SmallCapMedia therefore intends to assess all of these various attributes, all of which are steadily building intrinsic value into the Company’s share price. Shrewd investors will no doubt appreciate that such a scenario invariably mitigates a stock’s downside risks.

 

Probably the most impressive aspect of Continental’s highly enterprising business model is that within the last year the Company has propelled itself along the fast track to developing a prospectively world-class copper-gold deposit. All of this has been achieved from a standing start. (More on this later).

 

Furthermore, the unprecedented pace of development of this project continues to gather momentum.  In fact, Continental (www.hdgold.com/kmk/Home.asp) is even targeting the initiation of a feasibility study (an initial blueprint for a mine) this year. Moreover, management believes that this pivotal ‘proof of concept’ mine assessment phase can be completed within a 15- month time frame.

 

There also exists the likelihood that this deposit will eventually host between 150 million and 300-million-plus tonnes of high-grade copper-gold mineralization. Hence, this recent major discovery offers investors clear potential for a ‘home run’ win.

 

The odds in favour of such a financial windfall are further bolstered by the fact that the driving force behind Continental is a world-renowned management group (to be discussed further on). Notably, the group’s principals are in a league of their own with nearly half a dozen home run mining successes to their credit.

 

There is also the competitive advantage that Continental has earned by being an early-stage market entrant in one of the planet’s last great mineral frontier territories. This is where there still exits untapped potential to unearth ‘elephant deposits.’

 

A World-Class Gold-Copper Deposit in the Making

By way of background, Continental entered into a joint venture agreement in January of last year with another mining junior, Great China Mining, to acquire up to a 60% interest in the Xietongmen Project. It is located in the largely-unexplored, geologically fertile Tibetan Plateau region of western China. Under the direction of the project operator, Continental, this sizeable copper-gold discovery has been the focus of an aggressive, well planned drill program since April 2005.

 

No less than 62 grid-pattern drill holes (all of which have intersected mineralization), spanning 21,000 metres, have thus far outlined an emerging high-grade, bulk-tonnage copper-gold porphyry deposit. One that clearly exhibits significant, near-surface bulk tonnage potential.

 

As a consequence of having generated such comprehensive drilling data, Continental announced in early 2006 an initial estimate of a measured resource of 106.3 million tonnes grading an average of 0.49% copper and 0.73 grams per tonne (g/t) of gold. This translates into a resource base of approximately 2.49 million ounces of gold and 1.148 billion pounds of copper.

 

Readers please note, however, the 106.3 million tonnes resource estimate has been stated in the measured category. This means the drill-delineated measurements are spaced so closely and the geologic character of the mineralization is so well defined by way of size, shape, depth, and mineral content that the estimated resource is very well established.

 

A further 28.8 million tonnes of 0.43% of copper and 0.59 g/t of gold have been calculated in the inferred category. This represents an estimated additional 0.55 million ounces of gold and 273 million pounds of copper. By way of explanation, inferred resource estimates that merely assume continuity beyond measured resources for which there is geological evidence. Inferred resources may be supported by approximate estimations deduced from limited drilling.

 

However, drilling thus far has only tested an area measuring approximately 900 by 400 metres. In fact, the overall geological footprint that is the focus of an ongoing drill program is somewhat larger, totaling 1,000 by 800 metres in size.  Accordingly, six drills are systematically demonstrating the homogenous high-grade continuity of the gold and copper mineralization within the known parameters of this deposit.

 

This has been established, to date, by way of delineation drilling in 2005 over 50-metre spacing that consistently returned excellent grades - ones that tend to be distributed over an impressive mineralized zone that is, on average, 200 metres in thickness. Of equal importance, exceptional mineralized intercepts have even been encountered as deep as 400 metres below surface.

 

Meanwhile, the 2006 drill program is aimed at testing both the lateral and vertical extensions of all of this mineralization with the goal of developing significant additional resources. This close-spaced step-out drilling may yet reveal that the deposit is in fact larger in size and scope than the Company’s existing geological model indicates. Indeed, the likelihood of this scenario unfolding is supported by the fact that the mineralization is shown to be ‘open’ (continuous) in all directions.

 

All told, at least 40,000 metres of drilling is planned for this year to accomplish a number of benchmark objectives. They include the upgrading of inferred resources to a measured and indicated classification, and the drilling the lateral extensions of the deposit which remains open in all directions. Additionally, engineering drilling will be conducted for mine design planning. And much of this developmental work will help to delineate the ultimate size of the deposit and its overall average copper and gold grades.

 

Already, one well-respected mining analyst, Don Poirier of Blackmont Capital, has ventured a best-case scenario estimate for the deposit. In an insightful autumn 2005 research report, he postulated that it has the potential to host as much as approximately 267 million tonnes (translating into an estimated 7.3 million ounces of gold and 3.4 billion pounds of copper).

