QGX Receives Positive Preliminary Economic Assessment for the Copper-Gold-Silver Project at the Central Valley Zone (CVZ), Golden Hills, Mongolia

    - US$148.53/oz total cash cost for gold in oxide (net of silver
    - US$0.77/lb total cash cost for copper in sulphide (net of gold and
      silver credits)
    - IRR (pre-tax/after-tax): 34% and 27%, respectively
    - NPV @10% (pre-tax/after-tax): US$122 and US$83 million, respectively

    TSX - QGX

    WATERDOWN, ON, March 8 /CNW Telbec/ - (TSX: QGX) is pleased to announce
that it has received a positive NI 43-101 compliant Preliminary Economic
Assessment (the "Study") regarding the development of the Company's 80%-owned
copper-gold-silver resource at the Central Valley Zone (CVZ) at Golden Hills,
Mongolia. Chlumsky, Ambrust, & Meyer, LLC ("CAM"), a professional mining
engineering firm in Denver Colorado, prepared the Study. The Study defines a
two-stage development plan with a mine life of 15 years. The operation
commences with open-pit mining of the gold-silver oxide resource followed by
underground mining of the copper-gold-silver sulphide and high-grade
quartz-telluride vein resource at CVZ. The project is financially robust, with
an after-tax NPV @10% of US$83 million and an IRR of 27% (100% equity basis).
Project highlights are summarized in Table 1 below.

    Table 1.  Project Highlights for CVZ, Golden Hills, Mongolia
    Average Annual Production
                    Years 1-4 (Oxide Phase)
                             Gold / Silver          79,900 oz / 521,000 oz
    Years 5-15 (Sulphide & Telluride Phase)
                                    Copper             56.5 million lbs
                             Gold / Silver          53,900 oz / 235,200 oz
    Initial Capital Cost                                US$164 million
    Total Cash Cost(1)
                     Oxide Phase (open pit)             US$148.53/oz Au
    Sulphide & Telluride Phase (underground)(2)          US$0.77/lb Cu
    Avg. Annual Revenues(3)
                                Oxide Phase             US$47.2 million
                   Sulphide/Telluride Phase            US$105.6 million
    Avg. Annual After-Tax Earnings
                                Oxide Phase             US$13.8 million
                 Sulphide & Telluride Phase             US$19.5 million
    IRR (pre-tax / after-tax)                              34% / 27%
    NPV @ 10% (pre-tax / after-tax)         US$122 million / US$83 million
    1: Total cash costs/unit, are life-of-mine costs, net of by-product
       credits, and include transportation costs, and smelter charges
      (TCRC's), divided by metal units produced.
    2. Underground phase by-product credits include gold and silver from both
       sulphide and telluride ores
    3: Revenues reflect a reduction for Mongolian NSR royalties of 5%

    For purposes of this study, the capital plan assumes contract surface and
underground mining, therefore the cost of both operation and ownership of
mobile mining equipment is included in operating costs. Capital estimates for
the mill and fixed underground facilities include substantial contingencies.
The cash-flow valuation model developed by CAM uses long-term forecast metal
prices of US$1.50/lb copper, US$529/oz gold, and US$9.08/oz silver. These
prices are considerably lower than current spot prices for these metals.
    A sensitivity study (see Table 8) was completed to examine the impact on
NPV of long term metal prices. The financial returns for the project show the
greatest sensitivity to copper prices. Life-of-mine CVZ revenues are driven
63% by assumed copper prices.

    Paul Zweng, President/Chief Executive Officer of QGX Ltd., commented as

    "This Study represents an important milestone in the development of the
Central Valley Zone. We are encouraged that both the open-pit gold and the
underground copper operations are forecasted to be low-cost producers. This
signals the potential for the Central Valley Zone to become an important and
vibrant mining centre in western Mongolia.
    We are now evaluating the next steps to develop the project. We look
forward to working with all stakeholders to bring this project to market in a
safe and environmentally responsible manner."

    NI 43-101 Compliant Resources and Potentially Mineable Resources

    QGX first announced a NI 43-101 compliant resource estimate completed by
CAM on February 28th, 2005. CAM later updated the resource estimate in
October, 2005. The October resource estimate is shown in Table 2.

