Working toward the establishment
of commercial gold production

The Uzboy Project
(Certain information within this section is being updated)

Introduction

Alhambra's wholly owned subsidiary, Saga Creek Gold Company LLP ("Saga Creek") hold the rights to two exploration and exploitation Licenses which covers approximately 2.4 million acres located in north central Kazakhstan. These Licenses combined make up the Uzboy Project (the "Project"). These Licenses were granted in 1997 for an initial term of 25 years and can pursuant to the SubSoil Use Laws of the Republic of Kazakhstan be extended for an addition two, ten year terms. The Licenses provide Saga Creek the right to explore for all metals, including gold, uranium, copper and molybdenum.

The Project is strategically located in the Charsk Gold Belt between the Vasilkovoskoe gold deposit on the northwest and the Asku gold deposits on the southeast.

Map of Kazakhstan

Exploration targets within the Project include the Uzboy gold deposit, two past-producing gold mines (Dombraly and Stepnyak) and approximately 100 other significant gold showings.

Historical Exploration

The area covering the Project was explored by Stepgeology Geological Expedition #41 while conducting regional exploration for uranium in 1990 1991. Stepgeology Geological Expedition #41 explored the Uzboy area in 1994-1995 and focused on the gold potential of the area resulting in the discovery of two zones of gold mineralization. Reverse circulation drilling (100 metres by 40 metres grid on West zone and 200 metres by 80 metres and locally 40 metres on the East zone), detailed geophysics (magnetics and ground resistivity surveys) and core drilling were completed. Twelve core holes (1,543.5 meters) was completed in the Uzboy area by the Kazzoloto Expedition with 8 of the holes located along an East West profile line testing an area that is now referred to as the West zone of the Uzboy gold deposit. The exploration completed in 1996 and in 1997 was supervised by Cameco Mining Corp.

Alhambra commenced exploration of the Project in 2002 with the Uzboy gold deposit being the main exploration target. During the period 2003 to current date, Alhambra has conducted both detailed and regional scale exploration on various gold targets within the Project (see Project Summaries).

Resources

The information on the mineral resources for the Uzboy gold deposit as of December 15, 2009 is set out below. For additional details, please see the "Technical Reports" section of this website.

The resource estimate was completed by ACA Howe International Ltd. using a 0.4 grams per tonne ("g/t") minimum cut-off for the East and West zones of the Uzboy gold deposit.

Resource Category Tonnes Grade (g/t) Ounces
Measured 14,317,200 1.52 700,000
Indicated 7,009,500 1.22 275,500
Measured + Indicated 21,326,700 1.42 975,500
Inferred 11,258,200 1.17 421,700

The Measured, Indicated and Inferred resources for the East and West zones comply with the Canadian Institute of Mining, Metallurgy and Petroleum ("CIMM") resource category definitions.

Howe has been retained to complete an updated National Instrument 43-101 compliant resource estimation on the oxide and sulphide portions of the Uzboy gold deposit. The updated resource estimation is expected to be completed in 2011.

2010 Exploration Program

Alhambra's 2010 extensive exploration drilling program was concentrated on its three advanced exploration projects (Uzboy Gold Deposit ("Uzboy"), Shirotnaia and Dombraly) and three early stage exploration projects (Zhanatobe, Kerbay and North Balusty). In addition, a soil and rock chip sampling program was conducted on one of its early stage exploration projects (Vasilkovskoe East).

Alhambra completed 27,265 metres ("m") of exploration drilling of which approximately 34% was core drilling, 11% was reverse circulation ("RC") drilling, 32% was rotary air-blast ("RAB") drilling and the remaining 23% was hydro-core lift ("KGK") drilling. Of the yearly metres drilled, approximately 74% of this total was drilled on Alhambra's advanced exploration project areas of Uzboy, Shirotnaia and Dombraly. The remaining 26% was drilled on Alhambra's early stage exploration project areas of North Balusty, Kerbay, and Zhanatobe.

Completion of the 2010 drilling program was pushed well into 2011. This combined with export delays of more than 11,800 drill samples due to new export law and procedures lead to significant delays in receiving drill assay results. The assays for the 2010 drilling program are expected to be totally completed within the second quarter of 2011.

1) UZBOY GOLD DEPOSIT

An extensive exploration program was completed at Uzboy. This included drilling to delineate additional oxide and sulfide gold mineralization along strike and depth. The 2010 drilling program consisted of 8,298 m of core, RAB and KGK drilling.

