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Gold exploration in Russia March 2011

Gold exploration in Russia March 2011. Disclaimer. Disclaimer.

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Gold exploration in Russia March 2011

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  1. Gold exploration in Russia March 2011

  2. Disclaimer Disclaimer The information contained in this document is being supplied (in the case of distribution in the UK) only to persons who fall within certain exemptions of the Financial Services and Markets Act 2000, including a limited number of specified persons and institutions which meet the requirements of articles 19, 43, 48, 49 and 50 of the Financial Services and Markets Act 2000 (Financial Promotion Order 2001), or are persons to whom this document may otherwise lawfully be issued or passed on to. It must not be distributed or passed on to any other person. No representation or warranty, express or implied is given to the accuracy of the information or opinions contained in this document and no liability is accepted by Ovoca Gold Plc nor by Davy or any of their respective directors, members, officers, employees, agents or advisers for any such information or opinions. Accordingly, this information is being supplied to you, in whole or in part, for information purposes only and not for any other purpose. In particular, the distribution of this document in jurisdictions other than the United Kingdom may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of laws of any such other jurisdiction. This document and the information contained in it do not constitute a prospectus and do not form any part of an offer to sell or allot or issue, or any invitation to apply for, securities. Any decision to apply for securities must be made solely on the basis of information contained in the final document issued by Ovoca Gold Plc. By accepting receipt of this document you will agree to be bound by the limitations set out above. Persons receiving this document should note that, in connection with any proposed transaction, Davy is advising Ovoca Gold Plc and no-one else.

  3. Company snapshot Listing symbol OVG.L (AIM), OVX.IR (Irish SE) Shares outstanding 88.5mn Warrants/options 6.6mn Management ownership 45% Net cash and equivalents (at 03.12.10) $55.4mn Market capitalization (at 28.02.11) $47.5mn Deferred performance-based consideration to $18.0mn Magadan asset vendors

  4. Introduction • Ovoca Gold is a well-funded gold explorer and mine developer with a proven track record of creating value. • The Company’s business strategy is: • Focus – Russia, gold • Expertise/experience – professional staff with high success rate • Long-term regional experience – Russia business savvy, proven ability • Partnership – local government, community, strategic outreach View from Olcha gold deposit, Magadan Region, Russia, looking north

  5. Investment case • Ovoca Gold is: • Unique exposure to Russian gold industry • Almost complete absence of juniors in Russia • Russia major gold producer and massive resource potential • Russia again on agenda of major companies (PepsiCo, BP, Ford, Kinross) • Strong financial and capital market position • Cash and investments worth +$50mn • Share buy-back program • No debt (vendor payment contingent on successful exploration-development) • Zero value given for attractive exploration/development assets • Stakhanovsky project – easy to execute • Rassoshinskaya – multiple high quality targets • Company track record for successful asset development

  6. Share price performance AIM listing, GBP pence • Strong share price performance, up 109% in 2010 • Trading liquidity improved in 2010 due to roll up and new investor outreach effort • Daily share volume up 86%, value volume up 111% (4Q09 vs. 4Q10 on AIM)

  7. Why Russia? • Russia is the world’s 5th largest gold miner with one of the fastest rates of production growth • Russia hosts some of the world’s most promising exploration potential • However, Russia is: • Underexplored • Undermined • Underrepresented in asset • portfolios of world’s gold mining • companies Ovoca looking for gold, all alone…

  8. Russia – Last frontier for gold Russia has the world’s 3rd largest gold reserves, 5th largest producer Source: USGS

  9. Russian footprint (lack of) Russian production as a percentage of total 2010 production of top global gold mining companies: Source: Company data

  10. Foreigners in Russia • Despite Russia’s poor “risk” image in many mining circles, there are numerous positive examples of foreign gold companies working successfully in Russia • Kinross – Developed, built, operated, closed and sold Kubaka. Completed Kupol construction and currently operates. Acquired and sold Julietta • High River Gold – Acquired and currently operates Buryatzoloto. Developed, built and currently operates Berezitoviy • Bema Gold – Developed, built, and operated Julietta. Developed, began construction of Kupol • Silver Bear Resources – Acquired, developed and sold Avlayakan • Ovoca Gold – Acquired, developed and sold Goltsovoye • Celtic Resources – Acquired by Severstal, shareholders see share price appreciation of 118% from start to finish of hostile takeover • Petropavlovsk – Very successful UK gold miner with long track record operating in Russia