    Table 2. NI 43-101 Resource Estimate for CVZ (October 2005)
                                Cut-off  Cut-off  Resource        Grade
    Resource Classification      Grade    Grade    Tonnes     Au    Ag    Cu
                                 (g/t)    Cu (%)   (000's)  (g/t) (g/t)   (%)
    Oxide (gossan)
    Measured                      1.0                 474   3.10  19.0
    Indicated                     1.0               2,624   2.78  18.9
    Total Measured + Indicated    1.0               3,098   2.83  18.9
    Inferred                      1.0               1,752   2.72  19.5

    Massive Sulphide ("Sulphide")
    Measured                                0.8     1,024   0.39   5.5  1.86
    Indicated                               0.8     9,140   0.39   5.3  1.70
    Total Measured + Indicated              0.8    10,164   0.39   5.4  1.72
    Inferred                                0.8     9,499   0.33   4.5  1.29

    HGQT Veins ("Telluride")
    Inferred                      3.0                 696  19.63  35.0

    Table 3 shows the potentially mineable resources used in the Study. In
order to determine the possible resources that might be mined from the Golden
Hills oxide deposit, CAM floated several cones using gold prices from US$350
to US$700 per ounce of gold and estimated operating costs for a vat leach
operation. This exercise resulted in a possible open pit containing an
estimated 4.45 million tonnes of resources, (reduction of approximately 8%
from NI 43-101 Resource), with reduced grades as shown below. This possible
mineable resource is used in the oxide portion of the study.
    Underground sulphide and telluride ores were essentially left undiluted
for this Study. The deposit covers a wide area and appropriate mining methods
are expected to recover resource with minimal dilution, although detailed mine
plans are yet to be designed.

    Table 3. Potentially Mineable Resources at CVZ, Golden Hills, Mongolia
                                Cut-off  Cut-off  Mineable    Mineable Grade
    Resource Classification      Grade    Grade    Tonnes     Au    Ag    Cu
                                Au (g/t)   Cu (%)  (000's)  (g/t) (g/t)   (%)
    Oxide (gossan)
    Measured                        1.0               435   2.70  19.0
    Indicated                       1.0             2,409   2.42  18.9
    Total Measured + Indicated      1.0             2,844   2.46  18.9
    Inferred                        1.0             1,609   2.37  19.5

    Massive Sulphide ("Sulphide")
    Measured                                 0.8    1,024   0.39   5.5  1.86
    Indicated                                0.8    9,140   0.39   5.3  1.70
    Total Measured + Indicated               0.8   10,164   0.39   5.4  1.72
    Inferred                                 0.8    9,499   0.33   4.5  1.29

    HGQT Veins ("Telluride")
    Inferred                        3.0               696  19.63  35.0

    Investors are cautioned not to assume that any part or all of the mineral
deposits in this category will ever be converted into reserves. In addition,
'inferred resources' have a great amount of uncertainty as to their existence,
and economic and legal feasibility. It cannot be assumed that all or any part
of an Inferred Mineral Resource will ever be upgraded to a higher category.
    Under Canadian rules, estimates of Inferred Mineral Resources may not form
the basis of feasibility or pre-feasibility studies, or economic studies
except for Preliminary Economic Assessment as defined under NI 43-101.
Investors are cautioned not to assume that part or all of an inferred resource
exists, or is economically or legally mineable.

    Mine Development Overview

    As described above, the CVZ deposit consists of three distinct ore types:
gold and silver contained in near-surface oxide/gossan ("oxide"),
copper-gold-silver contained in volcanic-hosted massive sulphide ("sulphide"),
and gold-silver contained in high-grade quartz-telluride veins ("telluride").
Metals contained in each ore type are extracted using different mining and
beneficiation methods: open-pit mining and agitated vat leach of oxide,
(4 year life), followed by underground mining and concentration of sulphide
and telluride (11 year life). The processing plant reflects two distinct
phases, with the oxide mining and beneficiation phase constructing the
life-of-mine crushing and grinding circuits and adding agitated vat leach
circuits for gold-silver recovery. In year 5, the leaching circuits are
removed and replaced with flotation circuits to produce copper and byproduct
gold-silver contained in concentrate for the remainder of the mine life.

    Capital Costs

    This mine plan stipulates two phases of capital investment to produce the
ultimate mine configuration. This capital plan assumes contract surface and
underground mining. As a result, all capital cost associated with mobile
mining equipment is included in operating costs. As indicated below,
substantial contingencies have been included in these cost estimates. The
capital costs estimated by CAM to develop the mine are shown in Table 4.

    Table 4. Estimated Capital Costs for the CVZ, Golden Hills
                                         Oxide       Telluride         Total
    (US$ x Million)                Development     Development       Capital  

    Pre-Mine Development              $   12.1                     $    12.1
    Mill Facilities
      Structures                      $    9.8                     $     9.8
      Mill Crush/Grind                $   20.9                     $    20.9
      (Gold oxide)                    $    8.0                     $     8.0
      Flotation Circuits (Copper)                     $   11.6     $    11.6
       Contingency (15%)              $   33.5        $   10.5     $    44.0
                 Total Mill Cost      $   84.3        $   22.1     $   106.4
    Mine Cost
      Structures/Perriferals                          $    4.0     $     4.0
      Decline/Ramp/Shaft                              $   18.5     $    18.5
      Other/Contingency (20%)                         $   17.4     $    17.4
             Total U/G Mine Cost      $      -        $   39.9     $    39.9

