Qualifying Report for Dangxiongcuo Salt Lake Deposit Nyima County Tibet, China FOR Sterling Group Ventures, Inc. 900 – 789 West Pender Street, Vancouver, BC, Canada V6C 1H2, Tel: 604 893 8891; Fax: 604 408 8515.

Qualifying Report


Dangxiongcuo Salt Lake Deposit


Nyima County
Tibet, China


Sterling Group Ventures, Inc.
900 – 789 West Pender Street,
Vancouver, BC, Canada
V6C 1H2,
Tel: 604 893 8891;
Fax: 604 408 8515.

Norm Tribe, P.Eng.,
N.Tribe & Associates Ltd.
2611 Springfield Rd.
Kelowna B.C., V1X 1B9
(250) 860 7661
May 20, 2006

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Qualifying Report

for the

Dangxiongcuo Salt Lake Deposit

Table of Contents

  Location of Mineralization and Workings 6
  Terms of Agreements 7
  Regional Geological Setting 12
  Property and Local Geology 13
  Lithology 13

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  Summary of Work Done by the Institute. 25
  Measured Physical Parameters 25
  Evaporation Ponds 26
  Environmental Statement 27
  Reserve Calculation 27
  Conclusions 28
  Risk Analysis 28


  APPENDIX I – Assay report
  APPENDIX II – Geology Report for Dangxiongcuo Salt Lake Deposit Nyima County, Tibet of China. Beijing Mianping Salt Lake Research Institute

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Qualifying Report


Dangxiongcuo Salt Lake Deposit

List of Illustrations

Figure #1 Location Map, The Dangxiongcuo Salt Lake, Nyima County, Tibet, China 4
Figure #2 Satellite imagery of Nyima County, Tibet, China. 4
Figure #3 Satellite imagery of The Dangxiongcuo Salt Lake, Nyima County, Tibet, China. 5
Figure #4 Road Map Central Tibet. 5
Figure #5 Official Chinese License Document and Map 6
Figure #6 Claim Map superimposed on the satellite image. 12

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Qualifying Report


Dangxiongcuo Salt Lake Deposit

List of Plates

Plate i. Lake Dangxiongcuo on our way out of the basin 16
Plate ii. The lake levels were 200 meters higher in the past 17
Plate iii. We get the information on salinity pH temperature and other variables 17
Plate iv. Glassware and scales in the onsite laboratory 18
Plate v. A suite of samples ready for analysis. 18
Plate vi. An AAS analytical unit and computer in the laboratory 19
Plate vii. Weather station measures precipitation, temperature, sun light, humidity, wind speed and direction. 19
Plate viii. Various compounds drop out of solution at various times in the process. 20
Plate ix. These little pots also measure evaporation rates and other parameters. 20
Plate x. Taking the sample from the lake to be tested in Vancouver, Canada 21
Plate xi. These white lacustrine silt deposits were thought to be suitable for evaporation ponds but turned out to be permeable. 21
Plate xii. The camp and the laboratory are powered by this 6 kw solar array 22

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Qualifying Report


Dangxiongcuo Salt Lake Deposit

List of Appendices

APPENDIX I – Assay report

APPENDIX II – Geology Report for Dangxiongcuo Salt Lake Deposit Nyima County, Tibet of China. Beijing Mianping Salt Lake Research Institute May 2005

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Qualifying Report


Dangxiongcuo Salt Lake Deposit


          Thisreport is written at the request of Richard Xuxin Shao, President and C.E.O. ofSterling Group Ventures, Inc., for the purpose of providing an initialassessment of the Dangxiongcuo Salt Lake Deposit as a mining prospect. TheDangxiongcuo Salt Lake is located on the Qingzang Plateau in north-west centralTibet, China. The property, is covered by an exploration permit issued to TheBeijing Mianping Salt Lake Research Institute and consists of the DangxiongcuoSalt Lake and the surrounding area. Included as part of the property are thecamp and research laboratory. Beijing Mianping Salt Lake Research Institute hascarried out the research work and has submitted a report (Chinese Report) onthis work. The writer visited the installation in the field, did a spot test ofthe water in the salt lake and one of the hot springs feeding into the lake, andvisited and examined the laboratory experiments and procedures. A review of theresearch data done by the Beijing Mianping Salt Lake Research Institute was doneand this report is a review of these findings. A translation of the ChineseReport was provided and this will be reviewed and summarized.

          The field visit allowed the writer to examine and evaluate the camp, the laboratory and the suitability of the experiments . The analysis of the spot sample confirmed the presence of the elements of interest, in concentrations consistent with those presented by the Chinese in their report.

