Hi all,

On Feb 01, MJS released a corporate update which included the following statement.

Goals for 2013:

  1. Continue to increase production levels at Song Jiagou towards our production goal of 100,000 ounces per year through grade control:
    • Removal of low-grade material at top of resource (nearing completion)
    • Construction of modern and large capacity assay lab on site to accommodate sufficient blast hole assays (in progress);
    • Completion of detailed topographical surveys for detailed pit modeling (in progress).
  2. The Company is working closely with SRK Beijing on an application to the Chinese Government to expand the mining zone and mining permit to 7,400 tpd this fall.
  3. The Company will continue to search out potential merger and acquisition opportunities.
  4. The Company is investigating a potential listing on the Hong Kong Stock Exchange ("HKSE") for better valuations and reduced share dilution in future M&A's.

In the April / May edition of several mining journals, Rod Husband was quoted as saying the mill will take three months to complete.

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Boosting the grade

Majestic plans to achieve this massive production increase primarily through increasing the gold grade, for which purpose it is building an assay lab.

“The biggest problem we have now is the lack of grade control; where we’re putting everything that we dig up through the mill, because we don’t have the facilities on site to separate what would be waste from actual ore,” explains Husband.

“Constructing an assay lab will give us some grade control, which will start to increase our production significantly over the next several months. It will allow us to determine which blast holes are in ore and which are in waste before we blast them.”

Husband claims the assay lab will take three months to build and in the meantime, Majestic will be using a pit grid programme that will allow it to roughly separate lower grades from higher grades, raising the grade one step. “It’s not the optimum way to do it but that should take us from our current average of 0.35g/t or 0.4g/t to 0.6g/t or 0.7g/t, which would deliver a significant increase in production,” remarks Husband. (NOTE; the email posted yesterday from Brad Magnes indicates this part will take SIX WEEKS)

“Then, when we’re ready to do the more detailed assays three months hence, it will take us to the ultimate goal of 1.2g/t going through the mill.”

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Assuming there have been no delays, we could assume the assay lab is complete (FEB 01 - MAY 01 = 3 MONTHS per Rod's comment)

We should see about 6000 oz reported for Q2 on May 31.

Assuming the 6 week rampup to 0.7g/t per Brads email, we are on track to see Q3 results over 10,000 oz reporting on August 31, 2013

MJS reported via Marketwire the Q1 results 10 days before their SEDAR filing on FEB 19, 2013.

I'm going to go out on a limb and suggest that when the company reported the lab was "in progress" on Febuary 01, it had already been in progress for at least a few weeks putting the "three month" completion at APRIL 01.  This means the SIX WEEK grade rampup period per the Brad Magnes email is completed by mid May.  If my assumption is correct, this means we will enter Q3 with increased grades of 0.7g/t.

I suspect we may see another corporate update on or around MAY 21 after the Victoria Day weekend.  This would follow a similar timeline of their last update at about 10 days before next SEDAR filing on MAY 31, 2013.

I hope to see this update include.

  • Q2 results over 6000 oz
  • ASSAY LAB Complete
  • Attained average grade of 0.7 g/t for duration of Q3 while on schedule to reach 1.2+ g/t for Q4
  • Licence granted for 7000 tpd mill operation
  • Possible update on HKEX or M&A activity although I expect this will come later.

Thoughts anyone?

Best,

SC