At Uzboy Nova, located approximately 1.5 kilometres ("kms") north-east ("NE") of the West Uzboy open pit, an area that is logistically part of the existing Uzboy gold deposit and heap-leach operation, 8 core holes totaling 571 m were drilled. Four oxide and four sulfide mineralization zones were intercepted. At Uzboy NW, located 2.5 kms north-west ("NW") from the West Uzboy open pit, 127 KGK holes totaling 4,183 m were completed. A favorable geophysical anomaly, suggesting gold mineralization, was tested.

At West Uzboy and East Uzboy, core drilling started with relatively shallow holes targeting near surface oxide mineralization as an extension of the known oxide mineralization and continued with deeper holes at depth to test for additional sulphide gold mineralization. Twenty-seven holes totaling 3,239 m were drilled. These deeper holes confirmed the presence at depth of zones of strong sulphide mineralization and numerous intervals of intensive hydrothermal alteration, pervasive silicification, and quartz veinlets were intercepted.

2) SHIROTNAIA

Shirotnaia covers a 20 km strike length of the Aksu-Balusti mineral trend approximately three kms north of the gold and uranium deposits currently being mined at Aksu and Quartzite Hills. The gold mineralization at Shirotnaia is hosted in faulted and sheared andesite volcanic and volcaniclastic rocks that exhibits intense pyrite-sericite-carbonate and silica-clay alteration. The 2010 drilling program consisted of 3,391 m of core and RC drilling.

The first stage of the drilling program consisted of nine core holes totaling 1,141 m. The objective of this drilling program was to test the depth extension of the large gold anomaly previously outlined by the 2008 RAB drilling program. Two significant intervals of high-grade gold mineralization were encountered within a large area of lower grade gold mineralization, suggesting the probable continuation of the high grades to depth as is usual for this style of mineralization.

The assays from the nine hole core drilling program resulted in the discovery of two new zones of higher grade gold mineralization at Shirotnaia as well as numerous wide zones of low grade mineralization. In particular, one hole intersected 4.32 grams per tonne ("g/t") gold over an interval of 36.0 m including a higher grade interval of 16.80 g/t gold over 9.0 m and a second hole intersected 2.13 g/t gold over an interval of 20 m. These two zones could be estimated as at least 850 and 1,000 m long, 10-20 m wide and more than 60 m along the dip. The mineralized zones remain open along strike and at depth.

A second stage in-fill RC drilling program consisting of 43 holes totaling 2,250 m was completed at Shirotnaia to further enhance and understand the geometry of the large zone of anomalous gold mineralization previously outlined at Shirotnaia. These RC holes were drilled between the nine 2010 core holes and the area NE of these core holes. Broad intervals of anomalous gold concentrations (for +0.15 g/t) were intersected in 79% of the holes drilled. The RC drilling program successfully confirmed the presence of gold mineralization for at least another 550 m of strike length to the northeast, outside the boundaries of the 2007/2010 core drilling defined area of gold mineralization. The program also successfully provided new priority targets for the follow-up core drilling program in 2011.

3) DOMBRALY

The 2010 drilling program consisted of 8,511 m of core, RC and RAB drilling.

The objective of the 2010 exploration program at Dombraly was to continue core and non-core drilling on the oxide and sulphide zones of gold mineralization, to test the depth extensions of the known zones of gold mineralization, to locate new zones of gold mineralization in close proximity to Dombraly and to validate the gold mineralization and grade of the former stockpile and open pit back-fill. This program was focused to further define the extent and continuity of the gold mineralization at Dombraly, leading to an initial NI 43-101 compliant resource estimate by year-end 2011.

The gold mineralization at Dombraly is oxidized to a depth ranging from approximately 60-80 m, but in some cases, it can reach a depth of 100-120 m. The oxide zone is underlain by a transitional zone which in turn is underlain by sulphide gold mineralization.

Fifteen core drill holes totaling 3,788 m were completed. This included two holes that collapsed and were re-drilled. Of the thirteen core holes drilled, four holes were drilled at the northern flank of the Dombraly main zone of gold mineralization with the objective of extending the deep sulfide mineralization to the north and to check for shallow oxide mineralization. The remaining nine core holes were drilled just south of the known zones of gold mineralization where the gold mineralization is open-ended and aided in outlining the possible continuation of gold mineralization there.

