Mine Development Strategy

RNS Number:5700F
Tianshan Goldfields Ltd
12 October 2007

                          TIANSHAN GOLDFIELDS LIMITED

              MINE DEVELOPMENT STRATEGY AND METALLURGICAL RESULTS
     
*    Successful results from the on-going pre-feasibility studies and 
     metallurgical test work to date indicate potential to fast track gold 
     production at the 2.8moz Gold Mountain Project as a low cost gold producer.

*    Initial development being considered as a low cost, open pit mining - heap 
     leach operation, commencing with the Mayituobi and Yelmand deposits
     followed by the Jinxi Main deposit.

*    A stacking rate of 5 Mtpa is scheduled at Mayituobi and Yelmand over 5-6 
     years to deliver 80-100koz Au pa. Production from Yelmand is proposed to
     include shallow, low strip tonnes from the Balake section of the Jinxi 
     resource.

*    Development of the higher grade sections of Jinxi Main to be considered 
     once further resource drilling has been completed to gain a complete 
     understanding of geology, distribution of higher grade mineralisation and
     metallurgy.

*    Successful and positive results have been received from ongoing 
     metallurgical test work by Kappes Cassiday & Associates (KCA).
          
     O    Mayituobi and Yelmand column leach gold recoveries were 77% and 67%
          respectively after 72 days of leaching.

     O    Gold leach kinetics are rapid (60% being recovered after 10 days
          leaching).

     O    Reagent consumption rates are low.

     O    Results show no requirement to agglomerate the Gold Mountain ore after
          fine crushing.

Project Development Strategy

During 2007 the company has focused its attention on unlocking the value of its
2.8moz Au Gold Mountain Project (90%) with the commencement of pre-feasibility
studies and metallurgical test work.  The successful and positive results of
this work to date have allowed Tianshan Goldfields Limited ("Tianshan") (ASX/
AIM: TGF) to consider a project development strategy, delivery of which will be
subject to successful conclusion of a feasibility study, board approval,
financing and gaining necessary licenses and permits.

Phase I - 5 Mtpa Mayituobi and Yelmand Heap Leach Project

Development strategies at Gold Mountain will initially focus on the potential
for construction of stand-alone heap leach projects at Mayituobi and Yelmand.
The mineralisation at Mayituobi and parts of Yelmand is outcropping and shallow,
giving the potential for a low mining strip ratio.  Metallurgical testing shows
that the Mayituobi and Yelmand deposits have fast leach kinetics and good metal
recoveries that could enable the company to achieve gold production quickly
using conventional heap leach technology.

The design rate being considered for the crushing and stacking plant is 2.5 Mtpa
utilising a crushing plant consisting of a three-stage conventional crushing
system to produce a crush size of minus 6mm.  At a heap stacking rate of 2.5
Mtpa it is estimated that Mayituobi will be mined in approximately two years.
The crushing plant and conveying/stacking system is being considered as a
modular system with power supplied by onsite diesel generators.

The construction of a heap leach project at Yelmand is being considered to occur
concurrently with the operation of the stand-alone heap leach facility at
Mayituobi.  The design rate for the Yelmand facility is envisioned to initially
be 2.5 Mtpa.  Once the Mayituobi resource has been exhausted its modular
crushing and stacking equipment is expected to be re-located to Yelmand, ramping
production there from 2.5 Mtpa to 5 Mtpa.

The Yelmand operation will initially plan to process 15 Mt of ore from the
Yelmand deposit and 5 Mt from the Balake section of the Jinxi deposit on the 
heap leach site over an initial mine life of five-six years, based upon the 
initial ramp-up from 2.5 Mtpa to 5 Mtpa.

Project infrastructure requirements such as site access roads, offices, workshop
and laboratory will be common to both production sites.  There is the potential
for staff to be accommodated in Yining with workers travelling to the site, some
60km, on a daily basis.

Based upon the above combined Mayituobi and Yelmand development strategy the
predicted gold production potential over the initial six year production period
could be in the range of 80,000-100,000oz pa, along with silver at approximately
25,000oz pa.

Phase II:  Jinxi Main 5 Mtpa Heap Leach Project and high grade

Once further resource drilling has been completed at the main section of the
Jinxi deposit ("Jinxi Main") in 2008, and further understanding of the geology,
distribution of higher grade mineralisation and metallurgy is ascertained,
Tianshan will evaluate design considerations for Phase II of project
development.