  11. Expertise/experience Ovoca Gold has a top-tier team that collectively has decades of experience in mining asset development in Russia. The team’s core competency is exploration and development in the Far East region of Russia. Projects which have had major Ovoca Gold team involvement include: Unifying factor: gold/silver, Far East Russia, successful

  12. Goltsovoye experience Goltsovoye silver project Location: Magadan, Russia Production started: 2010 Peak output: estimated 7mn oz Ag Ownership: Ovoca – Polymetal Resource: 69.0mn oz silver @ 895.3 g/t* Ovoca involvement: Ovoca Gold acquired Goltsovoye in 2006. From 2006 to 2008 the Ovoca team upgraded the resource base to JORC standards, completed a Bankable Feasibility Study, secured an LOI on mine financing from a commercial bank, and then sold the project to Polymetal for $47.7mn in cash and securities (a 194% premium to Ovoca’s market capitalization at the time of closing). * Wardell Armstrong International, press release 08.02.2007, JORC measured, indicated and inferred resources

  13. Projects • Ovoca Gold core projects: • Rassoshinskaya: • 2 year exploration license, extendable and convertible to 25 year exploitation license • Multiple targets – Olcha, Podgorniy, Zet, Vist • Gold-silver, low sulphidation epithermal deposits, similar to successful mines in region • Stakhanovsky: • Full exploitation license, valid to 2027, extendable • Gold bearing quartz dykes, course - free gold, very simple metallurgy • Significant infrastructure already in place Rassoshinskaya Stakhanovsky

  14. Stakhanovsky Exploitation license valid until 07.05.2027, total size is 73 km2 in Northwestern part of the Magadan region Bulldozer clearing drill platform at Berezitoviy

  15. Stakhanovsky Berezitoviy Diorite quartz dykes parallel to each other and perpendicular to Zabolocheniy river bed. N Burovaya Albitoviy Zabolocheniy 1 – 2 Tainstvennay 1 - 3 Ore exposed in trench from Berezitovy (bottle for scale)

  16. Stakhanovsky – Maiden resource Maiden JORC resource announced 02/2011: 350,000 oz Au inferred category “SRK’s Mineral Resource Statement given in the table below is reported using the terminology and guidelines given in the JORC Code. The resource is given above a 0.5 g/t cut off grade and comprises 7 areas from the Berezitoviy, Zabolocheniy 1 and Tainstvennaya 1 areas. Generally, SRK considers the drilling to have covered only a quarter of the immediate area in which the geological mapping and grab sampling results have returned encouraging results; therefore exploration potential is considered to be good.” View from Berezitoviy looking Southeast

  17. Stakhanovsky – History Rich placer deposits discovered in the Stakhanovsky and Zabolocheniy river beds – alluvial mining To date approximately 2mn oz gold has been extracted from the license area Initial exploration work conducted by Magadangeologia Geophysics, geochem, trenching and drilling done Uneven course-grain mineralization in diorite quartz dykes. Initial Russian-code resource (P1) of 1.2mn oz gold 2009: 260 ton bulk sample taken from two dykes – grade determined 2 g/t with +60% recovery via gravitation. 2010: 7,100m RC drilling and 1,000 DD completed. Results given to SRK for resource calculation. 2011: Initial JORC resource from SRK. Large-scale bulk sampling and DD drilling. Commence pre-feasibility study, register end-year resource with State as first step to full feasibility and mine construction.* Operational State mining run by local Artel (Communal placer mining groups) State-owned license area. OOO Magsel acquired the property at auction in May 2007. Ovoca acquires Magsel in January 2010. Corporate 2011 - 1940 - 2000 2001 - 2008 2009 - 2010 *Subject to successful exploration

  18. Stakhanovsky – Drilling Significant 2010 RC drilling results include: Total work done in 2010 included approximately 7,100m RC drilling and 1,000 meters of DD. RC rig drilling at Stakhanovsky

  19. Stakhanovsky – Infrastructure in place View from Zabolocheniy 1 looking East Year-round road to Susuman, town pop. 7,500. Distance to license area 40km Village Udarnik, on license area, pop. seasonal, buildings in place to house miners, drill crew Power substation

  20. Stakhanovsky – Summary • Simple project with clear development path • Significant infrastructure in place at site • Initial test work show gold recoveries in excess of 60% via gravitation alone • Multiple observations of large gold particles > 1mm in size • Opportunity for scalable start-up with off-the-shelf modular production lines • Initial estimate of low capital expenditures Picture of gold particles taken from 2009 bulk sample, Russian coin (for scale) approximately size of US dime

