Majestic Gold is one of my top picks for the year. As you ll see, this tiny company could be a big winner for us over the next few

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1 Mike Schaefer s Secret Stock Files Gold Dragon Spotlight: Majestic Gold Corp. (MJS: TSX) Trading symbol: MJS Exchange: Toronto Venture Exchange ( Contact: Toll free: Majestic Gold is one of my top picks for the year. As you ll see, this tiny company could be a big winner for us over the next few months And I say that coming off some huge winners, including our most recent, a 270% shot in under a month. I ve been investing in resource stocks for more than 15 years now. And I think these small shares, the juniors, are the most explosively profitable of any investment out there, period. There s no doubt my readers agree: "Mike, this is just a note to let you know how many people you have touched with your recommendations and research. I am now up $110,000 on SME." -- J. Morse That s because I ve consistently posted big gains in these stocks over the course of my career. Last year alone my portfolio returned over 100%. As a comparison, the Dow returned about 3% over the same time period. So you can see why I focus on resource stocks. They can make a tremendous difference in your portfolio. We ve been enjoying a bull market in these tiny stocks over the past few years. But that s not to say a rising tide floats all ships. As an analyst, it s imperative to take a close look at each situation individually, evaluating the projects, the company, and most important, the management. With Majestic Gold (MJS: TSX, $0.72), we ve got the best of everything: Two high impact properties in a prolific gold producing region, and a top-notch management team to execute the plan. Let me start off by saying that Majestic, like 99% of these junior resource companies, trades on the Toronto Venture Exchange in Canada. If you ve never bought Canadian stocks, don t let this

2 deter you. It s very simple and can be accomplished through almost any online broker or major brokerage firm. For online investors, I recommend Penntrade: Otherwise, use Mike Bruin at Canaccord Capital USA Inc or Mike is a subscriber to Secret Stock Files and follows all the companies I do. You can visit the TSX website at It s a great place to get price quotes and news on these companies. I think our chances for at least 300% appreciation with Majestic are excellent. In fact, I fully expect Majestic to be one of my biggest winners for the year. That s why it s vital we get positioned now. To summarize, Majestic owns a gold property in China, located squarely inside the Tien Shan gold belt. The Tien Shan is a massive gold belt, and hosts two of the biggest gold mines in the world, Kumtor and Muruntau. It looks like Majestic s property also hosts a very large gold deposit. In fact, testing done so far on the property already confirms the presence of widespread gold. But the next step is key. The company is set to initiate a drilling program to determine the exact location and extent of the gold mineralization. This program is what will drive the stock. Just like the NYSE, it s results that ultimately drive the share price. But before those results come out, it s not uncommon to see shares rise in anticipation. So timing is everything. I expect we ll see some results from the ground exploration program within the next 60 days. Because of that, it s vital we get hold of Majestic now, before the word spreads. This is an important point, because I m only aware of a few other analysts following the company. And that s another key point about these tiny stocks. Once the word starts to spread, they can go nuts on the upside. It s just one more reason this opportunity is perfect. Majestic Gold

3 The Tien Shan gold belt lies in Central Asia, and traverses a path over 1,500 kilometers, from Uzbekistan to China. Tien Shan hosts the world s largest single gold deposit, the 170 million ounce Muruntau deposit. The nearby Kumtor deposit produced over 600,000 ounces of gold in If you look at a map of the Tien Shan, you ll see at least 11 major mines there comprising well over 200 million ounces of gold resources. Majestic s deposit, called Sawayaerdun, is believed to host 3 million ounces of gold, based on limited exploration carried out by Chinese geologists. This figure, which can t yet be booked as reserves, would be worth as much as $300 million. Now that s a huge number, but the potential is vastly higher, because this number is based on a limited amount of exploration. In fact, these numbers come from only one small portion of the property. That s important, because the entire land package is 123 square kilometers. Like China itself, it s massive. What s more, most analysts I ve talked to believe the next major gold discovery in the Tien Shan belt will be inside China, right where Majestic is operating. Sawayaerdun hosts at least 20 different gold zones. And the geochemical work done by Majestic suggests several more zones within the property. Geochemical and geophysical are two methods of exploration employed by companies like Majestic to help them determine the location and extent of mineralization. It s how modern-day prospecting is carried out. Right now, China is just opening up to these modern, westernstyle exploration methods. Before, most of the gold found in China was located the old fashioned way by a grizzled miner with a pick and a mule. It s partly because of this lack of modern exploration that many believe several of the next world-class discoveries will be made in China. The interesting part of this puzzle is that Kumtor and Muruntau lie in Kyrgystan and Uzbekistan. Because the Chinese portion of the belt hasn t been explored there aren t any big mines