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          Thereserves of useful compounds are listed as follows:

  • 1,036,100 tonnes of LiCl.

  • 1,281,800 tonnes of B2 O3

  • 52,045,100 tonnes if KCl

  • 10,307,600 tonnes of Na2 CO3 +NaHCO3

  • 8,900 tonnes of Rb

  • 113,500 tonnes of Br.

          Ata grade of 0.43 g/l, Li, or 2.63 g/l LiCl, the Dangxiongcuo Salt Lake Deposit iscomparable or better in grade than the other mines presently in operation.

          Thereare large areas suitable for evaporation ponds. There are also hot springs inthis area, the thermal energy from which could be used to enhance theevaporation rate.

          Alongthe western part of the lake there is a large shallow area which is suitable fordamming off to form in lake evaporation ponds.

          Abudget of ¥144 M. (US$18.0 M.) is proposed for the research work Sterling hasagreed to finance this research. Sterling will need to raise ¥50.25 M. (US$5.28M.) over the next 18 months to meet its commitment to the joint venture.

          Thisseems reasonable, but very little of this type of work is being done with whichto compare this figure.


          This report is written at the request of Richard Xuxin Shao, President of Sterling Group Ventures Inc., for the purpose of providing an initial assessment of the Dangxiongcuo Salt Lake Deposit as a mining prospect. Located on the Qingzang plateau in north west central Tibet, China, the property consists of the Dangxiongcuo Salt Lake and the surrounding area. Included are the camp and

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research laboratory on the north side of the lake and threetest ponds situated near the laboratory.

          BeijingMianping Salt Lake Research Institute has carried out the research work and hassubmitted a report on this work herein referred to as the Chinese Report(Appendix II). The scope of this review was to visit the installation in thefield, do a spot test of the water in the salt lake and one of the hot springsfeeding into the lake, to visit and examine the laboratory experiments andprocedures, to review the research data done by the Beijing Mianping Salt LakeResearch Institute and report on these findings. An official translation of theChinese Report was provided and this was reviewed and comments made in anattempt to clarified the somewhat convoluted style of the Chinese technicalreporting.


          The writer is required by NI 43-101 to include description of the property title and terms of legal agreements. The Dangxiongcuo Salt Lake research project is under the direction of the Beijing Mianping Salt Lake Research Institute. The licenses are reported to be issued to the Beijing Mianping Salt Lake Research Institute. Documents indicating this are presented as Figure #5 but an interpretation of the Chinese is not provided. Further analysis of the titles is beyond the scope of this report and the expertise of this writer.

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Figure #1 Location Map, The Dangxiongcuo Salt Lake, NyimaCounty, Tibet, China.

Figure #2 Satellite imagery of Nyima County, Tibet, China.

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Figure #3 Satellite imagery of The Dangxiongcuo Salt Lake,Nyima County, Tibet, China.

Figure #4 Road Map Central Tibet.

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Figure #5 Official Chinese License Document and Map

Location of Mineralization and Workings

          The mineralization on the property is in the form of mineral salts dissolved in the Dangxiongcuo Salt Lake. The minerals of note are LiCl, B2O3, KCl, NaCl, and Na2SO4. These minerals dissolved in the brine are consistent throughout the lake. Surveys in a number of locations in and around the lake and at various depths in the lake have indicated that concentrations of minerals varies very little.

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Terms of Agreements

          TheBeijing Mianping Salt Lake Research Institute is reported to hold theexploration permit on the Dangxiongcuo Salt Lake and the surrounding area. Thenumber is 5400000620013 the area is 89.06 km2. and it is valid until Feb 23,2007. There is a routine in which this exploration license can be converted intoa mining permit. Sterling Group Ventures Inc. (Sterling) has entered into aJoint Venture agreement with The Beijing Mianping Salt Lake Research Institute(Mianping) in which the Mianping has agreed to contribute the Technology, theExploration License and to begin the process of acquiring the mining permit.Sterling has agreed to finance the Joint Venture with 144M Yuan in research andin so doing will earn a 65% interest in the project development capital.

          Detailsof the agreement are as follows:

          1. Sterling will make a 1 million yuan payment to Mianping within two business days after the agreement is signed (Sterling reports that it has made this payment),

          2.. Sterling will, within ten business days, set up a project account and put 3 million yuan into the account for early working capital (Sterling ensures that early works are funded. When project account is short of cash, Sterling shall transfer the money into the account in time),

          3.. Sterling will finance the:

  • feasibility study,

  • hot spring drilling,

  • topography study.

  • engineering geology,

  • pond tests,

  • weather station monitoring,

  • Chinese team working capital; etc.,

  • Total estimate is 4.25 million yuan before Joint Venture agreement comes into effect,.