  21. Rassoshinskaya Exploration license valid until 15.02.2013, term is extendable and can be converted to 25 year exploitation license, total size is 2,460 km2 in Northeastern part of the Magadan region Staging camp for Olcha

  22. Rassoshinskaya regional context Significant gold-silver deposits (+1mn oz Au equivalent) mined or under development Mayskoye Karalveem Dvoinoye Rassoshinskaya Kupol Lunnoye Nezhdaninskoye Kubaka Dukat Khakanja Natalka Ametistovoye Julietta Excerpt from SRK report, June 2009

  23. Rassoshinskaya – Multiple targets Vist: Gold-silver target. Placer mining in neighboring area. Podgorniy: Large gold-silver anomaly. Geophysics, geochemistry and grab samples. Trenching and drilling scheduled for 2011 season. Zet: Gold-silver bearing epithermal quartz vein system over 7 km long. Geophysics, geochemistry, grab samples and trenching done. Drilling scheduled for 2011 season. Olcha: Gold-silver bearing epithermal quartz vein system. Extensive exploration work done. Excerpt from SRK report, June 2009

  24. Podgorniy – Strong geochem anomaly Geochemical results show strong presence of gold and silver, geophysics also confirm structural anomaly at site. Trenching and drilling planned for 2011. Halo grade (g/ton) Silver Gold 2km 2km

  25. Olcha – Maiden resource Maiden JORC resource announced 06/2010: 344,000 oz Au inferred category The metallurgical characteristics of the ore are amenable to conventional gravitation, flotation and direct cyanidation processing techniques. Metal recoveries from initial test work reached over 97% for gold and 74% for silver Zone 1 N Zond Zone 2 2.7km

  26. Olcha Olcha: Structural model developed, new results being added NW Zone 2 Zone 1

  27. Olcha Bore hole C-35. Epithermal quartz veining. Similar veining in neighboring gold mines (Kubaka, Kupol)

  28. Olcha Significant historical drilling and trenching results include:

  29. Olcha – Zone 2 * denotes data from 2010 drilling season

  30. Olcha – Photo highlights View looking West, camp, drill rig in background Overburden cleared, ore outcrop (white veins) visible Trench heading South

  31. Ovoca focus Ovoca Gold is one of the only independent (no strategic stake owned) publically-listed junior explorer/miner active in Russia today Junior miner presence in Russia largely absent + Foreign companies wanting to enter Russia lack local partners + World class projects and people = Business opportunity: focus of Ovoca Gold Drill rig at Olcha

  32. Peer valuation (EV/oz resource) Current valuation implies negative value for our resources, free gold! Producers Explorers/developers EV is market capitalization as of 28.02.11 plus net cash as of latest financial report, peer group is AIM listed companies with operations in emerging markets

  33. Valuation – Vending arrangement • Current EV valuation of Ovoca Gold implies a negative US$/oz Au (JORC M,I&I) • Explorer/developer peer average valuation would imply share price of GBP 0.65 • Assume Rassoshinskaya conversion and Stakhanovsky threshold of 300,000 oz JORC measured and indicated completed by end-2011: • Payment out of Ovoca equals US$12mn as per vending agreement • JORC measured, indicated and inferred resource at 694,000 oz Au (Olcha + Stakhanovsky) • Current EV valuation would be US$8/oz JORC resource (less than half closest peer) • Cash and equivalents position would still be very strong at forecast US$32 – 35mn Road sign for Susuman, note city coat-of-arms is dredge for placer mining

  34. Development timeline 34 Mine development Management intentions (3 - 5 years) Exploitation Exploration a cash generating asset producing 30,000 – 50,000 ounces Au annually (preliminary in-house estimate) 2010 - 2011 2012 2013 – Stakhanovsky a significant gold resource ready for feasibility study and/or JV partner with global mining companies 2010 - 2013 2014-2015 2016 – Rassoshinskaya Management’s goal is to put Stakhanovsky into production as soon as possible, generate cash flow to keep company financially self-sufficient, explore the Rassoshinskaya license area, and keep an eye out for opportunistic acquisitions.

  35. Team

  36. Contacts Ovoca Gold Plc. Russia representative office: Stoloviy Pereulok, Bld 6 Moscow, 121069 Russia Telephone: +7 495 916 6029 Dublin office: 78 Merrion Square Dublin 2 Ireland Telephone: +353 1 661 9819 www.ovocagold.com

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