4 operating there yet. But it s clear the belt extends well into China. The word is getting out. One of the top resource and goldoriented brokerage firms had this to say about the region: We believe one of the most lucrative opportunities for risk tolerant investors is investing in new companies with quality properties within the Tien Shan Gold Belt in Central Asia. That s why I think Majestic could be responsible for the first major gold discovery within the Chinese zone of the Tien Shan gold belt. And that s the beauty of this project it s largely unknown right now. But when Majestic starts to announce the numbers from its drilling program, the resource community will sit up and take notice quickly. At some point over the next several months, I expect we ll see several of the major mining companies express interest in this project. What s Next? The next step is the drilling program. Majestic will spend between $2 and $5 million to get a handle on just how big the deposit is. Because of the size of the project, I don t expect Majestic to hold on to it for very long. Instead, I expect them to team up with a major mining company in a joint venture. Or end up as a takeover candidate by one of these big outfits. Sawayaerdun Project: Key points Multi-million ounce gold target in prolific, yet unexplored portion of the Tien Shan gold belt. Same geologic environment which hosts several major bulk tonnage gold mines (over 217 million produced and contained ounces) in neighboring countries Uzbekistan, Tajikistan and Kyrgyzstan The Chinese portion of Tien Shan could host the next major discovery. The Chinese have already defined an indicated resource of 3 million ounces. Majestic has confirmed and expanded these results through trenching and drilling. Major drill program scheduled for Spring 2005 will define the full scope of the project.

5 I should mention that last year Majestic drilled five holes to verify previous results from the Chinese program to get an idea of what the targets held. All five drill holes penetrated gold mineralization in economic grades. They confirmed holes that had previously been drilled by the Chinese. Shooting fish in a barrel? Not quite, but it s pretty close. Sawayaerdun is a company maker, bottom line. But wait, it gets better Muping and Fushan Projects If Sawayaerdun is a company maker, the Muping and Fushan projects are icing on the cake lots of icing. Majestic Gold, in these projects, has a very high probability of another multi-million ounce deposit. In fact, it s almost a slam dunk. Eastern China also hosts a large gold belt. In fact, 25% of China s gold is produced in the region, which accounts for about 1 million ounces per year. There s been active mining in the area for a long time. The reason? There are major high grade gold-bearing structures that run for miles and miles. If you travel to the region, you ll see dozens of mines scattered across the area. But just like Tien Shan, this area hasn t seen any modern exploration and extraction methods they re still operating with old technology. But the existence of producing mines proves the existence of widespread gold mineralization in the area. These mines are producing gold from high-grade vein systems. Majestic holds the property surrounding most of these small mines, which includes dozens of separate high grade veins, as well as extensions of the veins currently being mined. Plus, there s widespread gold mineralization on top of, and surrounding these veins. To a geologist, it s like being a kid in a candy store. Everywhere in the world where they occur, these systems go very deep and stretch on for very long lengths. Also, there s one of

