Golden China Releases December 2006 Quarterly Update Report

    TORONTO, Jan. 30 /CNW Telbec/ - Golden China Resources Corporation
(TSX; ASX: GCX) today released it's quarterly update report, a regulatory
filing required by the Australian Securities Exchange (ASX), which summarizes
key corporate events for the three months ended December 31, 2006. The
mandatory briefing also reviews Golden China's most recent, post-period
(January) business developments.


    - Merger with Michelago completed. The Company is now listed on the TSX
      and the ASX under the symbol GCX

    - Mr. Frank Potter appointed as Chairman of the Company and
      Mr. Gregory Starr as CEO

    - The Company made a private placement of 4,500,000 units at a price of
      C$1.00 per unit for gross proceeds of C$4.5 million

    - BioGold sold 22,710 Gold Equivalent ounces of gold during the quarter

    - An initial NI-43-101 Resource Statement for the Beyinhar gold project
      was released delineating 475,000 thousand ounces of gold in the
      Measured and Indicated categories plus 130,000 ounces in the Inferred

    - The Changchun Design Institute completed a Development Study, under
      Chinese standards, for the Nibao gold project that proposes the
      development of a mining and processing operation that would produce
      approximately 45,000 ounces of gold annually over a 10 year mine life.
      This document will be integral in the submission of the Mining License
      for Nibao

    - GCRC carried out over 5,700 metres of exploration drilling at Beyinhar
      and Nibao during the quarter.

    - The 2006 drilling programme at Beyinhar ended in early November due to
      the winter season and will re-commence in March 2007. The drilling
      programme at Nibao is ongoing with a scheduled 15,000 metres budgeted
      for completion by July 2007.

    - Preliminary metallurgical testwork from ore samples from the Beyinhar
      ore body indicate a gold recovery of approximately 83% by heap leach
      type recovery methods

    - Australian Solomon's Gold (GCRC 24%) is scheduled to complete the Gold
      Ridge Bankable Feasibility Study by February 2007. The project is on
      schedule to commission in December 2007.

    1. Merger with Michelago Limited and Private Placement

    During the December Quarter, the Company completed the previously
announced business combination with Michelago Limited of Australia and, in
connection therewith, the consolidation of its common shares on a one for five
basis. As a result of the business combination, Michelago has become an
indirect, wholly owned subsidiary of Golden China and the shareholders of
Michelago have become shareholders of Golden China.
    Golden China also announced that it had completed a private placement of
4,500,000 units (22,500,000 units pre-consolidation) at a price of C$1.00 per
unit (C$0.20 per unit pre-consolidation), for gross proceeds of C$4.5 million.
Each unit comprises one common share and one common share purchase warrant.
Each warrant entitles the holder to purchase one common share at a price of
C1.25 per share (C$0.25 per share pre-consolidation) for a period of 12 months
ending December 8, 2007. Golden China has the right to require warrant holders
to exercise the warrants if the volume weighted average price of the common
shares for any period of 15 consecutive trading days equals or exceeds C$1.50
per share (C$0.30 per share pre-consolidation). The net proceeds of the
placement will be used for working capital and general corporate purposes,
including drilling programmes at Golden China's promising Nibao and Beyinhar
gold projects. The hold period under applicable Canadian securities laws with
respect to the securities comprising the units will expire on April 9, 2007.
    Golden China was accepted for listing on the Toronto Stock Exchange (TSX)
and the Australian Securities Exchange (ASX). Golden China common share are
now trading on the TSX under the symbol "GCX". Golden China CDIs (units
representing beneficial ownership of Golden China common shares) are trading
on the ASX under the symbol "GCX".

    2. BioGold

    During the December Quarter (September), the BioGold plants processed
9,831 (14,552) tonnes of concentrate at a gold equivalent grade of 59.34
(46.72) g/t. Equivalent gold won for the Quarter was 16,868 (19,570) ounces,
while gold sales were 22,710 (22,033) ounces. Total plant production and sales
for the December Quarter are shown in Table 1.

