Malawi NI 43-101 - December 2011 - Gold Canyon Resources Inc.

51 SUMMARYProperty Description Chambe Basin is part of Malawi Exclusive Prospecting Licence 0325/11,a rectangular block about 40 km E-W and 27 km N-S with an area of 1,050 sq km, within whichthe licencee has exclusive rights to prospect for rare earths (“REE”) and bauxite.Location The Property is located in southernmost Malawi (south central East Africa) andcovers the Mulanje Massif. The centre of the Property is at approximately 15˚ 57”S, 35˚ 37”E.Ownership EPL 0325/11 is held in the name of Spring Stone Limited, a private Malawi companythat is a 100% subsidiary of Spring Stone Exploration Inc., a private company registered in BritishColumbia and a 100% subsidiary of Canadian public company Gold Canyon Resources Inc. Theproject is a joint venture between Gold Canyon Resources Inc, and Japan Oil, Gas and MetalsNational Corporation (“JOGMEC”), which provides 67% of funding for Spring Stone ExplorationInc. and consequently has a 67% equity option holding in licence-holder Spring Stone Ltd.Geology A gneissic basement complex of Precambrian to Lower Paleozoic age forms the oldestrocks in the area. This is intruded by a series of partly overlapping, subcircular, mostly syeniticplutons that are part of the Chilwa Alkaline Province, of Upper Jurassic to Lower Cretaceous age.Chambe Basin is an area of low relief covered by thick, bouldery, residual kaolinitic soils in themiddle of one of these syenite intrusions that is surrounded by a circular outer rim of bare syenite.Mineralization A small number of reconnaissance samples of soils collected in 2010 and early2011 from Chambe Basin and analysed for leachable rare earths (“REE”) suggest there ispotential for a bulk REE deposit in these soils.Exploration concept Chambe Basin is being explored for a REE deposit of the “ion adsorption”type. Such deposits are quite important REE producers in China but few have been foundelsewhere. Typically the REE content is low, but a significant part is easily extractable by ionexchange using dilute solutions of common chemicals such as ammonium sulphate. Othercharacteristics include very low U and Th, a large proportion of high value “mid” and “heavy” REE,and they may be mined by relatively inexpensive shallow surface excavations or in situ.Status of exploration The Property licence was acquired on 18 March of 2011, mostly on thebasis of reconnaissance samples by Geological Survey Dept headed by J. Ishikawa in 2010. Anexploration program of systematic short-hole drilling, with some pitting, initial environmentalsampling, and analysis of soils for leachable REE is currently being carried out by Mitsui MineralDevelopment Engineering Co. Ltd (“MINDECO”) under contract to Spring Stone Exploration Inc.,the vehicle for the joint venture between Gold Canyon Resources Inc and JOGMEC.Conclusions and recommendations Only a small number of reconnaissance samples of soilsfrom the Chambe Basin have so far been analyzed, but from review of these and verifyinganalyses the author agrees with the interpretation by J. Ishikawa, JOGMEC and MINDECO thatthere is potential for a REE deposit of the ion adsorption type. A US~$1.1 M program proposed byMINDECO, and accepted by the Malawi Government, is currently under way. While the authorhas had no opportunity to recommend changes to this approved program he endorses it as a welldesignedand thorough first phase plan of exploration of the Chambe Basin for ion-adsorptionREE potential.