6 these in every little valley, so basically you ve got dozens of high grade veins swarming over the property. To manage and explore this property most efficiently, Majestic forged a key strategic partnership. Majestic has teamed up with Muping, the 4 th largest gold producer in the region, in a partnership a very smart move. The company s flagship project here is the Song Jiagou, which hosts a 300,000 ounce gold resource, and is open-ended. So the exploration potential here is as good as it gets. Several years ago, the Chinese drilled 30 holes in the property and defined a 300,000 ounce resource. On top of that, there s a high-grade structure within the deposit, meaning Majestic should be able to prove two or three times the number of ounces currently hosted. That would mean a figure upwards of 1 million ounces. Analysts, I ve spoken with who have visited this particular prospect, think the potential for one million ounces is very high. One went so far as to say it s a done deal. This particular property could be put into production by Majestic, because the company s partner, Muping, is the 4 th largest producer in the region, and they re already mining nearby. Again, analysts I ve spoken with who have visited this property claim that there s no question about this deposit, it s just a matter of how big it will ultimately be. Near Term Majestic s near term goal is to proceed with drill programs on both properties over the course of the next several months. At the same time, the company hopes to begin to get the word out about what it has in China. Next month we ll see active drilling on the Song property. By June the company will have two major programs going, with the addition of drilling at Sawayaerdun. Muping and Fushan Projects Key Points: Majestic has partnered with Muping, a producing gold company already operating and producing in the region.

7 The Song Jiagou property currently has a 300,000 ounce defined resource, which is open to exploration growth. Making the step from exploration to production company is easy. Multi-million ounce potential. Earlier I mentioned Sawayaerdun is a company maker. This project is as well. Because you ve got the high grade vein systems, which have on top of them disseminated gold systems that are just below the surface. And the high grade structures, which are currently being mined on a small scale, run right onto Majestic s property. Expertise, Intangibles Obviously, it takes another level of expertise to operate in China. Majestic s project manager, Richard Shoa grew up in China and graduated from Beijing University with a PHD in Metallurgy. So he not only knows the country, and the contacts, he s intimately familiar with mineral exploration and extraction. This is a part of what I refer to as the intangibles of the deal. Richard has incredible connections in the country. The importance of this is impossible to overstate. As a teacher at the University he actually taught many of the government officials he now deals with as Majestic s project manager. Others he went to school with. His network of contacts has allowed Majestic to acquire projects that would have been out of reach for other companies. And, as these projects move forward, there s no doubt his connections will help the company move quickly and efficiently within the Chinese system. I m not going to go into detail on the entire management team in this report. You can get further details directly from the company or on the website. Suffice it to say they re all topnotch mining professionals with past successes under their belts. In the interest of time I ve touched briefly on Majestic s properties in China. That s because I think this opportunity has a very short fuse. By the time Majestic begins its exploration program next month I think we ll see share prices much, much higher. I ve given you the details to understand the story, and the information to capitalize on it. The rest is up to you. Contact the company directly or visit them online for more information.

8 Majestic Gold (MJS: TSX, $0.72) Toll free Copyright 2005, Michael Schaefer's Secret Stock Files. PO Box 84905, Phoenix AZ, Michael Schaefer's Secret Stock Files yearly subscriptions are $495 per year (48 issues). For Customer Service, please call (800) No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer or solicitation of an offer to buy or sell securities mentioned. While we believe the sources of information to be reliable, we in no way represent or guarantee the accuracy nor the statements made herein. Any investment should be made only after consulting a professional investment advisor and only after reviewing the financial statements and pertinent corporate information about the company. Investing in securities is speculative and carries a high degree of risk. The publisher is not a registered investment advisor and does to purport to offer personalized advice; the publisher does not determine the suitability of the advice and recommendations contained herein for any reader. Past performance does not guarantee future results. As Majestic Gold Corp, the company featured in this publication, subsidized distribution costs, this feature should be construed as advertising. Magnuns & Mann Publishing, LLC developed and coordinated this mailing having received and administered a budget of $100,000. This edition of Secret Stock Files has been distributed as part of a new subscriber effort. Michael Schaefer, editor of the Secret Stock Files, has received no compensation from Majestic Gold Corp. in relation to this feature; however, Mr. Schaefer does expect some new subscriber revenue as a result of this effort the amount of which is unknown at this time.