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          4.Sterling will deposit in the Joint Venture account, 15 million yuan within 30business days after the business license of the Joint Venture has been issued.(Estimate time is 3 months).

          5.Mianping will transfer the mining permit into the Joint Venture (estimated timeis 2-3 months). After the permit is transferred, Sterling will put 34 millionyuan into the account of the Joint Venture. Joint Venture will pay 34 millionyuan to Mianping,

          6.Before 34 million yuan is paid to Mianping, both parties control the accounttogether. After 34 million yuan is paid, Sterling controls the account,

          7.Summarizing the above, Sterling needs to put 50.25 million yuan in place(roughly US$ 6.28 million) to meet its commitment to the Joint Venture.Estimated time to raise this capital is 1.5 years,

          8.Sterling assures that the input of the registered capital and projectconstruction cost will be completed in time.

          Althougha preliminary working schedule has been established, in the event that thisschedule is conflicted with the test research and project design work, the aboveschedule will be adjusted accordingly.


          Dangxiongcuo Salt Lake (DXC) is located in the south-western part of Xizang plateau in Nyima County. The geographic co-ordinates are between 86°38’00” and 86°49’00” east and 31°30’00” to 31°40’00” north. The area of the lake is about 55.53 km2 (5,553 hectares) (21.44 sq. mi.). The elevation of the lake is 4,475 m (14,682 ft.). The climate can only be described as hostile with elevations around the 15,000 foot (4,600 m.) level the winters can be very cold. The temperatures during our site visit in early May were around the freezing point and the humidity was in the 20% range with a moderate wind making the environment feel cold. To the southeast is Mount Qingbagonglong, 6,129 m. (20,108 ft.) in height and snow covered year round.

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          The average ambient temperature at the lake is –1oC. (30.2 oF.), precipitation is 151 mm. (5.91 in.) and with a typical humidity is 16% – 18%. Yearly evaporation is 2,302 mm. (90.63 in.) which is 15 times the rainfall. The average annual sunshine is 3,122 hours.

          Thereis almost no local infrastructure. The only power, water, and roads are thoseinstalled by the Institute. Beicun village at the head of the lake appeared tohave perhaps 300 people, local Tibetan herdsman of the Han ethnic group. Theyare mainly occupied with herding yaks, sheep, goats, and a few horses. Theyplant small gardens of barley and vegetables but are not self sufficient andimport food stuffs from outside.

          Althoughpeople would be available from this village to work on a project in this areathe skill level would be very low. The village has a small Buddhistmonastery.

          Communicationwith the outside world is by satellite telephone. The nearest land line is atNyima a distance of 90 km away.

          Shipmentof product does not seem to be a problem as numerous heavy trucks were noted allalong the road to the property. National rail service is available from Naquabout 700 km distance to the east.

          Accessto Tibet is through Lhasa which has a good efficient international airport. Roadaccess into the property area is difficult at best. The road heads northwestfrom Lhasa to the town of Zamsar then northeast through the Zhangzhong passwhich is 5,200m. (17,000 feet). This first 200 km is good paved road.

           Thence down into the valley turning right onto a rough gravel road near the Nam Tsho Salt Lake. This lake does not contain valuable mineral salts. Thence around the eastern and northern side of the Nam Tsho lake and on 300 kilometers to the isolated village of Pankgo. Pankgo appears to have a population of 4,000 people. Some services and accommodation are available in Pankgo. Thence proceed 400 kilometers to the City of Nyima which has a population of 5,000 people and is the County seat of the County of Nyima. Another 90 kilometers of very rough road brings you through another 4,600 m.

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(16,000 foot) pass and down to the Dangxiongcuo Salt Lake. Thistrip takes 26 hours of bone shaking 4X4 ride from Lhasa.

          Generally,the physiography could be termed basin and range with broad valleys betweensharp ridges and arretes. The valleys are generally gentle in profile bothlaterally and longitudinally with small to medium rivers coursing through thebottoms of the valleys. Few of the rivers are bridged and most of the crossingsare by shallow fords. We passed through these valleys at breakup in the springand although some difficulties were encountered we were able to passsuccessfully. Along these tracks for much of the route were seen numerous largetrucks of 30 – 40 tonnes. Most were freighting bagged material, probably saltfrom one of the salt lake operations. There are no services along the routeexcept for Pankgo and Nyima.

          TheDangxiongcuo Salt Lake sits in a rather confined basin between high ruggedridges. There are numerous benches or beaches around the lake indicating lakelevels at one time were 200 meters above the present levels of the lake, as thelast glaciation receded.