                                             1 July - 30      1 October - 31
                                               September            December
    Bacox and Cyanide Leach             Total Operations    Total Operations
    Concentrate treated (tonnes)                  14,552               9,831
    Concentrate grade (Au eq. g/t)                 46.72               59.34
    Gold recovery (%)                              91.25               90.53
    Silver recovery (%)                            86.03               88.14
    Gold won (Au eq. ozs)(1)                      19,570              16,868
    Gold production
    Third party goldroom purchases                 1,446                 776
    Refined gold sold (Au eq. ozs)(2)             22,033              22,710

    (1) Gold equivalent calculated at $US616.99/oz Au and $US12.97/oz Ag.
    (2) Differences in gold produced from the plants and Gold
        Production/Sales report is due to inventory movements, doré purchases
        and toll treatment.

                       Table 1: Total Plant Production

    Production during the period was affected by power failures primarily
affecting the Bacox(C) plant. Further, low-grade stockpiled tailings residue
through the cyanide leach plant was not processed as the plant was treating
concentrates. By the end of the month, production had returned to normal
levels. The new flotation plant operated without incident during the quarter.
    Discussions are ongoing with international concentrate suppliers and local
brokers for the purchasing of international concentrates. These international
concentrates usually have improved credit terms compared to local sources.
    Regular shipments of the Hellas Gold S.A. (a subsidiary company of
European Goldfields Ltd) concentrates are now being received and successfully
treated in the Bacox(C) plant. The Hellas Gold contract underpins the planned
expansion of the Bacox(C) plant, construction of which is due to commence in
the new calendar year.

    3. Nibao Exploration

    During the quarter the company continued both the exploratory and fence
drilling programmes at the Nibao gold project, Guizhou Province, PRC. The
drilling programme is designed to increase the size of the total mineral
resource and also to upgrade a substantial portion of the mineral resource
from the Inferred to Indicated and/or Measured resource categories.
    During the quarter, 31 drillholes comprising 3,438 metres were drilled at
Nibao. Resource definition drilling continued at Nibao Central and exploratory
drilling at Nibao Far East (NFE), commenced in late September. The drilling
metreage is summarised below:

    NIBAO         Meters Drilled       Meters Drilled     Total Meters Since
                    this Quarter         Year To Date      Project Inception
    Total                  3,438               26,601                 48,382

    4. Nibao Project Development

    The Changchun Design Institute, (Changchun) one of the foremost mining and
process design institutes in China, has completed a development study to
expedite the development of Nibao gold project in China. This study was
carried out to support the Pre-Feasibility Study for Nibao currently being
undertaken by GCRC and also to support the Mining License application for
Nibao which will be lodged with the Chinese authorities in March.

    4.1 Summary of development Study

      This design is based on the construction of an open cut mine, flotation
      plant and associated infrastructure, with a mining rate of
      660,000 tonnes per annum to produce an average of 45,000 ounces of gold
      annually for 10 years. Ore would initially be mined from the higher
      grade Nibao South deposit, before mining the Nibao East and Central
      deposits after the fourth year of operations.
      Nibao ores would be processed through a central processing facility,
      located on site, utilising conventional crushing, grinding and
      flotation equipment to produce a gold concentrate. This concentrate
      would initially be sold to a third party. GCRC has held preliminary
      discussions with third parties regarding the sale of these
      The estimated construction time for the project would be 40 weeks and
      would not involve the additional capital cost or construction time
      required to initially build a bacterial oxidation plant on site. It
      would then allow GCRC to utilise the cashflow from the new operations
      to fund the construction of a bacterial processing facility.
      The key elements of the development plan will be presented in more
      detail in the March quarter.
      Environmental monitoring programmes are continuing, with the aim of
      completing an Environmental Impact Statement (EIS) and Environmental
      Management Plan (EMP) that will meet both international banking
      standards and Chinese environmental standards by mid 2007.

    5. Beyinhar Exploration:

    At the Beyinhar gold project in Inner Mongolia, PRC exploration during the
quarter comprised 17 drillholes, for 2290 metres of drilling.