 

Whether or not such an ideal scenario will pan out, Continental’s management may yet find additional tonnage elsewhere on the property. To add a little ‘blue sky’ dimension to the Company’s story, substantial reconnaissance/exploration drilling will also be conducted at three new target areas. All of which are distinctly separate prospects from the original discovery area.

 

Project History

The emergence of this large-scale mineral deposit has gathered considerable momentum in a relatively short period of time. In fact, the sub-surface geological potential of the Xietongmen Property’s discovery zone was first probed in 2001-2002 by Great China Mining – another Canadian mining junior listed on the US OTCBB.

 

At that time, two short adits (tunnels) were driven into a hillside. They revealed broad intervals of significant copper-gold mineralization. Then two subsequent vertical drill holes in 2003 produced equally tantalizing results.

 

This therefore led to the search for a North American mining partner that could offer the geological sophistication, depth of experience, and financial resources to develop a major copper-gold deposit. Enter Continental Minerals – one of a stable of high-profile companies managed by Hunter Dickinson Inc. 

 

Dynamic Management with a Stellar Track Record

Well-established for over two decades as leaders in the global quest for rich new mineral deposits, Hunter Dickinson boasts a much-envied track record of successes. Ones that have yielded returns even exceeding 1,000% for shareholders of several of their companies.

 

Their major accomplishments include playing key roles in the discovery and development of the Golden Bear, Kemess and Mount Milligan deposits, all of which were sold for rich profits to major mining companies. And two of which have been prolific mines.

 

The Hunter Dickinson group has also been expanding its skilled team and in particular, engaging experienced executives to lead each of the public companies. The new President and CEO for Continental is Gerald Panneton, who joined the company in Janaury 2006 from Barrick Gold, where he was a member of Barrick’s evaluations and acquisitions team for a number of years, most recently as Director, Advanced Projects and Evaluations for the Exploration-Corporate Development group. 

 

In that role, Mr Panneton was instrumental in the acquisition of Pangea Goldfields, a Canadian company with Tanzanian assets, and he played a key role in advancing the Tulawaka Project in Tanzania through feasibility and permitting. 

 

Shareholders of Continental Minerals may also take heart from the cachet that the Company’s name offers. Specifically, another of Hunter Dickinson’s past flagships,   Continental Gold, provided investors with unprecedented returns of up to 1,700% within two years. This came about after Continental discovered the Mount Milligan deposit in 1988. Then after the Company advanced the deposit to the final mine permitting stage, it was purchased by global mining heavyweight Placer Dome Inc. in 1990. Continental shareholders were able to cash out at Cdn. $20 a share, representing a huge financial payday for many of them.

 

Similarly, the Hunter Dickinson group is now developing into a mine what has now demonstrated itself to be the second largest gold-copper deposit in North America. Unassumingly named the Pebble Deposit, it is situated in southwestern Alaska in close proximity to deep-water ports. To date, a jaw-dropping 31.3 million ounces of gold, as well as 18.8 billion pounds of copper and one billion pounds of molybdenum, have already been outlined in the measured and indicated category.

 

Moreover, a second deposit has now been discovered. The ongoing delineation of inferred resources suggests that this already epic deposit may yet virtually double in size, at least in terms of its copper and molybdenum potential. And a further headline-grabbing 14.5 to 22.1 million ounces of gold is also in the offing (as indicated in the inferred resources category).

 

Needless to say, these are a few of the reasons why the Vancouver-based firm of multi-disciplinary mining experts was selected by Great China Mining as a perfect business partner.

 

China’s ‘Gold Rush’: Heralding World-Class Opportunities

China has a pressing need for Western capital. And more importantly, the technology transfer from North American mineral explorers to develop the nation’s domestic mineral reserves. Therefore, in order to attract overseas mineral explorationists, numerous mining-friendly initiatives have now been implemented with an emphasis on reforming China’s historically protectionist property ownership laws. This has resulted in a dramatic improvement in the business climate for foreign mining companies just within the last several years.

 

Such a scenario has taken on a particularly lustrous dimension with China’s recent acceptance as a member of the World Trade Organization. In effect, it safeguards China’s newly-found status as a secure and stable investment environment (albeit with a developing tax and legal system), particularly when compared to other developing countries.

 

Accordingly, Continental is among the first wave of North American mining companies to benefit from a once-in-a-lifetime opportunity to earn unrestricted and unencumbered access to some of China’s most geologically prospective and under-explored regions. Indeed, China now represents one of the world’s final frontiers for the discovery of new deposits.

 

These frontiers include Tibet, where Continental has joint ventured a geologically prospective land package spanning nearly 13 square kilometres (1,290 contiguous hectares). Of which the Xietongmen Deposit only constitutes a very small percentage of the whole property.

 

This presents the possibility that Continental is ideally situated in an expansive new mineral district that offers the prospect for other for large-scale porphyry discoveries. Hence, the Company embarked on thoroughly investigating this hypothesis, starting in 2005 with the systematic exploration of its jointly owned Xietongmen Property by way of detailed geological mapping and soil sampling programs, and drilling.