         There isno infrastructure, except the road. Power, water and buildings were allinstalled by The Beijing Mianping Salt Lake Research Institute.

          Vegetationthroughout the plateau is sparse grasses which have been grazed down to the rootlevel. Sheep, goats and yaks graze in large herds on what appeared to be verylean fodder. Herdsmen and herdswomen tend these flocks with no visible supportand often many miles from the nearest shelter. Some of the herdsman seen to relyon the 125cc motor bike for transportation. The women appeared mainly to walk.Occasional five tonne trucks were seen hauling personal belongings grosslyoverloaded with household items and people.

          Wildlife noted during the trip was an abundance of wild yaks which were seen in large herds. Several herds of Kiang or Tibetan wild ass (Equus kiang) of one hundred animals or more were encountered near the road. These are beautiful animals, three quarters the size of a horse and consistently colored with a brown black back and a white belly. Two herds of thirty or more Chiru or

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Tibetan antelope (Pantholops hodgsoni) were seen, withtheir 1 meter long horns. Several herds of thirty to forty Tibetan Gazelle(Procapra picticauda) were also noted as well as several smaller groups.Numerous White Lipped Pica populate the plain, quickly disappearing down theirburrows as one approaches. Also seen in the lights of the vehicle at night wereseveral Tibetan wooly hare, and a Tibetan sand fox.

          Reportedto inhabit the area but not seen on this trip are the Blue Sheep, the Argalisheep and a brown wolf. Snow leopards and lynx are listed as inhabiting thisarea but are extremely rare.


          Lithiumis a metallic element that is widely distributed in the earth’s crust at lowconcentrations. Lepidolite, petalite, and spodumene, are important mineralsources of lithium. Subsurface brines, which is water that is saltier thanseawater) are the dominant raw material for lithium carbonate productionworldwide because of lower production costs as compared with the costs for hardrock ores. In the United States, lithium brines are produced and processed inNevada, and imported material is processed in North Carolina. Chile, China,Australia, and Russia are listed as major lithium producers in 1996. The UnitedStates is the leading consumer of lithium minerals and compounds and the leadingproducer of value-added lithium materials. The use of lithium compounds inceramics, glass, and primary aluminum production represented more than 60% ofestimated consumption. Other major end uses for lithium were in the manufactureof lubricants and greases, pharmaceuticals, synthetic rubber and more recentlylithium rechargeable batteries.

          Mineral resources are known to be abundant in the salt lakes of the Qingzang Plateau. Exploration of these deposits began in 1999 when the initial survey work indicated the presence of lithium, boron and potassium in the Dangxiongcuo Salt Lake. The research station was set up in 2002 and the work began in 2004 and has been operating since that time collecting data and running experiments.

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          Saltlake exploration in the Qingzang Plateau is in a very preliminary stage and onlyone deposit, the Zhabeye Salt Lake deposit, has been developed. The compositionof the brine at Dangxiongcuo Salt Lake is very similar and of the same type asthat at Zhabeye Salt Lake with good values in Li, B, and K.


Regional Geological Setting

          Basementrocks of the Dangxiongcuo basin are primarily Permian and cretaceous sediments.The main strata is composed of Jurassic – cretaceous flysch rock (sandstoneshales and limestone) and cretaceous carbonate rock.

Figure #6 Claim Map super imposed on the satellite image.

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          Overlyingthese basement rocks is the Dangxiongcuo stratum of loose Quaternary sedimentsalong the lake. These consist of lake facies sediments of glacial silts andtills.

          TheDangxiongcuo Salt Lake is strictly controlled by theDangziongcuo-Dangruoyongcuo-Xurucuo graben which is 90 km long and 30 km wideand in the late Pleistocene contained one lake where now it contains the threelakes after which it was named, Dangxiongcuo, Dangruoyongcuo and Xurucuo Lakes.The terraces around Dangxiongcuo Salt Lake mark the elevation of this LatePleistocene Lake some 200 meters above the present lake level.

Property and Local Geology

          Surroundingthe lake on three sides are terraces of lacustrine sediments. The composition ofthe lacustrine sediment in the area is mainly grayish white thin-layered,laminated carbonate clay or clayish carbonate. The thin layers are usually 3-5cm thick. The laminations are patterned in light and dark horizontal layers withthickness of ±1 mm and typical lacustrine bedding. This lacustrine sedimentalthough often called clay is not composed of clay minerals, but fine rock flourproduced in the grinding actions of the glaciers. The significance of this isthat these lacustrine glacier derived sediments have a degree of permeabilitywhereas a true clay bed would not.