All the holes confirmed the presence of previously established zones of hydrothermal alterations, quartz veining and pyrite mineralization. Assay results for the 15 core hole program are pending.

The RC drilling program at Dombraly included drilling of the waste pile, the open pit back fill material and the possible extension of oxide mineralization northward of the pit. The waste pile was successfully drilled as 25 RC holes totaling 340 m were completed. The back fill material was also successfully drilled with 7 inclined and vertical RC holes totaling 287 m. Most of these holes were planned to be 120 m deep to test the area below the bottom of the open pit for gold mineralization but due to technical difficulties, the average depth of the holes was 41 m with the maximum being 74 m. The 5 hole RC line totaling 256 m drilled northward of the pit met the same problems and as a result the average depth of the holes was 51 m instead of 120 m with the maximum of 57 m. Assay results from these holes are pending.

The RAB drilling program completed around the Dombraly gold deposit was focused on testing a possible further extension to the south from the waste pile as well as another possible mineralized zone 900 m north-east of the pit. This program consisted of 192 RAB holes totaling 3,840 m. Assay results are pending.

4) ZHANATOBE

RAB drilling was completed at Zhanatobe. Fifteen drill lines with 483 holes totaling 4,744 m were drilled.

Geological results of the RAB drilling are encouraging. As established by drill chip logging, numerous bodies of completely silicified iron oxide rich rocks were intercepted. These types of rocks could be indicators for the presence of carbonate hosted gold mineralization.

Only partial assay results from this drilling program have been received. The results of the RAB drilling program are encouraging with sporadic gold values ranging from 0.1 to 0.2 g/t being established in both the Northern and Central areas. The most significant +0.2 g/t Au anomaly with a peak value of 0.51 g/t Au was established in the last drill line in the Northern area. This appears to be the obvious target for 2011 follow-up drilling.

Assay results from RAB holes drilled at the silicified zone situated in the Central area are still pending.

5) KERBAY

Two scout diamond holes totaling 305 m were drilled on Kerbay. Both holes intercepted intervals of hydrothermal alterations in andesite and siltstone, but the assay results did not indicate significant mineralized intercepts. The only anomalous interval was established in hole DDK 110-01 from 99 to 108 m. The weighted average gold grade was 0.2 g/t with the peak value of 0.36 g/t. Exploration at Kerbay will continue in 2011 with RC drilling in the NW part of the area which wasn't tested in 2010 and where some trench anomalies exist.

6) NORTH BALUSTY

As a result of the exploration conducted at North Bulusty in prior years, a 12.8 km long and up to 2.5 km wide zone of gold anomalism in alluvium and saprolitic rocks was established. It consists of numerous wide individual anomalies where the gold values exceed 0.1 g/t. In three potential target areas the concentration of anomalies is higher and the gold grades reach 0.5 g/t in RAB samples. The 2010 drilling program completed was a test line of 51 KGK holes totaling 2,018 m. The depth of the holes averaged 40 m but varied from 7 to 79 m. In total, 988 samples were taken. Assay results are still pending.

7) VASILKOVSKOE EAST

The exploration program for Vasilkovskoe East, a 500 square kilometre ("km2") project area located on the western section of Alhambra's license area, included soil sampling of two areas (Western and Akshasor) as well as geological traverses with rock chip sampling at the Ivanovka area situated between the Western and Akshasor locations.

In the Western area, 4 N-S orientated lines from 5 to 7 kms long were sampled. The distance between the lines was 500 m and between samples along the line at 100 m. A total of 225 soil samples were taken. In the Akshasor area 9 NW soil sampling lines orientated 1,000 to 1,650 m long and 200 m apart were completed. Samples were taken each 25 m along the line in the central part of the area and each 50 m at the flanks. A total of 336 samples were taken. The results from the Western area returned one sample containing 20 ppb gold and a second sample containing 1.9 ppm gold. Taking into account the very wide space between the individual samples, more soil/rock samples are planned be taken in this area.

Soil sampling results from the Akshasor area were very interesting. Twenty-five samples returned gold grades of between 20 ppb with the peak grade of 0.289 g/t Au. The anomalous contour of +30 ppb Au, consisting of two NW and NE orientated parts, has dimensions of about 550 m by 450 m. It continues as zones of patchy gold anomalism in both NW and south-east ("SE") directions and remains open to the SE where sampling still has to be done. Elevated grades of Ag, As, Sb, Ba, Bi and Mo support the gold anomaly and this signature suggests the presence of an orogenic intrusion related mineralization (Vasilkovskoe style) mineralization.