 

Infrastructure and Socio-economic Considerations

Continental intends to be a standard-setting model of corporate governance for Western mining companies that are active in China. This partly involves adhering to the highest environmental standards. And it also includes a commitment to providing a wide range of culturally-respectful initiatives to further the needs of the surrounding Tibetan villages and local area government. This is already shaping up to be a meaningfully impactful undertaking as Tibet has historically been a very poor and underdeveloped region.

 

But Tibet’s longstanding economic woes could be resolved in dramatic fashion if regional-scale exploration over the next few years reveals a substantial inventory of buried mineral wealth. To this end, Continental hopes to act as a catalyst to ensuring the future prosperity of the region. In fact, the realization of a lucrative open pit mine would no doubt offer a major boost to regional employment, while also providing countless economic spin-offs.

 

The advent of such powerful economic stimuli for this remote and sparsely populated territory certainly has not been overlooked by China’s central government. On the contrary. These days, Chinese authorities are making unprecedented efforts to open up the Tibetan plateau to large-scale mineral development. And not just to financially empower the indigenous population. But to also help meet China’s burgeoning domestic demand for raw materials.

 

In order to accommodate such development, the Qinghai-Tibet Railway – one of the regions most important new construction projects – has been completed to Lhasa, the capital of Tibet.  There are also plans to extend it to Rikaze (about 50 kilometres from the Xietongmen property) by 2010. This crucial economic artery connects Tibet with other railway lines that lead to China’s industrial heartland.

 

Furthermore, there is more than adequate infrastructure in the immediate vicinity of the Xietongmen Deposit. This involves a paved highway and a hydroelectric transmission line that pass near the southern boundary of the property. And the highway provides easy access to the fully-serviced city of Rikaze (with a population of 100,000). Also, heavy equipment and skilled operators, as well as industrial vehicles, are all at Continental’s disposal in Rikaze and Lhasa.

 

All of these various dynamics paint a very favourable logistical picture in support of a profitable mining operation at the Xietongmen Deposit. One that should realize greater cost efficiencies when the Qinghai-Tibet Railway finally reaches Rikaze.

 

Key Project and Stock Evaluation Numbers

In order to earn its 50% interest in the Xietongmen Project, Continental was committed to U.S. $5 million in exploration/development expenditures and U.S. $2 million cash payment to Great China Mining by November 2006, both requirements have already been satisfied).

 

Continental may also increase its stake to 60% by incurring an additional U.S. $3 million in developmental expenditures by November of 2007.  The Company expects to complete these expenditures by April 2006. At this time, Continental will have more than Cdn. $5.0 million in its treasury with the exercise of 2006 warrants – an ample sum to initiate its 2006 work program.

 

From a technical perspective, Continental has approximately 47.3 million shares outstanding (about 54.8 million fully diluted). This type of share structure typically makes for good liquidity in daily trading volumes.

 

Other Highlights of the Xietongmen Project

The economic imperatives driving the development of the Xietongmen Deposit are largely a factor of global demand for copper beginning to outstrip supply. This is why copper is now trading at all-time highs. This situation is being exacerbated by China’s double digit economic growth, making this emerging superpower the world’s most dominant consumer of this indispensable industrial metal.

 

From a logistical perspective, Continental further benefits from having this voraciously hungry marketplace virtually on the Company’s doorstep. Likewise, there is now increasing demand among China’s new middle classes for gold (a metal frowned upon until recently as a bourgeois status symbol). This also partly explains why bullion has literally doubled in price in the last three years to hit 25-year highs.

 

Value-oriented investors will also take heart from the fact that the excavation of rich, bulk tonnage ore from a near-surface, open pit mine typically offers tremendous cost savings. Especially when compared to underground mining operations. And the ready availability of prolific tonnage invariably leads to meaningful economies of scale – yet another significant cost-cutting dynamic.

 

Investment Summary 

Continental is managed and financed by proven mine finders who have handsomely rewarded legions of patient investors in their publicly traded companies time and time again. Once more, the Hunter Dickinson group has shrewdly implemented a finely-calibrated risk/reward formula for success that shareholders stand to benefit from immeasurably.

 

These same investors are also poised to enjoy leveraged exposure to surging, historically high gold and copper prices. This assertion is underscored by the fact that the Company’s prospectively world-class copper-gold deposit exhibits a particularly high preliminary valuation for its metal content. It compares very favourably to other major porphyry ore bodies around the world, most of which typically fall within the U.S. $5-10 billion valuation bracket.

 

Meanwhile, the upward trajectory of Continental’s stock promises to gather considerable momentum in 2006 with the advent of a continuation of plenty of impressive drilling results. And the initiation of a mine feasibility study later in the year should also instill in the investment community a high degree of confidence that this project. In turn, this promises to make it a very attractive buying opportunity for deep-pocketed institutional investors.

 

Accordingly, SmallCapMedia fully expects Continental Minerals to firmly establish itself as a ‘rising star’ both in the equity markets and in the global mining business within the next couple of years.