Photos Rozan

Maps Rozan

Summary

The Rozan Property is an early stage polymetallic exploration property 100 percent owned by Emgold Mining Corporation (Emgold). It is located in a region of historic mining activity and is part of a large geologic trend containing tungsten, molybdenum, gold, copper, silver, and lead mineralization. The trend includes the Rozan Property, Emgold's 100 percent owned Stewart Property, Valterra Resource Corporation's Toughnut and Star Properties, and Sultan Minerals Incorporated's Kena Property.

Exploration by Emgold has included geological mapping, geochemical sampling and geophysical surveys along with small drilling programs, all of which had encouraging results. The Rozan Property has the potential for high-grade gold veins, bulk mineable disseminated gold zones, and possibly other metals.

In January 2010, Emgold entered into a Lease and Option to Purchase Agreement with Valterra Resource Corporation (Valterra) on the Rozan Property. This agreement will allow for systematic exploration of the region by Valterra, thus increasing the potential for an economically significant discovery.

Location

The Rozan Property is located ten kilometers southwest of the community of Nelson and 12 kilometers northwest of the historic mining town of Ymir in the Red Mountain area of southeastern British Columbia, Canada, as shown on the Location Map. The Rozan Property consists of 1,950 hectares, representing 32 mineral claims.

Rozan Property Location Map

Ownership

The Rozan Property is currently 100 percent owned by Emgold, subject to a three percent underlying Net Smelter Royalty (NSR) held by Jack and Eric Denny (the "Denny Royalty"). Emgold currently has the right to acquire two thirds (a two percent NSR) of this three percent NSR by making a cash payment of CDN $1,000,000 to the Denny's. Emgold also has first right of refusal on the remaining one third (a one percent NSR) of the three percent NSR, should the Denny's elect to sell it to a third party.

Emgold currently has a Lease and Option to Purchase Agreement with Valterra Resource Corporation, as announced in a news release dated January 14, 2010. As part of the Lease and Option to Purchase Agreement with Emgold, Valterra will have the following cumulative work commitments over a 5 year period on the Rozan Property during the lease period of the Agreement:

Valterra Work Commitment Schedule
Year	Work Commitment($CDN)
2010	CAD$50,000
2011	CAD$250,000
2012	CAD$500,000
2013	CAD$750,000
2014	CAD$1,000,000
Total Cumalitive	CAD$1,000,000

Property payments to be made by Valterra to Emgold during the lease are scheduled as follows:

Valterra Property Payment Schedule to Emgold
Timing	Cash($CDN)	Shares	5 Year Warrants*
Signing		50,000	50,000
Year 1	$30,000	50,000	50,000
Year 2	$30,000	50,000	50,000
Year 3	$40,000	50,000	50,000
Year 4	$40,000	50,000	50,000
Year 5	$60,000	$100,000	$100,000
Total	$200,000	350,000	350,000

*Warrants prices will be set at the price of the common shares at the time of issuance.

Upon completion of the lease payments and work commitments, Valterra will acquire the Rozan Property, subject to the underlying NSR. Valterra will use best efforts to complete a NI-43-101 resource estimate for the property by Year 5, subject to results obtained from exploration and development work.

Under the agreement with Valterra, should Emgold elect to acquire two thirds of the Denny Royalty (a two percent NSR), Valterra will have 30 days to exercise an option to obtain half of this interest (a one percent NSR) by paying Emgold CDN$500,000, which Emgold will use as part of the payment to acquire the two percent NSR from the Denny's and transfer half of this interest (a one percent NSR) to Valterra. Should Valterra elect not to exercise its option at this time, it shall retain a further option to acquire the one percent NSR from Emgold at a future date for a payment of CDN$750,000. Emgold will retain its first right of refusal with the Denny's to acquire the remaining one percent of the three percent Denny Royalty, should the Denny's elect to sell it to a third party. Should Emgold obtain this one percent NSR, Valterra shall have first right of refusal if Emgold elects to sell it to a third party.

History

The Rozan Property was initially staked by William Rozan in 1928 and was worked until 1972. A small high grade mining operation yielded 115 tons containing 127 ounces of gold with small amounts of silver, lead and zinc.

Eric and Jack Denny and Frank Cameron purchased the property in 1974. From 1983 to 1997, exploration of the property consisted primarily of geological mapping and geochemical (soil and rock) sampling, which resulted in the definition of two veins with gold values reported to be up to half-ounce per ton. In addition, stockwork veins were discovered in granodiorite.