Given the potential for high grade sulphide zones at Jinxi Main, as evidenced by
2007 and adit sampling results, it is likely that a stand-alone concentrator
will be constructed to process these, with the significant tonnage of lower
grade ore being processed using heap leach technology.  After the final Jinxi
resource has been delineated, and the various ore types characterised, Tianshan
will carry out a study to establish the optimal process strategy.  Given the
significant size of the potential heap leachable oxide resource, it is
considered the stacking rate for the heap leach operation at Jinxi would be in
the order of 5-7 Mtpa.

Metallurgy

The potential metallurgical performance using conventional heap leach technology
was examined by an extensive metallurgical testwork program undertaken by Kappes
Cassiday & Associates (KCA).  As part of the testwork program KCA carried out
both fine and coarse intermittent bottle roll leach tests on crushed and
pulverised diamond borehole assay pulps to quantify the bulk leach extractable
gold ("BLEG"), as well as column leach tests on crushed borehole core samples.

Coarse intermittent bottle roll leach tests were carried out at a range of crush
sizes i.e. minus 25mm, minus 12.5mm and minus 6.3mm to determine the effect of
liberation size on metallurgical performance, thus defining the optimal crush
size for use in the column leach tests.

The column leach tests were conducted using a 50kg charge for a leach period of
72 days, at the optimum crush size of minus 6.3mm determined from the bottle
leach testing.  Leached gold was recovered continuously onto activated carbon
and metallurgical balancing undertaken using the gold recovered on carbon and
remaining in the column leach residue.

All of the column leach tests were carried out with half borehole core samples
crushed using a conventional jaw crusher.  Preliminary investigations were
conducted comparing bottle roll leach recoveries obtained using a High Pressure
Grinding Rolls ("HPGR") crusher compared to a conventional crusher resulted in
improved metallurgical performance.  Composite samples from Gold Mountain
crushed to minus 6.3mm, using a pilot scale HPGR crusher, resulted in increased
gold leach recoveries of 6-7% over conventionally crushed material.  Further
testing will be done to define the potential for use of HPGR crushing.

A summary of the major outcomes of the 2007 metallurgical testwork program
completed by KCA are as follows:
          
*    Mayituobi column leach recoveries were 77% for gold and 20% for silver for 
     72 days of leaching; and Yelmand leach recoveries were on average 67% for 
     gold and 13% for silver for 72 days of leaching.  The results are 
     summarised below:

      Sample Identification        Average Head   Calculated  Extracted, % Crush Size,  Days of
                                   Assay, gms Au Head, gms Au      Au          mm        Leach
                                        /MT          /MT
       Yelmand - DD05YEL019            1.08          1.12         63%       Minus 6.3      72
       Yelmand - DD05YEL076            1.00          1.03         71%       Minus 6.3      72
      Mayituobi - DD06MY020            1.10          1.07         77%       Minus 6.3      72
     
*    The gold leaching rates were very fast, with greater than 60% being 
     recovered after 10 days leaching;

*    Reagent consumptions were low, KCA estimate operational consumptions for 
     both cyanide and lime at approximately 0.2 kg/t for NaCN and >0.2kg/t for
     lime;

*    The column leach tests showed there were no deleterious elements present in 
     the samples tested;
     
*    KCA used various industry standard techniques to evaluate the percolation 
     characteristics of the crushed ore during the column leach tests, and 
     concluded that the Yelmand and Mayituobi ores show good percolation
     characteristics at the design crush size, and that agglomeration is not
     required;

*    Size by assays on the column leach residues showed that the gold was
     distributed in the coarser size fractions.  Losses in the minus 6.33 + 
     1.70mm size fractions attributed to 80% of the gold in the column leach 
     residues.  It is likely that with extended leaching that some of this 
     material would be recovered in a multi-stacked heap; and

*    Good correlation is observed between BLEG results conducted on the
     minus 2mm crushed assay pulps from borehole core and recoveries obtained 
     from column leach testing.

Future Metallurgical Test Work

Currently BLEG tests on 5m composite samples of minus 2mm crush assay pulps from
the Mayituobi and Yelmand drill holes are in progress.  At this particle size
the results have been found to be relatively comparable to coarse intermittent
bottle roll tests carried out at the target crush size of minus 6.3mm, and hence
correlate to column test results.  The BLEG's will be used to define a
relationship between liberation size and recovery and the interpreted results
can be incorporated into the resource block models, to be available after
current resource estimations are completed.  This should provide an estimation
of recoverable gold on a block-by-block basis.

Tianshan plans to conduct further HPGR testing on bulk ore samples from the
Mayituobi and Yelmand deposits to further define the metallurgical benefits of
using HPGR crushers. HPGR technology may have advantages over conventional
crushing, including increase of gold recovery, savings in capital and operating
costs, increased leach kinetics and operational flexibility.


