Quarterly Report

RNS Number:2581T
Tianshan Goldfields Ltd
29 April 2008

TIANSHAN GOLDFIELDS LIMITED
("Tianshan" or the "Company")

Quarterly Report For The Period Ended 31 March 2008

Highlights

Tianshan owns 90% of the 2.8moz Gold Mountain project in the Xinjiang Province
of North West China. The Company's aim to develop the Gold Mountain Project into
a large tonnage, open pit mining and heap leach operation continued to progress
positively in the March 2008 quarter.

* During the quarter Tianshan announced a significant upgrade in the
classification of the resources at Gold Mountain with combined total
Measured and Indicated Mineral Resources increasing to over 2 million
ounces. Total Mineral Resource estimated at 95 million tonnes at 0.9g/t Au
for 2.64 million ounces of gold (at 0.4g/t Au lower cut-off grade).

* Bulk Leach Extractable Gold tests on all drill core from the Yelmand
and Jinxi deposits confirming ore heap leach amenability was reported.
Average leach recoveries for Yelmand and Jinxi were 79.8% and 66.9%
respectively, on minus 2mm crushed drill core, after five days of leaching.
Leach recoveries were shown to be independent of gold head grade.

* Experienced engineers appointed as Project Manager and Project Engineer to
the Gold Mountain Project have been focused on completing a Pre-Feasibility
study by mid 2008 and submitting a mining licence application for the Gold
Mountain Project sometime in the latter half of 2008. The company is
targeting a low cost, low capex open pit, heap leach mining operation
initial processing 5mt per annum for initial 80,000 - 100,000 oz Au per
annum.

* Planning for the 2008 Field Programme was completed during the quarter. The
first priority of the 2008 exploration programme will be commencement of
drill testing the southern extension to Jinxi where the 2007 exploration
programme intersected 51m @ 4g/t Au highlighting the potential of a high
grade shoot beneath the blanket mineralisation. A 7,500 metre diamond
drilling programme is planned to start in early May.

* A regional drilling exploration programme of 12,500 metres will commence in
the second quarter of this year in conjunction with the evaluation of 31
prospects defined by prior exploration and data review.

MINERAL RESOURCE

Following the completion of the 2007 field season, Tianshan reported updated
Mineral Resource estimates for the Yelmand-Jinxi, Mayituobi and Lion deposits
within the 90% owned Gold Mountain Project (Table 1). The Yelmand, Jinxi and
Balake prospects previously reported separately as the Yelmand and Jinxi
deposits, are now reported as the Yelmand-Jinxi deposit .

Table 1: Gold Mountain Micromine January 2008 Mineral Resource Estimate (at 0.4
g/t Au cut-off grade) in accordance with JORC guidelines

Tianshan Goldfields - Gold Mountain Project - Total Mineral Resource as at January 2008
Measured Indicated Inferred Total Resource
Deposit Tonnes Au Au Tonnes Au g Au Ounces Tonnes Au g Au Ounces Tonnes Au g Au Ounces
g/t Ounces /t /t /t
Yelmand-Jinxi 21,942,000 0.9 642,000 46,422,000 0.9 1,268,000 16,807,000 0.9 473,000 85,172,000 0.9 2,383,000
Mayituobi 1,269,000 1.1 43,000 2,251,000 0.9 62,000 436,000 0.7 10,000 3,957,000 0.9 115,000
Lion 26,000 0.7 538 1,221,000 0.6 22,000 4,398,000 0.8 119,000 5,644,000 0.8 142,000
Total 23,237,000 0.9 686,000 49,894,000 0.8 1,352,000 21,641,000 0.9 601,000 94,772,000 0.9 2,640,000

Note: Figures used are rounded

The 2.6moz Au Gold Mountain Project, located in North West China, has been the
subject of an extensive diamond drilling programme which the Company commenced
in 2003. Over the past 12 months the focus of drilling activity has centred on
the Yelmand-Jinxi and Mayituobi deposits .