         Total Construction Cost      $   84.3        $   62.0     $   146.3

    Sustaining Capital Cost Assumed   $    1.5        $   16.0     $    17.5

         Total Life-of-Mine Cost      $   85.8        $   78.0     $   163.8

    Operating Costs

    The estimated cash operating cost/tonne ore (including administration
costs) for the open-pit oxide and the underground sulphide-telluride
operations are outlined in Table 5.
    The open-pit oxide mine cash operating cost/tonne ore is estimated to be
US$14.85/ tonne ore, with mining and milling costs representing approximately
US$10/tonne of the total. Cost estimates assumed local labor rates, for both
QGX labor and contract mining labor. The total cash cost for gold extracted
from oxide (net of silver credit) is US$148.53/oz. This total cash cost/oz for
gold is very low, and would place the CVZ oxide operation in the lowest
quartile of the production cash-cost curve for 2005, and in the lowest 10% of
producers cash-cost curve based on Q3 2006 data. Silver credits of US$ 60/oz,
representing roughly 10% of revenue, are gained during the oxide phase of
    The cash operating cost/tonne ore for both the underground sulphide and
telluride ores is estimated to be US$26.30/tonne ore, with mining and milling
representing just over $23.50/tonne of the total, and administration costs the
remainder. CAM applied labor cost assumptions to the underground operation
that are similar to those outlined above for the oxide operation. The total
cash cost for copper contained in sulphide (net of gold and silver credits on
both the sulphide and telluride ores) is US$0.77/lb over the 11 year life of
underground operations.
    Project returns (NPV's) and total cash cost calculations reflect TCRC's of
US$80/concentrate tonne (treatment costs) and US$ 0.08/lb copper (refining
costs). Transport costs have been assumed at US$100/concentrate tonne. The
Mongolian government NSR royalty of 5% has not been shown as a production
cost, but rather has been applied to by-product credit calculations and
average revenue figures. Table 5 below outlines select unit cash costs.

    Table 5. Unit Costs for Open-Pit Oxide and Underground Sulphide &
    Telluride Ores at CVZ

                                            Phase I                 Phase II
                                           Open Pit              Underground
    US Dollars                                Oxide     Sulphide & Telluride
                                          Operation                Operation
    Mine Production Costs/Tonne Ore
    Mining Cost                           $   4.19                 $   16.33
    Milling Cost                          $   5.85                 $    7.26
    Site Management, Security             $   4.21                 $    2.11
    Office Support-Local                  $   0.60                 $    0.60
    Head Office Expenses                  $      -                 $       -
    Total Production Costs/Tonne Ore      $  14.85                 $   26.30

    Total Cash Cost/Unit -Metal(1)
    Unit Cost/Oz Gold (w/Ag Credits)      $ 148.53
    Unit Cost/lb Cu (w/Au & Ag Credits)                            $    0.77
    (1)Total cash costs reflect by-product credits. Total cash costs include
       all cash production costs, transportation costs, and smelter charges
      (TCRC's). Total cash costs, as defined, are divided by copper metal
       contained in concentrate.

    Project Financial Summary

    CAM developed a cash-flow valuation model using long-term forecast metal
prices of US$1.50/lb copper, US$529/oz gold, and US$9.08/oz silver. These
prices are considerably lower than current spot prices for these metals, which
on February 23rd were US$2.65/lb copper, US$680/oz gold, and US$14.50/oz
silver. Metal prices used in this Study are shown in Table 6.

    Table 6. Metal Price Assumptions
    Metal                    2007       2008       2009       2010   Average
    Copper (US$/lb)         $2.79      $2.23      $1.83      $1.51     $1.50
    Gold (US$/oz)            $667      $ 660      $ 613      $ 561     $ 529
    Silver (US$/oz)        $12.74     $11.75     $10.66     $10.11     $9.08
    Note: Prices shown in 2007 and 2008 are for reference only as the Study
    assumes production does not commence until 2009.

    Annual revenues in the oxide phase average US$47.2 million per year.
Oxide-phase revenues end in 2012. Annual sulphide and telluride-phase revenues
occur from 2013 to 2023 and average US$105.6 million per year. These revenues
are net of government NSR royalty of 5%.
    Annual after-tax income in the oxide phase averages US$13.8 million per
year, reflecting revenues and prices as assumed and discussed above. Project
annual after-tax income increases beginning in 2013, reflecting the start of
the sulphide and telluride phase of operations. Average after-tax income in
this phase is US$19.5 million, ending in 2023.
    All financial projections in this Study are calculated in constant US
dollars with no inflation assumed to affect the capital amounts, the costs,
metal prices, or NPV discount rates. No leverage has been assumed-numbers
reflect a 100% equity basis. The Base-Case project uses metals prices as
documented in Table 6, assumes only Mongolian tax rates (25% corporate income
tax), and assumes the Mongolian windfall profits tax currently in effect today
will not be in effect by the time the mine begins operations in 2009.
    The Golden Hills project is 80% owned by QGX Ltd. The other 20% is owned
by a privately controlled Mongolian partner. The Mongolian partner interest is
a carried interest funded by a non-recourse debt from QGX at market interest
rates. QGX retains rights to almost all (98%) of the project cash flow until
the Mongolian partner's carried-interest obligation is repaid.
    Table 7 presents a series of project NPV's for various discounts rates
based on the metal price assumptions shown in Table 6.