In the Ivanovka area, 30 kms of geological traverses covering an area of 12.7 km2 were done and 54 rock chip samples taken. A schematic geological map of the area was prepared which shows a favourable geological environment measuring 1,100 m long and 250 m wide for sediment hosted gold mineralization.

Mining Operations

A detailed history of the mining and leaching operations conducted at the Uzboy heap leach site to the end of 2005 is set out in the Feasibility Study dated June 30th, 2006, a copy of which has been filed on SEDAR. A brief history of the work performed on the Uzboy Project during the period 2004 and 2005 related to the completion of a large scale "semi-industrial test" and the conversion to commercial operations is summarized below.

In 2004, Alhambra completed the exploration of the oxide portion of the Uzboy gold deposit. Mining operations began in July and stacking of oxide gold mineralization commenced in August 2004. Construction of the infrastructure required to complete a large scale "semi-industrial" heap leach test of the gold mineralization in oxide portion of the Uzboy gold deposit was completed in September 2004. Test leaching operations commenced in December 2004. The mining operation uses the services of a contract miner resulting in a significant reduction in the project's capital cost but increased operating costs.

In February 2005, Alhambra achieved its first sale of gold recovered from the test leaching operations. During 2005, Alhambra continued test leaching operations including the construction of two leach pads. In mid 2005, diamond drilling on a 40 metre by 40 metre grid pattern was commenced to define the limits of the primary (sulphide) gold mineralization of the Uzboy gold deposit.

In 2006 test leaching operations continued until April 30. Effective May 1, 2006, Alhambra declared commercial operations at its Uzboy heap leach mine. In September 2006, the Corporation commissioned its resin desorption plant located in Stepnagorsk, in the Republic of Kazakhstan. This facility provided Alhambra with control of its gold production.

Mining and Stacking Operations

Alhambra, through its wholly owned subsidiary Saga Creek employs approximately 274 people in its 100% owned Uzboy heap leach mine. The oxide portion of the Uzboy gold deposit is being mined as an open pit. Alhambra uses contractors for blasting and loading and hauling waste and ore. The day to day supervision of mine design, grade control and selection of ore and waste are determined by Alhambra's technical services group.

Ore mined and stacking activities are summarized quarterly. This information can be accessed via Alhambra's MD&A found under the "Investor Relations" section of this website.

Leaching Operations

The gold recovery method used at the Uzboy heap leach mine is typical of other heap leach projects. The ore stacked on the heaps is referred to as "run of mine" material utilizing end dumping practice. The gold is recovered using ion resin adsorption/desorption techniques and electrowinning methods. The gold recovery plant design was based on results of metallurgical testing on representative material of the oxide gold mineralization from the West and East zones of the Uzboy gold deposit. The gold mineralization at the Uzboy gold mine is separated into three main classifications: oxide, transitional and primary (sulphide).

Oxide mineralization is located at the surface of the deposit and extends to a vertical depth of approximately 50 m. The transitional and primary (sulphide) gold mineralization is not being processed at this time. The oxide ore accounts for 100% of the ore reserves being processed.

Gold and silver are leached from the stacked ores using solutions that contain low concentrations of cyanide. The solutions are applied to the surface of the heap with drip emitters, passed through the stacked ore, collected in lined-ponds, and then passed through resin columns to adsorb the precious metals from the leach solution. Loaded resin (typically containing 5,000 g/t of gold and 2,000 g/t of silver) is periodically removed from the columns and stripped of precious metals using strong caustic/cyanide solutions. The precious metals are then recovered from the strip solution in electrowinning cells. The precious metal sludge (referred to as "cathodic sediment") is then removed from electrowinning cells, and dried and shipped off-site for refining.

Leaching operations are performed on a year round basis. This information is summarized quarterly and can be accessed via Alhambra's MD&A found under the "Investor Relations" section of this website.

The percentage of gold to be recovered from the leaching operations is expected to average approximately 65% to 70% over the life of the mine.

Operating Highlights

During the year 2010, the Corporation stacked a total of 1,023,853 tonnes of ore at an average grade of 0.85 g/t of gold onto the pad. The estimated recoverable gold mined totaled 18,192 ozs. The estimated recoverable gold classified as work in progress was 36,623 ozs as of December 31, 2010. In addition, the Corporation mined 2,374,398 tonnes of waste during this same period.