The Yelmand-Jinxi, Mayituobi and Lion deposits are found within a 4km2 area in
the north west portion of the Gold Mountain exploration licence (covering
approximately 88.5km2), within a north west trending corridor and within a total
Gold Mountain Project exploration tenement area of 632.3km2.

Following completion of the 2007 drilling programme, detailed resource modelling
was completed by Mr D Pertel of Micromine Pty Limited ("Micromine") where he
employed the Ordinary Kriging method of grade estimation using a three
dimensional block model. Both a JORC and Chinese compliant resources were
derived. Full results were reported to the ASX/AIM on 5 February 2008.

The important objective of the 2007 infill drill programme at Yelmand, Jinxi and
Mayituobi, to deliver Measured and Indicated resources for input into pit
optimisation studies and meet Chinese feasibility study guidelines, was
achieved. More conservative parameters to previous estimates were applied.

At 0.4g/t Au cut-off, the new resource estimate (Table 1) includes combined
Measured and Indicated resources totalling over 2 million ounces gold, or 77% of
the total resource (26% Measured and 51% Indicated).

The block model output from this resource estimate will form the basis of future
pit optimisation and financial modelling studies currently in preparation for
completion in the second quarter 2008.

The Perth and Melbourne based company ioGlobal Pty Ltd has been contracted to
develop and manage all the Gold Mountain Project geological data:

* A validated database;

* Secure access to the database through the ioHub web portal;

* Views, ready-to-use exports and reports as defined with XGM for
resource reporting and delivery into engineering studies; and

* Ongoing data management and delivery.

METALLURGICAL TEST WORK

BULK LEACH EXTRACTABLE GOLD TESTS

Further to the results reported for the Mayituobi deposit on 18 October 2007,
Tianshan reported on 19 February 2008 Bulk Leach Extractable Gold "BLEG" leach
recovery results for the Yelmand (472 composites) and Jinxi (324 composites) at
79.8% and 66.9% respectively on five metre composite samples. The BLEGs were
carried out on five metre composites of minus 2mm crushed drill core, with
leaching carried out over a period of five days.

The results show that the gold recovery at Yelmand and Jinxi appears independent
of head grade. The highest grade five metre composite, containing 8.3g/t Au
(Jinxi), leached to give a total 87.1% gold recovery after five days.

In the current quarter the full suite of BLEG results have been incorporated
into the respective Yelmand, Jinxi and Mayituobi resource block models, suitably
factored downwards to estimate heap leach recovery at the design crush size of
minus 6.3mm. A combination of gold grade and leach recoveries, on a
block-by-block basis, has assisted Tianshan to evaluate mine planning, pit
design and project economics. The BLEG results have also be used to define
samples for further column leach testing that will be truly representative of
the types and quantities of mineralisation present in each resource.

PRE-FEASIBILITY STUDIES AND FUTURE WORK

The development progress of the Gold Mountain Project is pending completion of a
Pre-Feasibility study by mid 2008 and submitting a Mining Licence Application in
the latter half of 2008.

Pre-Feasibility studies commenced in 2007 and included metallurgy test work
conducted by Kappes Cassidy & Associates, SGS Lakefield and Metallurg Pty Ltd,
the engagement of Bateman Engineering for process plant studies and Golder
Associates (Golder) for heap leach pad and environmental studies. The
Pre-Feasibility study aims to complete work commenced in the current quarter on
basic process plant design, leach pad studies at Yelmand and Mayituobi and pit
optimisations and mine planning.

Tianshan has secured the services of two very experienced engineers to lead the
project development team on the Gold Mountain project. Mr Robin Jones joined
Tianshan in January 2008 as Project Manager. He is an engineer with over 18
years experience in project management and development of resource projects from
scoping study level through to implementation. He is joined by Mr Edward Rose, a
senior project engineer with over 20 years experience in project engineering,
construction and procurement including gold processing plants in China. Mr Rose
will be based in Beijing and will work closely with local Chinese Design
Institutes.