          Theorigin of the lithium and other salts in the lake has not been determined. Somehave suggested that the hot springs are the source of the lithium and the boronas well as the potassium and sodium salts. Although a single sample is notdefinitive, the spot test of the water in the North East Hot Spring did notsupport this hypothesis.

          The lacustrine deposits were initially thought to be ideal material in which to build the evaporation ponds. However permeability of the material was soon noticed to allow significant losses during the evaporation process.

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          Thedeposit is a large salt lake 55.53 km2 in area with a maximum depth of 14 m.Brines are a common source of lithium and the Dangxiongcuo Salt Lake is aclassic brine type deposit. This type of deposit is know throughout the worldwhere ever desert climates allow evaporite deposits to form. Some of the wellknown salt lake lithium deposits are in Chile at the Salar de Atacama and inNevada at the Silver Peak, and the Tincalayu Mine, Salar del Hombre Muerto inArgentina and Lago Poopo in Bolivia.


          Mineralization in the lake is in the form of dissolved salts of sodium, potassium, lithium and boron, as chlorides, oxides, sulfates and carbonates. These can be recovered through fractional precipitation of the various salts by the evaporation of the water. Variations in salinity, pH and temperature determine which compound will form crystals and precipitate from the brine.

          Mineral resources indicated in the lake are 903,700 tonnes of LiCl, and 1,180,300 tonnes of B2O3 as well as undefined quantities of KCl, NaCl , Na2 SO4 and other minerals.


          Traditional exploration is not applicable in proving up the mineralization in a salt lake deposit. Systematic water sampling on a grid pattern and a varying depths is an acceptable method. This has been done by The Beijing Mianping Salt Lake Research Institute with a few hundred water samples taken at various depths on a 2 km. X 2 km. grid pattern in the lake. The concentration of the various salts is fairly uniform throughout the lake and hence the quantity of contained metal is easily determined.

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          Samplingby The Beijing Mianping Salt Lake Research Institute was done on a 2 km X 2 kmgrid on which 106 samples were taken at 16 sample points at various depths.Location control was provided by GPS . If the water depth was less than 2 metersdeep, one sample was taken; if the water depth was between 2 and 10 meters, thentwo samples were taken at 3 and 8 meters and if the water was deeper than 10meters then three samples were taken. Each sample consisted of two 500 ml.bottles of brine.

          Thesampling method used a standard water sampling technique where a bottle islowered into the lake to the required depth, the stopper removed, and the bottleallowed to fill. AAS analytical techniques were used to determine thecomposition of the brine sample. This sampling program was repeated severaltimes during the various seasons of the year. Several hundred samples have beencollected in this way and analyzed by The Beijing Mianping Salt Lake ResearchInstitute at their AAS laboratory on site. Full details are submitted in theChinese Report included as Appendix II.

          Two samples were collected by the writer. The results indicate that theconcentration of salts is comparable with the results shown in the attachedreport. See Appendix I. The lake water returned values of 376 ppm lithium, 893ppm boron and 11,300 ppm potassium. This sample was collected from the lake at adepth of 1.0 meter.

          The second sample was collected from the North East Thermal Spring. The analysis returned values of 2.18 ppm boron, 0.733 ppm lithium and 12.5 ppm potassium. These results indicate that the salts do not originate from this particular hot spring. Other springs such as the South Thermal Spring are reported to be high in salts.

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          Thereis one other lithium salt lake in Tibet. This is the working operation atZhabieye, in eastern Tibet. Experiments to establish some working parameterswere suggested from the study of this operation.

          Othersalt lakes on the Qingzang Plateau are believed to be producing potassium salts.This conclusion was reached by observing large trucks hauling bags of industrialmaterial toward the railhead. This could not be verified by the Chinese expertsaccompanying this site visit.


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World wide lithium production in past decade

  Country/year 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004e Reserve Reserve
  Argentinae 8 30 8 1000 200 200 200 200 960 1300 NA NA
  Australiae 1700 1800 2800 2800 2200 2000 2000 2000 3450 3450 160 000 260 000
  Bolivia 5 400 000
  Brazil 32 32 32 30 32 30 220 220 240 240 190 000 910 000
  Canada 660 660 1600 1600 710 710 700 700 710 700 180 000 360 000
  Chile 2000 2100 4100 4500 5300 5500 6800 6800 6580 6600 3 000 000 3 000 000
  China 320 320 2900 2900 2300 2000 2400 2400 2500 2700 540 000 1 100 000
  Namibiae 52 50 40 40             NA NA
  Portugal 160 160 180 160 140 140 200 200 190 190 NA NA
  Russiae 800 800 2000 2000 2000 1800 2000 2000     NA NA
  USA W W W W W W W W W W 38 000 410 000
  Zaire 320 000
  Zimbabwe 520 500 700 500 700 700 700 560 480 360 23 000 27 000
  World total U 6 300 U 6 600 U 14 000 U 16 000 U 14 000 U 13 000 U 15 100 U 15 100 U 15 100 U 15 500 ARP 4 100 000 ARP 11 000 000

