Kenya

African Queen's JV Partner ABBA Mining is Presently in Dispute Over Portion of the Rongo License in Kenya

(click here for press release)

Rongo Gold Field Project

AFRICAN QUEEN MINES LTD. (the “Company”) entered into an Earn-in and Joint Venture Agreement (the “Agreement”) with Kenyan private company ABBA MINING COMPANY LIMITED (“Abba”), covering exploration, development and exploitation of the Rongo Gold Field Project (the “Project”), which is the subject of Special License No. 287 (the “License”), granted to Abba by the Commissioner of Mines and Geology of the Government of the Republic of Kenya (the “Commissioner”) on January 22, 2010. The License grants full and exclusive rights to prospect and explore for all minerals for an initial period of two years within an area of approximately 112 sq. km. known as the Rongo Gold Field in the Kanango gold mining area of the Migori District of Nyanza Province in Southwest Kenya near Lake Victoria.

The Project is situated some 380 km. by road from the capital city of Nairobi and 60 km. N of the border with Tanzania, forming part of the rich Lake Victoria Greenstone Belt extending from Tanzania and hosting known world-class gold deposits including African Barrick Gold’s Bulyanhulu and North Mara Mines, within approximately 100 km. of the Project, and AngloGold Ashanti’s Geita Mine.

Under the terms of the Earn-In and Joint Venture Agreement with Abba, the Company may earn up to an 85% interest in the Project by funding prescribed optional stages from exploration through feasibility. In addition, the Company is required to make three payments to Abba to secure its rights under the Agreement in the sum of U.S. $100,000 each on the date of effectiveness of the Agreement (now), the commencement of Phase 2 and the commencement of Phase 3, respectively. The Company is designated as manager and operator of the Project on behalf of the joint venture partners, subject to full consultation with Abba on all material aspects of the Project. Abba has agreed to transfer the License to the Company’s Kenyan operating subsidiary presently being formed upon the Company’s election to proceed to Phase 3 and payment of the above three rights payments. The Agreement has now been approved by the Commissioner.

The License area is comprised primarily of Archaean age metavolcanics of the Nyanzian System. This region has historically recorded gold production with Migori, one of the earliest gold mines in Kenya and well known for its Archaean lode gold production, located just SW the southern perimeter of the License. The mineral occurrences on the License were reported to have been first discovered in 1994 by an unsuspecting farmer who correctly identified a gold nugget in the soil. Subsequently, artisinal miners entered the area and have been carrying out sporadic small-scale operations to present principally geared toward recovering gold from vein quartz pebbles in the soil profile. Nonetheless, the potential hard-rock deposit is largely occluded by a layer of topsoil and overburden, with very few visible outcroppings. Only this topsoil has been worked by the local farming community and has led to the property being overlooked and underexplored, with its mineral potential largely unrecognised until now. Recent pitting, trenching and sampling has revealed a highly auriferous mineralized zone below the overburden covering an area extending at least 5 sq. km. at surface, with presence of visible gold in significant quantities.

The Company carried out a comprehensive site examination in April, 2010, as well as a due diligence review of the License and Project. A number of rock chip samples were identified within which visible gold was seen. The rocks are generally mafic to intermediate metavolcanics (andesites) which are extensively epidotised and often silicified. These rock types host the majority of Archaean lode gold deposits in Australia, Canada, Zimbabwe and neighbouring Tanzania. The main type of mineralization in the License area comprises sheet swarms and stockworks of gold-bearing quartz veins commencing at or near surface. The gold is typically associated with pyrite, galena and other copper sulphides. Historic grab samples taken from the artisanal workings have reported grades in excess of 2 g/t au and as high as 96 g/t au.