    Table 7. NPV and IRR Financial Summary for CVZ, Golden Hills, Mongolia
    (US$ x Million)            NPV @ 8%  NPV @ 10%   NPV @ 12%  IRR
    Base Case Project (100%)
                       Pre-tax    $   152       $   122         $   98    34%
                     After Tax    $   106       $    83         $   64    27%
    Base Case QGX 80% Share
                       Pre-tax    $   142       $   114         $   91    33%
                     After-Tax    $    96       $    74         $   57    26%

    The Base-Case project returns an after-tax US$83 million NPV at a 10%
discount rate over the assumed 15 year mine life (assuming no windfall profits
tax). Mongolia currently has a windfall profit tax ("WPT") in effect for
copper and gold only. This tax applies to copper revenues over US$1.18/lb and
gold revenues over US$500/oz. The tax actually applies to net smelter returns,
allowing TCRC's to be deducted prior to the WPT. If the WPT is still in effect
when the project begins operations, the Base-Case NPV would be reduced to
US$75 million from US$83 million. Based on assumed long-term copper prices,
there is no WPT payable on copper revenues after TCRC deductions.
    The financial returns for the project show the greatest sensitivity to
copper prices. Life-of-mine CVZ revenues are driven 63% by assumed copper
prices. Table 8 shows the impact on NPV as a function of long-term metals
prices (2011 onward).

    Table 8. NPV Sensitivity to Long-Term Metal Prices
     (US$ x Million)
    Assumes No                  Gold Price Sensitivity (US$ per oz)
     Profits Tax Cu Price/lb  $   450   $   500   $   550   $   600  $   650
                    $   0.95 negative  negative   $     6   $    17  $    27
    Copper Price    $   1.00 negative   $     2   $    13   $    24  $    35
    Sensitivity     $   1.20  $    21   $    32   $    43   $    54  $    64
    (US$ per lb)    $   1.50  $    66   $    76   $    87   $    98  $   109
                    $   1.70  $    95   $   106   $   117   $   128  $   139
                    $   2.00  $   140   $   150   $   161   $   172  $   183
                    $   2.20  $   169   $   180   $   191   $   202  $   213

    Qualified Person

    Mr. Robert Sandefur, Principal for CAM, and a Qualified Person as defined
by NI 43-101, has reviewed and approved the resource information contained in
this release. Mr. John Thompson, VP Project Development 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 Study, including but not limited to statements of the project's
potential and information under the heading "Key Assumptions and Highlights of
the Study" 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 Study was prepared to broadly quantify 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 pre-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, so the ultimate costs may vary widely from the amounts
set out in the Study. 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 very 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 Study 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 Chlumsky, Ambrust, & Meyer, LLC ("CAM"), a professional
mining engineering firm in Denver Colorado in October 2005. 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 Preliminary Economic Assessment. 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
Preliminary Economic Assessment 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 Preliminary Economic
Assessment. There can be no assurance that mining can be conducted at the
rates and grades assumed in the Preliminary Economic Assessment. The
Preliminary Economic Assessment assumes specified, long-term prices levels for
copper, gold and silver. 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 Preliminary Economic
Assessment. Prices for gold and silver have been below the price ranges
assumed in Preliminary Economic Assessment at times during the past ten years,
and for extended periods of time. 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.

    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 on June 7th an
independent NI 43-101 resource for metallurgical and thermal coal at Baruun
Naran comprised of 47.5 Mt of measured, 60.0 Mt of indicated (107.5 Mt
contained in measured and indicated) and an additional 48 Mt of inferred
resources. QGX filed in October, 2005 an independent NI 43-101 report
outlining a polymetallic resource at the Central Valley Zone of 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
    %SEDAR: 00013803E

For further information:

For further information: David Anderson, Executive Chairman, (905)
689-9442; Paul Zweng, President/CEO, (925) 855-0505 or visit our website at
www.qgxgold.com; Renmark Financial Communications Inc., John Boidman,
jboidman@renmarkfinancial.com; Neil Murray-Lyon,
nmurraylyon@renmarkfinancial.com; Media: Eva Jura, ejura@renmarkfinancial.com;
(514) 939-3989, Fax: (514) 939-3717; www.renmarkfinancial.com

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