Table explanations
all the data are in metric tons

Reserve base – that part of an identified resource that meets specified minimum physical and chemical criteria related to current mining and production practices, including those for grade, quality, thickness, and depth. The reserve base is the in-place demonstrated (measured plus indicated) resource from which reserves are estimated. It may encompass those parts of the resources that have a reasonable potential for becoming economically available within planning horizons beyond those that assume proven technology and current economics. The reserve base includes those resources that are currently economic (reserves), marginally economic (marginal reserves), and some of those that are currently sub-economic (sub-economic resources). The term geologic reserve has been applied by others generally to the reserve-base category, but it also may include the inferred-reserve-base category; it is not a part of this classification system. Reserve – that part of the reserve base which could be economically extracted or produced at the time of determination. The term reserves need not signify that extraction facilities are in place and operative. Reserves include only recoverable materials; thus, terms such as extractable reserves and recoverable reserves are redundant and are not a part of this classification system.
W – withheld to avoid disclosing company proprietary data.
NA – Not Available
e – estimated
ARP – excludes Argentina and Portugal
U – excludes U.S. production

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Lithium minerals and brine: World production by country

Country/year 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003e 2004e
Argentina-spodumene and amblygonite 400 400 400 697              
Argentina-carbonate         6000 1592 2161   906 2850 4970
Argentina-chloride         2500 2794 5182 4512 4729 4700 6303
Australia-spodumene 45 987 81 841 117 094 88 399 63 190 75 824 65 504 79 859 79 085 124 410 125 000
Brazil-ore concentrate 1600 1600 1600 1600 9485 11 122 10 875 9084 12 046 12 100 12 100
Canada-spodumenee 20 000 21 000 22 000 22 500 22 500 22 500 22 500 22 500 22 500 22 500 22 500
Chile-carbonate 10 439 12 943 14 180 24 246 28 577 30 231 35 869 31 320 35 242 41 667 42 500
China-carbonatee 9050 12 800 15 000 15 500 13 000 12 500 13 000 13 000 13 000 13 500 14 000
Namibia-ore concentrate, petalite 1861 2011 1972 1019 500            
Portugal-lepidolite 11 352 8740 7626 6883 7000 14 862 9352 11 571 16 325 16 000 16 000
Russia-ore concentrate and brinese 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000 2200
USA-brine W W W W W W W W W W W
Zimbabwea 25 279 33 498 30 929 49 833 28 055 36 671 37 914 36 103 33 172 12 131 12 000

Table Explanations – all data in metric tonnes

Wwithheld to avoid disclosing company proprietary data.


aamblygonite, eucryptite, lepidolite, petalite, spodumene

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Summary of Work Done by the Institute.

          Workdone to date by The Beijing Mianping Salt Lake Research Institute includes:

  • Analyzing the basic regional geology, hydrology, water chemistry and origin, recharge water characteristics, and their relation to the brine and any stratification therein.

  • Testing the dynamics of the surface brines throughout the seasonal cycles.

  • Sampling the lake brines on a grid pattern and testing for depth, water level, lake bottom lithology, chemistry, mineralogy, density, pH, and temperature, basically to determine the balance between water and salts, facies, map location and salting out stages.

  • Measuring the parameters of surface water to determine variations in rainfall, temperature, evaporation and runoff.

  • Testing the stability and continuity of the soils and rocks around the lake to determine their suitability for saltfield construction and other basic construction needs.

  • Analyzing all the above information to determine the economic parameters of the mineral assets and which of the minerals has value and how to recover them.

Measured Physical Parameters

          There are three rivers draining into the Dangxiongcuo Salt Lake from the southwest, the Qiangxiong, the Qurebaima and the Miankangluoma Rivers. The first two are fed by runoff form Mount Qingbagonglong and run year round. Draining from the north are the Yueza, Duowochiba and Mania rivers which run intermittently depending on the runoff conditions and precipitation.

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          Theaverage temperature at the lake is –1oC. (30.2 oF.),precipitation is 151 mm. (5.91 in.) and with a typical humidity is 16% – 20%.Yearly evaporation is 2302 mm. (90.63 in.) which is 15 times the rainfall.

          Severalwater sources around the lake were measured for mineral content. Most of therivers and hot springs flowing into the lake carry significant lithium and boronminerals with the exception of the Yueza river which did not. One of the hotsprings named the “South Thermal Spring” is reported to carry 8.5 mg/l, Li and263.77 mg/l B2O3. A hot spring on the north-east edge ofthe lake was sampled by the writer and the results are listed in Appendix I asSample #2.