Geological exposures were visited in the field and late stage granites can be distinguished in the western parts, while the central and eastern areas are largely underlain by mafic and felsic volcanic rocks. Large shear zone related structures are identified which are certain to have played a role in the location of the gold bearing quartz veins. Initial social awareness programmes indicate that the community is very much in support of investment through mining and is welcoming the Company’s activities in the region. No areas of protected forest are noted with the entire area being used for agriculture.

Phase 1 - Phase 1 Exploration Program on the Rongo Gold Field Project Underway

The work covering Phase I will include (i) comprehensive rock and soil sampling, trenching and pitting over the license area; (ii) geological mapping and evaluation; and (iii) airbourne geophysical studies. The objective of the Phase 1 Exploration Program is to assess the overall geologic structure of the License area and the likelihood of a commercially viable gold deposit within the License area, as well as to identify discreet drill targets for a Phase 2 core drilling program.  The costs for Phase 1, estimated at up to U.S. $300,000, are being paid by the Company.

The Project is situated some 380 km. by road from the capital city of Nairobi and 60 km. N of the border with Tanzania, forming part of the rich Lake Victoria Greenstone Belt extending from Tanzania and hosting known world-class gold deposits including African Barrick Gold’s Bulyanhulu and North Mara Mines, within approximately 100 km. of the Project, and AngloGold Ashanti’s Geita Mine.  The area of the license covers Archaean age metavolcanics and granites of the Nyanzian System within which historical records of gold production are known. The area is situated over the northern contact of the Kinjere Granite with Nyanzian greenstones. Migori, one of the earliest gold mines in Kenya, is situated along the southern contact and has a similar geological setting. Active artisanal mining is presently occurring on the Kamwango area of the license, which has been prioritised for detailed field study.

Field visits and liaisons with all the relevant local governmental bodies and responsible persons have now been completed and the detailed Phase 1 sampling, trenching and pitting program is now underway on the ground.  Supervision and geological mapping and sampling of this area is being conducted by Remote Exploration Services of Cape Town, S.A. (“RES”) who have been responsible for carrying out most of the preceding years’ field work for the Company’s projects in Mozambique and Ghana.   Overall project management is being provided to the Company by Senior Consulting Geologist Pete Siegfried (M.Sc., MAusIMM), a qualified person, who has approved the contents of this press release.

It is planned to use the trenching and pitting initially for orientation and sampling of the area presently producing artisanal gold. As much of the area is covered by a few meters of recent alluvial material, detailed mapping of the geology has been hampered in the past. It is the Company’s intent to identify potential gold bearing, quartz veined fault structures and drill these zones later this year in order to establish grade, thickness and depth extent of the underlying gold mineralization.

Approval has now been granted by the civil aviation authorities of Kenya (“KCAA”) to commence a detailed airborne geophysical survey and it is expected that flying will commence prior to month-end.  The magnetic survey is anticipated to highlight areas of structural interest such as faults and shear zones.   Terrascan Airborne GmbH & Co Kg, based in Germany, has been contracted to carry out the survey on behalf of the Company and has had extensive experience working in remote parts of Africa. Terrascan’s geophysicists will be providing the necessary quality assurance with quality control being provided by Mr. Rainer Wackerle based in Windhoek, Namibia. Mr. Wackerle for many years oversaw quality control for the airborne geophysical surveys completed by the Namibian government through various SYSMIN and related grants.

According to Irwin Olian, CEO of the Company, “We are very excited to be commencing our work programs in Kenya. While the Rongo Gold Field is a highly prospective area on the Lake Victoria Greenstone Belt with potential to host a major deposit, it has to date been underexplored as a result of overburden which largely concealed the mineralized zones below surface.  This has created a great opportunity for us to add value and we are now moving forward with our exploration programs with all due haste.  The Kenyan authorities as well as our JV partner Abba have been extremely helpful in providing necessary support and cooperation, with the result that we are already at work on the ground only a few months following consummation of our underlying agreement.”

Visible Gold in Quartz Vein

First Vein Strike

Trenching Team #1

Trenching Team #2

Trenching Team Photo