    BEYINHAR      Meters Drilled       Meters Drilled     Total Meters Since
                    this Quarter         Year To Date      Project Inception
    Total                  2,290               14,053                 20,265

    In addition, the Company completed the first resource delineation program
for Beyinhar and has identified an initial mineral resource on the largely
oxide, near-surface zone of a Measured and Indicated Resources of
475.000 contained ounces and an Inferred Resource of 130,000 ounces, at a
0.30g/t Au cut-off.
    The estimated resources for the Beyinhar gold deposit at various cut-off
grades are presented, by category:

           Measured + Indicated                        Inferred
    000 tons     Grade       Ounces      000 tons        Grade        Ounces
                  (g/t)          Au                       (g/t)           Au
    17,600        0.84      475,000         7,500         0.54       130,000
             Beyinhar Resources Summary (at a 0.3g/t Au cut-off)

    The resource modelling has demonstrated that the Beyinhar deposit hosts a
continuous, shallow higher-gold grade central core with mineral resource of
about 336,000 ounces at 2.07 g/t gold (at 0.8 g/t cut-off).
    The resource estimate was undertaken by Mario E. Rossi, of GeoSystems
International, Inc. The key findings of this work are:

    - The 2006 drilling campaign has confirmed and extended the mineralized
      volume in both the along strike and down dip directions. Drilling has
      also identified a higher grade central core which hosts about
      330,000 ounces total.

    - The estimated resource is in the oxide zone, which has been the focus
      of Golden China's exploration efforts so far; however, the potential
      for additional primary (sulphide) resources down dip has been

    - The primary mineralisation that has been included in the resource model
      does not have supporting metallurgical testwork, and therefore has been
      placed in the Inferred category.

    6. Beyinhar Metallurgical Testwork:

    Preliminary metallurgical column leach testwork is being carried out on
ore samples from Beyinhar. Early results indicate that gold recoveries of
approximately 83% can be achieved from less than 12.5mm material over a 40 day
leach cycle.

    To see map click here :

    It is proposed that a bulk representative ore sample from Beyinhar will
be collected in March 2007 and detailed metallurgical network for both heap
and dump leach analysis will commence.

    7. Australian Solomons Gold - TSX code SGA (Golden China 24%)

    On the 10th January 2007, ASG reported that delays in the receipt of
results from independent laboratories undertaking the metallurgical testwork,
coupled with the analysis of the results taking longer than anticipated, has
impacted on the progress of mine planning, mine scheduling and cost estimation
for the BFS, which is now scheduled for completion at the end of February
    In order to maximise financial returns from the project, ASG has
continued to investigate the use of alternative energy sources for power
generation to reduce dependence on its existing diesel powered generating
equipment. It is ASG's view that the use of alternative energy could result in
a substantial reduction in operating costs. A separate feasibility study is
being undertaken concurrent with the Bankable Feasibility Study (BFS) and is
due for completion in the first quarter of 2007.
    In the meantime, the Company continues to work with its BFS Project
Manager, Ausenco Limited, to optimise the results of all other work carried
out to date.
    ASG has appointed Societe Generale Australia as the lead arranger for the
provision of the debt component of the funds required to redevelop the Gold
Ridge mine. ASG and the banking syndicate is working towards finalisation of
the debt funding by April 2007 in order to allow completion of the plant
refurbishment to be completed in December 2007 and allow ASG to meet its
schedule of re-commissioning the mine before the end of 2007.

    8. New Board of Directors

    On January 22, 2007, the Company announced several strategic changes to
its executive management team and board of directors subsequent to the
Company's recent business combination with Michelago Limited. The adjustments,
which support best practices in corporate governance by creating a board that
is highly independent, consisting entirely of non-executive directors, follow
the company's recent migration from the Toronto Venture Exchange to the main
board of the Toronto Stock Exchange and the Australian Securities Commission.
The changes are also designed to guide the company through its next phase of
    The new board is comprised of the following individuals.

    Frank Potter, Chairman: Mr Potter's career includes such posts as
Executive Director of the World Bank and the International Finance Corporation
in Washington DC, has been appointed Chairman. A director since the company's
inception in 2004, Mr. Potter brings a wealth of international business
experience to the organization's stewardship as Golden China embarks on its
next critical development phase following its recent business combination with
Michelago Limited.