In 2010, the Corporation recognized $16.0 million in revenue from the sale of 12,663 ozs of gold at an average price of $1,262.78/oz. This compares to $6.2 million in revenue from the sale of 5,606 ozs of gold at an average price of $1,098.84/oz during the period September 15, 2009 to year end 2009.

Operating Expenses

Operating expenses consist of all costs associated with the production of gold, (including direct costs incurred in the mining, leaching, and resin stripping processes ("process operating costs")), transportation and refining of the cathodic sediment. All process operating costs are charged to work in progress and are expensed on the basis of the quantity of gold sold as a percentage of total recoverable gold mined.

Operating costs for the year 2010 were $9.1 million or $720.25/oz sold as compared to $3.7 million or $651.18/oz of gold sold for the period from September 15 to December 31, 2009.

Included in the 2010 operating cost amount is $2.3 million or $182.15/oz related to the amortization of the bump-up to fair value from the estimated cost of work in progress on revaluation at September 15, 2009. Cash operating costs were therefore $538.10/oz. For the period September 15 to December 31, 2009, $1.3 million or $229.23/oz of similar costs were included in operating costs making the cash cost of gold sold for this period $421.95/oz.

Geological Setting

The Project is located in the Altynshan gold belt in Northern Kazakhstan also referred to as the Northern Kazakhstan Metallogenic Province which hosts several multi-million ounce gold deposits.

The Project is strategically located between the Vasilkovoskoe deposit on the West and the Aksu deposits on the southeast. The Vasilkovoskoe and Aksu deposits are "World Class" multi-million ounce gold deposits are located immediately adjacent to the Project.

The former Stepnyak and Dombraly gold mines are located with the boundaries of the Uzboy Project. The Uzboy Project covers a significant portion (approximately 250 kilometres) of three mineralized structural trends that cross the Project.

The east-west Shatskaya trend crosses the northern part of the Project. This trend hosts the world-class Vasilkovoskoe gold deposit (reported to contain 12 million ounces) which is located approximately 12 kilometres west of the Project. The Uzboy gold deposit occurs within the Shatskaya trend. The north-south Aksu-Bailusti trend crosses the east side of the property. This trend hosts the Aksu gold deposits (reported to contain 5 million ounces in mineable resources and 15 million ounces in resources (based on Soviet estimation methodology). The former Dombraly gold mine is also located within this mineralized trend. The Aksu gold deposits are located approximately three kilometres south of the Project. The third trend crosses the property in the vicinity of the former Stepnyak mine, which was mined to a depth of 400 m. Gold production form this mine is reported to be approximately 800,000 ounces.

Mineralization

Both disseminated and quartz vein style gold mineralization occurs within the Project. Alhambra's primary focus is disseminated style gold mineralization such as that currently being explored in the Uzboy gold deposit, the Dombraly gold deposit and at Shirotnaia. The gold mineralization in these areas are hosted in broad zone of sheared quartz-sericite-pyrite altered andesite. The zone of alteration and shearing can be up to several hundred metres wide. Localized within the zone of alteration and shearing is the gold mineralization. Faulting and lithology are important features in the localization of the gold mineralization.

The gold mineralization in the West and East zones of the Uzboy gold deposit is open at depth.

Exploration Potential

The Project was extensively explored during the Soviet times. This resulted in the location of 110 significant exploration targets including two past producing gold mines (Stepnyak and Dombraly).

The exploration model used to explore the Uzboy gold deposit and other parts of the project is the Vasilkovoskoe gold deposit located 140 kms to the west of the Uzboy gold deposit. This deposit was extensively explored during the Soviet period and is reported to have a resource of 12 million ounces of gold based on Soviet C1 and C2 resource categories.

The information on the Vasilkovoskoe deposit is not necessarily indicative of the mineralization on the Uzboy Property. The Qualified Person for the Corporation has been unable to verify the information from the Vasilkovoskoe deposit. The information related to the Vasilkovoskoe deposit is stated in a report titled "Preliminary Assessment Report on the Uzboy Gold Project" Akmola Oblast, Republic of Kazakhstan, prepared by Howe for the Corporation dated March 31, 2003. This report has been filed on SEDAR.

The Uzboy gold deposit occurs within the Shatskaya trend which crosses the north half of the Uzboy Project. This trend hosts the Vasilkovoskoe deposit.

Recent Exploration Results

The exploration results generated have been set out in News Releases. Please see "Investor Relations" section of this website.