Emgold Mining Corporation acquired the Rozan Property in early 2000. Emgold completed several small exploration programs between 2000 and 2008. In January, 2010, Emgold completed a Lease and Option to Purchase Agreement with Valterra Resource Corporation, who own the nearby Star and Toughnut properties.

Geology and Mineralization

The Rozan Property is located in a region of much historic mining activity, with the Ymir, Erie, Sheep Creek and Nelson districts being sites of extensive exploration and production for over 100 years. Rozan is part of a large geologic trend of tungsten, molybdenum, gold, and other mineralization. This trend includes the Rozan Property, Emgold's 100 percent owned Stewart Property, Valterra Resource Corporation's Star and Toughnut properties (approximately 9,000 hectares of properties near Rozan) and Sultan Minerals Incorporated's Kena Property.

Valterra's holdings cover five gold-silver-polymetallic mineralized zones that are structurally aligned within a 3.5 kilometer belt called the Silver King Shear Zone. The Silver King Shear Zone continues southeast toward the past-producing Silver King Mine and the 8,173 hectare Kena Gold-Copper Property owned by Sultan Minerals Corporation. Properties within this regional trend of mineralization may benefit from large-scale and deep exploration.

The Rozan Property is underlain by Early Jurassic Rossland Group volcanic (Elise Formation) and sedimentary (Archibald Formation) rocks, which have been intruded by the Nelson Batholith, Tertiary dikes and small stocks. Quartz veins have cut the Nelson Batholith and older formations. A zone of silicification in the intrusives is normally developed on both sides of these quartz veins. Lamprophyre dikes also cut across the Nelson Intrusives.

The quartz veins appear to follow two directions, northwest and northeast. The northwest direction is the regional trend, which is also followed by the lamprophyre dikes. The northeast trend of the larger quartz veins is reflected by the gold soil geochemistry contours.

There have been two types of gold mineralization exposed at the Rozan Property. Relatively high-grade gold mineralization is associated with quartz-sulphide veins that cut both the Nelson granitics and the Elise volcanic rocks. These veins, which include the Rozan Main Vein, exhibit pinch and swell characteristics. Gold mineralization is also associated with sheeted and stockwork quartz veining within and adjacent to the granitic rocks. Potential also exists for other metals including tungsten, molybdenum, copper, silver, lead, and zinc.

Exploration

Since acquiring the property in 2000, Emgold has mapped geology, conducted geochemical sampling and geophysical surveys, and completed small drilling programs. This has resulted in the discovery of a new mineralized structure while also confirming the presence of subsurface mineralization.

Soil and rock geochemistry sampling of quartz and quartz-sulphide veins and veinlets identified areas of elevated gold values. Both low grade sheeted or stockwork veining and higher grade quartz-sulphide veining (the Main or Rozan Vein) are present. Intrusive-related gold occurrences may also exist on the property.

Exploration results also suggest that there is a correlation between areas of elevated gold in soil, anomalous airborne geophysical survey data and veining and alteration.

One geophysical survey, a DIGHEM electromagnetic-resistivity-magnetic survey, indicated the presence of a large magnetic high area on the western margin of the property. Higher gold soil geochemical values were associated with this magnetic high.

Emgold drilled three diamond core holes at Rozan totaling approximately 410 meters. Significant assays included 1.45 g/t gold over 4.1 meters and 60.73 g/t gold over 0.25 meters. Drilling results indicate that low grade stockwork veins are present, with quartz-pyrite veining in granodiorite ranging in width from 0.5 to 2.0 centimeters. Samples of such veined areas had gold values of up to 1.69 g/t over lengths of three meters.

Thus far exploration indicates that the Rozan Property has the potential to host both high-grade gold in individual quartz veins and stockwork-style disseminated gold in quartz vein systems. Exploration also shows that the Rozan Main Vein is open at depth, and that other metals may be present.

Resources and Reserves

Rozan is considered an early stage property. No NI 43-101 compliant resources have been defined for the property at this time.

Mining

Exploration would target high grade veins and disseminated metal deposits suitable for mining by either surface or underground methods. Selection of mining methods would be determined following exploration and economic studies.

Metallurgy

Selection of a metallurgical process would be determined following additional exploration activity, metallurgical test work, and economic studies.

Conclusions

The Rozan Property is favorable for precious and base metal exploration because those minerals are present and new veins have been delineated from recent exploration. Also, it is part of a regional trend that may also host polymetallic mineralization.

The development strategies could include advancing Rozan as a stand alone exploration project or alternatively, and subject to agreements with other companies, combining the Rozan Property with other properties in the region to create a larger regional exploration program. By combining Rozan with Valterra's properties, Emgold believes the larger regional exploration concept offers the best opportunity for success.

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