Mongolia since 1994. QGX's two most advanced properties are the
Baruun Naran and the Golden Hills projects. QGX announced in June 2007 an
independent NI 43-101 resource for coking and thermal coal at Baruun Naran
comprised of 93.3 Mt of measured and 159.6 Mt of indicated (252.9 Mt contained
in measured and indicated) resources. QGX filed in April 2007 an independent
NI 43-101 report outlining a positive preliminary economic assessment for its
copper-gold-silver project at Golden Hills. Barrick Gold Corp. holds an
approximate 9% equity interest in QGX as part of a strategic relationship
between the two companies.

    The TSX has not reviewed and does not accept responsibility for the
    adequacy or accuracy of this release.

    This press release includes certain "forward-looking statements". All
statements, other than statements of historical fact, included herein,
including without limitation, statements regarding potential mineralization,
results and future plans and objectives of the Company are forward-looking
statements that involve various risks and uncertainties. There can be no
assurance that such statements will prove to be accurate and actual results
and future events could differ materially from those anticipated in such
statement.
    %SEDAR: 00013803E




For further information:

For further information: David Anderson, Executive Chairman, (905)
689-9442; Paul Zweng, President/CEO, (925) 855-0505; www.qgxgold.com; Renmark
Financial Communications Inc.: John Boidman, jboidman@renmarkfinancial.com;
Maurice Dagenais, mdagenais@renmarkfinancial.com; Media: Adam Ross,
aross@renmarkfinancial.com, (514) 939-3989, Fax: (514) 939-3717,
www.renmarkfinancial.com

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