Metallurgical test work on the Jinxi deposit is still ongoing.  Further BLEG
testing is underway on 5m composite samples testing the potential metallurgical
recoveries from the Balake section of the Jinxi deposit.  Also, preliminary
scouting flotation testwork is underway on the high-grade sulphide zone; the aim
of this testwork is to produce a bulk rougher concentrate for high intensity
cyanidation and a flotation tail product for leaching by CIL.

Strategy and Targets moving Forward

  * Pre-feasibility studies are ongoing with environment, surface and ground
    water, seismic, flora and fauna studies and leach pad, mine construction and
    infrastructure design having commenced.  The Pre Feasibility Study is
    estimated to be completed by mid 2008 at which time a full Feasibility may
    follow;

  * Golders & Associates has been commissioned to oversee aspects of
    Pre-feasibility studies to ensure full compliance with International and
    Chinese standards.  Golders & Associates has also been commissioned to
    design heap leach pads;

  * The Gold Mountain Project Geological Assessment Report is well underway
    and will incorporate many aspects from the current Pre-feasibility studies.
    Once complete this report will be submitted to the Ministry of Land and
    Resources in Beijing for Project Registration.  A formal application for a
    Mining Licence will then follow in mid 2008;

  * New resource estimates, incorporating the 2007 drilling programme results,
    for Yelmand, Jinxi and Mayituobi deposits will be undertaken by Micromine
    Consulting and are expected to be completed by December 2007;

  * Metallurgical work is ongoing for Yelmand, Mayituobi and Jinxi where BLEG
    tests on 5m composite samples, of minus 2mm crush material for all
    mineralised drillholes at Mayituobi and a total of 40 representative
    drillholes at Yelmand and Jinxi have commenced or are imminent;

  * Cube Consulting has been commissioned to complete pit optimisation, once
    the new resource estimates have been received; and

  * Tianshan is presently targeting gold production in mid to late 2009
    contingent upon a positive outcome from feasibility studies and on gaining
    all necessary approvals from the relevant Chinese Authorities.

Background Information

Mineral Resource

Following the completion of the 2006 field season, Tianshan Goldfields Limited
reported Mineral Resource estimates for the Yelmand, Jinxi (includes Balake),
Mayituobi deposits and the Lion deposit within the Gold Mountain Project (Table
1).


Table 1: Gold Mountain FinOre December 2006 Mineral Resource Estimate (at 0.5g/t
Au cut-off grade)

        Tianshan Goldfields - Gold Mountain Project - Total Mineral Resource as at 31 December 2006
                            Indicated                     Inferred                    Total Resource
Deposit              Tonnes    Au g/ Au Ounces     Tonnes    Au g/ Au Ounces     Tonnes     Au g/ Au Ounces
                                 t                             t                              t
Yelmand             21,200,000   0.9    586,000    8,400,000   0.9    233,000    29,600,000   0.9    819,000
Jinxi               32,600,000   0.9    904,000   23,400,000   1.1    817,000    56,000,000   1.0  1,721,000
Mayituobi            5,000,000   1.0    162,000            -     -          -     5,000,000   1.0    162,000
Lion                         -     -          -    4,200,000   1.1    141,000     4,200,000   1.1    141,000
Total               58,800,000   0.9  1,652,000   36,000,000   1.0  1,191,000    94,800,000   0.9  2,843,000

Note: Figures used are rounded

Mr SL Allnutt (AusIMM, MAIG), Chief Geologist of Tianshan Goldfields Limited,
and Mr K S Liddell (FAusIMM) a director of the Company, compiled the technical
aspects of this report relating to the Gold Mountain Project.  Mr Liddell and Mr
Allnutt have sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the activity that
is being reported on to qualify as a Competent Person as defined in the 2004
Edition of the Australasian Code for Reporting of Mineral Resources and Ore
Reserves. Mr Allnutt and Mr Liddell consent to the inclusion in the report of
the matters in the form and context in which it appears.


FOR FURTHER INFORMATION, PLEASE CONTACT:

Tianshan Goldfields Limited
Level 22, Allendale Square
77 St Georges Terrace
Perth WA 6000
Telephone:               +61 8 9221 7729
Fax:                     +61 8 9221 7866

Keith Liddell - Chairman
Jason Bontempo - Chief Financial Officer

WH Ireland Limited
11 St James's Square
Manchester
M2 6WH
Telephone:              +44 161 8322174

David Youngman
Katy Mitchell


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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