          ThepH of the lake brine ranges from 8.9 to 9.7 with the typical readings between9.2 -9.4. As depth increases so does the pH value as does the salinity, thedensity, and the concentration of lithium and boron.

          Comparingthe brine at Dangxiongcuo Salt Lake with the brine at the working operation atZhabieye, the Dangxiongcuo Salt Lake brine contains less Mg and Ca than doesZhabieye, which is favorable to the extraction of Li2CO3but the mineral content is lower which requires a larger evaporation area.The most valuable component of the brine is the lithium with secondary values inboron, potassium, rubidium and bromine.

          Severalhot springs occur in the lake basin, with the largest being the North Springwhich ix fresh water and provides water for the village of Beicun and the bestknown being the South Thermal Spring which is a salt water spring. Water for thecamp comes from a small fresh water spring just above the camp and is more thansufficient to provide water for the camp.

               Theuse of the thermal energy from one or more of these springs has been suggestedto provide heat for the camp and to heat the evaporation ponds thus increasingthe rate of evaporation.

Evaporation Ponds

               Two evaporation pond sites have been selected. A total of 111 pits and 24 drill holes have been completed to test the sites. The first site is to be along

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the north shore of the lake with the evaporation ponds on theshore. The second site is along the west side of the lake and will consist of abarrier or breakwater and will be built to separate the pond from the lake. Thispart of the lake has a large, ±3.0 meters, shallow area ideally suited to thistype of development.

Environmental Statement

          Thereappears to be very limited environmental impact from the proposed miningoperation. The only anticipated damage which might occur is the possibility of aspill from one of the ditches or ponds which would contribute to the salinationof the grasslands at the edge of the lake. Procedures will be undertakes toavoid such an event. Other environmental problems are related to the humanhabitation of the area, the disposal of domestic and industrial waste especiallyplastic wraps, glass, metal, food stuffs and human wastes. Care and disciplinewill have to be exercised to eliminate these problems.

Reserve Calculation

          Reserveswere calculated according to the requirements of the “Geological MineralIndustrial Standards of the Peoples Republic of China, Geological explorationregulations for salt lake and salt mineral resources.”

          Thecalculation is made based on information collected on a 2000 m. X 2000 m. grid.Three complete surveys were made at three different times of the season cycle.There were slight discrepancies in the results, so an average was used toestimate the resource.

          The volume of the lake is calculated at 390,000,000 m3

          The reserves of useful compounds are listed as follows:

  • 1,036,100 tonnes of LiCl.
  • 1,281,800 tonnes of B2 O3
  • 52,045,100 tonnes if KCl
  • 10,307,600 tonnes of Na2 CO3 +NaHCO3
  • 8,900 tonnes of Rb
  • 113,500 tonnes of Br.

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          Concentrationof lithium, boron and potassium, exceed the minimum required for an industrialevaporite operation. At a grade of 0.43 grams per liter, lithium, or 2.63 gramsper liter, lithium chloride, the Dangxiongcuo Salt Lake deposit is comparable orbetter in grade than the other salt lake mines presently in operation.

          Alongthe northern edge of the lake there are large areas suitable for evaporationponds. There are also hot springs in this area, the thermal energy from which,could be used to enhance the evaporation rate.

          Alongthe western part of the lake there is a large shallow area which is suitable fordamming off to form in lake evaporation ponds. The bottom of the lake issuitable for this type of installation.

Risk Analysis

          Therisk in this operation is mainly dependent on the risk in operating in China.Present conditions in China favor foreign investors and foreign capitaldeveloping China’s natural resources. Any risk analysis involves the predictionof future foreign policies by the Chinese.

          Risksassociated with the deposit itself, are minimal, as the sampling to date and thenature of the deposit leaves little doubt as to what the metal content of thedeposit is.

          Resourcerecovery parameters are a different matter and the experimentation presentlyunderway is attempting to determine what these parameters are. The risk thatsnags in this experimentation could defeat or delay the production seems smallat this point, but does exist.

          The technical work observed during the site visit was being handled in a professional manner under difficult and remote conditions. Indications were that the variables of salinity, pH and temperature were well understood and that further testing will define the parameters best suited to the fractional precipitation of the minerals of value, i.e. the lithium and the boron. When these parameters are well defined, economics can be worked out and the parameters understood

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the risks are again minimal. At this point in time, theseparameters are only partially defined but look favourable to the extraction oflithium and boron.