    Douglas C. Betts: In addition to this position with GCMI and Golden
China, Mr. Betts is Chief Executive Officer of Kingsway Canada and Chief
Executive Officer of Kingsway International. Mr. Betts has been associated
with the Kingsway International Group for over 15 years and has been a
director of Kingsway International since August 1995. Mr. Betts co-founded
Borealis Funds Management Ltd, where he served from October 1997 to March 2001
as Managing Director responsible for sourcing and structuring investment
transactions. Before joining Borealis, Mr. Betts was a partner in Torys LLP, a
Canadian law firm where he practiced business law an emphasis on securities
and real estate. Mr. Betts has an LLB from the University of Ottawa and has
been involved in Business transactions in Asia for over 20 years.

    John P. Horan: Mr. Horan has more than 41 years of financial, corporate,
technical and management experience in the mining industry, with extensive
project licensing and development skills, a strong management and compliance
background and a detailed understanding of the resource and mining sector.
Mr. Horan is currently a director of ASX listed explorers Adelaide Resources
Limited and Chairman of Marengo Mining Limited, in addition to a number of
unlisted public and private companies. Mr. Horan has been Chairman of
Michelago since prior to listing on ASX in June 1996.

    Robert M. Miller: Mr. Miller is Executive Chairman of Cathay Oil and Gas
Ltd, a private natural resource company. He received the Chevron Chairman's
Award for his part in the discovery of the Collahuasi and Ujina copper
deposits in Chile and the Chevron President's award for his part in the sale
of the deposits. He has 35 years of international experience in base and
precious metals operation and development and in exploration and development
of oil, gas and coal-bed methane projects.

    David Paterson: Mr. Paterson has lived in Hong Kong since 1976. Before
his retirement, he was a senior executive in the Swire Group and the founder
and Managing Director of HSBC Private Equity Management, the largest private
equity manager in the Far East outside Japan with over U.S. $1 billion of
assets under management. He sold his interest in HSBC Private Equity
Management in 1998. Since that time, his activities include acting as Chairman
of a Korean securities brokerage company listed on the Korean Stock Exchange.
Mr. Paterson is a Fellow of the Institute of Chartered Accountants in England
and Wales and has a M.A. (Hons.) degree from Oxford University.

    Alan N. Roberts: A metallurgist by profession, Mr. Roberts has gained
over 30 years' operational and managerial experience at a senior level within
the Rio Tinto Group, including appointments as Managing Director of Kelian
Equatorial Mining, based at its large gold mine in Indonesia, and as MD/ CEO
of Lihir Gold in Papua New Guinea. During his career, Mr. Roberts held senior
positions in a variety of operations located in Australia, Bolivia, the United
Kingdom, Iran, Indonesia and PNG. Mr. Roberts is currently independent
Chairman of Ok Tedi Mining Limited, Papua New Guinea.

    The new management team will be led by Mr Gregory Starr as President and
Chief Executive Office (CEO) of Golden China, bringing key mining organization
leadership experience to the Golden China executive team through his previous
CEO roles with Michelago Limited and Emperor Mines Limited. Further, in line
with the Company's support of best practices in corporate governance policy.

    The changes represent the next logical step in Golden China's growth from
a junior exploration company to a pre-development stage mining organization
and mid-size producer of gold in China. The result is a blended leadership
team that has the experience and skills to continue the Company's growth and
carry it through the next critical stage: Bringing exploration projects into

    About Golden China Resources Corporation:

    Golden China Resources Corporation is a significant participant and
consolidator in the Chinese precious metal industry and one of the largest
producers of gold in China. The company uses international best practices and
China knowledge in building a diversified gold business focused on exploration
and development, operations, and merchant banking in the Chinese precious
metal industry. Golden China's shares are listed on the main boards of both
the Toronto and Australian Stock Exchanges under the symbol GCX.

    Forward-Looking Statements: Statements in this release that are
forward-looking statements are subject to various risks and uncertainties
concerning the specific factors disclosed under the heading "Risk Factors" and
elsewhere in the Company's periodic filings with Canadian securities
regulatory authorities. Such information contained herein represents
management's best judgment as of the date hereof based on information
currently available. The Company does not assume the obligation to update any
forward-looking statement.
    %SEDAR: 00009239E

For further information:

For further information: Golden China Resources Corp.: Kristen Humphrey,
Communications Manager, (416) 366-8818 ext. 230,,; Renmark Financial Communications Inc.: Tina Cameron:; Barbara Komorowski :; (514) 939-3989, Fax: (514) 939-3717,

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