          Possibleby-products are available in the brine at economic levels. Rubidium andpotassium are listed as economic with significant values in cesium, fluorine andbromine.


          Itis therefore recommended that the experimentation be continued until therelevant parameters are defined.

          With these technical parameters defined, economic parameters can be defined and production plans and schedules can be worked out.

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          TheBeijing Mianping Salt Lake Research Institute has outlined a research budget of¥144 M. (US$ 18 M.) and Sterling has agreed to finance that research.

          Thiswriter sees no reason not to accept this figure as a reasonable estimate of thecost requirements of completing the research work.

          Sterlingwill need to raise ¥50.25 M. (US$6.28 M.) to meet its commitments to the jointventure.

          Respectfullysubmitted this 20th day of May, 2006, at Kelowna, B.C..

/s/ Norman Tribe

N.L.Tribe, P.Eng.

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               I,NORMAN LLOYD TRIBE, P. Eng., of 2611 Springfield Rd. in the City of Kelowna,Province of British Columbia, hereby certify as follows:

          Iam a Consulting Professional Geological Engineer registered (#11,330) with theAssociation of Professional Engineers and Geoscientists of British Columbiasince 1978.

          Iam a Consulting Geologist with an office at 2611 Springfield Road, Kelowna,B.C., V1X 1B9.

          Iam a registered Professional Engineer of the Province of British Columbia.

          Igraduated with a degree of Bachelor of Applied Science from the University ofBritish Columbia in 1964.

          Ihave worked as a geological engineer for a total of 41 years since my graduationfrom university. I have read the definition of “qualified person” set out inNational Instrument 43-101 (“NI 43-101”) and certify that by reason of myeducation, affiliation with a professional association (as defined in NI 43-101)and past relevant work experience, I fulfill the requirements to be a “qualifiedperson” for the purposes of NI 43-101.

          Iam responsible for the preparation of the technical report titled “QualifyingReport for Dangxiongcuo Salt Lake Deposit, Nyima County, Tibet China” dated May20, 2006 relating to the Dangxiongcuo Salt Lake Deposit, Nyima County, TibetChina. I visited the Dangxiongcuo Salt Lake Deposit, May 2nd untilMay 7th , 2006 for five days.

          I have not had prior involvement with the property that is the subject of this Technical Report.

          I am not aware of any material fact or material change with respect to the subject matter of the Technical Report that is not reflected in the Technical Report, the omission to disclose which makes the Technical Report misleading.

          Iam independent of the issuer applying all of the tests in section 1.5 ofNational Instrument 43-101.

          Ihave read National Instrument 43-101 and Form 43-101F1, and the Technical Reporthas been prepared in compliance with that instrument and form.

          Iconsent to the filing of the Technical Report with any stock exchange and otherregulatory authority and any publication by them for regulatory purposes,including electronic publication in the public company files on their websitesaccessible by the public, of the Technical Report.

          Thisreport dated May 20, 2006 is based on data collected from published sources,from a report entitled “Geology Report for Dangxiongcuo Salt Lake Deposit , May,2005, communication with Mr. Shi chemical engineer on site and Mr. Zhanggeologist and expert on the geology of the region and by the writer during avisit to the property on May 2nd through May 7th,2006.

          Datedat Kelowna, Province of British Columbia this 20th day of May,2006.

/s/ Norman Tribe
Norman Lloyd Tribe, P. Eng.
Consulting Geologist.
Tel: (250) 860 7661
Fax: (250) 860 7661
Email: nta@shaw.ca

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TO: B.C. Securities Commission, and the TSX VentureExchange.

          I,Norman Tribe, P.Eng., do hereby consent to the filing of the written disclosureof the technical report titled “Dangxiongcuo Salt Lake Deposit, Nyima County,Tibet China” and dated May 20th, 2006 and any extracts from or asummary of the Technical Report in any Statement of Material Facts and newsreleases of Sterling Group Ventures Inc. , and to the filing of the TechnicalReport with the securities regulatory authorities referred to above.

          Ialso certify that I have read the written disclosure being filed and I do nothave any reason to believe that there are any misrepresentations in theinformation derived from the Technical Report or that the written disclosure inthe filings with SEDAR made for the purpose of continuous disclosure of theactivities of Sterling Group Ventures Inc., contains any misrepresentation ofthe information contained in the Technical Report.

Dated this 20th day of May, 2006.


/s/ Norman Tribe

Norman Tribe, P.Eng.

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Vinnerstedt, L.J.Shan Ring and Hammel, C.J. 1995 Current status of environmental, health, and safety issues of lithium ion electric vehicle batteries: National renewable Energy Laboratory Report NREL/TP-473-7673, p. 50.

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Assay report

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