Together Mr Jones and Mr Rose are currently focused on completing the
Pre-Feasibility study by mid 2008 and submitting a Mining Licence application
for the Gold Mountain Project in the latter half of 2008.

Work undertaken in this quarter has involved the compilation of the necessary
documents required by the PRC Ministry of Land and Resources (MOLAR) for a
Mining Licence Application. Essentially the documents are broken into the
following key categories:

* MAS - Mine Area Scoping which is a map of the mining area boundaries;
* EISA - Environmental Impact and Social Assessment; and
* MRDUP - Mineral Resource Development plan and utilization proposal.

Golder will continue to advise and ensure a scope of works and subsequent
execution to meet International and Chinese standards for environment, social
and hydrology studies appropriate for inclusion in the Chinese ESIA.

MAS -MINE AREA SCOPING STUDY

Significant progress has been made in the first quarter of this year on the site
layout to the extent that no significant changes are expected going forward with
the project.

EISA -ENVIRONMENTAL IMPACT AND SOCIAL ASSESSMENT

Various long lead baseline environmental studies commenced in 2007, including
construction and continued successful operation of a weather station and
completion of a draft report on initial acid rock drainage assessment. The
balance scheduled to commence in Q2 of this year.

MRDUP - MINERAL RESOURCE DEVELOPMENT PLAN AND UTILISATION PROPOSAL

The compilation of the Chinese geological report continued in the current
quarter. The geological resource was reported and Micromine will complete the
resource evaluation component of this group of studies in the second quarter of
2008.

Studies continued with the Xinjiang Institute of Natural Disaster Prevention on
an initial draft of a seismic safety assessment study.

RESOURCE AND REGIONAL EXPLORATION 2008 PLANNING

Tianshan's aim is to develop and continue to identify large tonnage,
stratabound, disseminated style gold deposits in near surface blankets
associated with high grade feeder breccias and veins within the Gold Mountain
Project, that are suitable to open pit mining and heap leaching.

The Gold Mountain Project consists of 13 exploration licences in the Tulasi
Basin, with a combined total area of 623.3km2. The Yelmand-Jinxi, Mayituobi and
Lion resources are located in the Gold Mountain tenement area, a single
exploration licence, covering an area of approximately 88.5km2. The southeast
corner of the licence is located immediately north of the Arxi Gold Mine. The
Arxi Mine reportedly had a resource of 21Mt @ 5.8g/t Au (3.8M oz).

Planning during the quarter is well advanced to commence the 2008 field
programme in early May, subject to weather conditions. Four diamond core drill
rigs have been contracted to complete the proposed drilling in 2008.

The first priority of the 2008 exploration programme will be commencement of
drill testing the southern extension to Jinxi where the 2007 exploration
programme intersected 51m @ 4g/t Au at highlighting the potential of a high
grade shoot beneath the blanket mineralisation. Structures near to
Yelmand-Balake especially on areas that will be affected by mine plan layout
infrastructure will also be evaluated. This work may also include some grade
continuity drilling within known resources. Geotechnical drilling for pit slope
structural analysis will also commence. A 7,500 metre diamond drilling programme
is planned.

Detailed geological mapping with emphasis on structure will be undertaken on the
Gold Mountain tenement notably in mineralised areas. Bedrock drill sampling of
areas close to known mineralisation, concealed by loess, and in proximity to
planned mine infrastructure will also be undertaken.

Regional exploration will commence immediately in the second quarter of 2008.
Previous years work has highlighted 31 anomalous targets within the 13 granted
tenements which cover approximately 623.3km2. Initially exploration efforts will
focus on the southern tenement Nalensayi, where follow up drilling is required
at prospects identified in 2007, namely Tikexi, Jin Gu and Awuliya. This work
will initially involve extensive prospect scale geological mapping and sampling
together with acquisition of ground magnetics shown to be invaluable in
interpreting key structures that appear to control mineralisation.

A new fully equipped regional exploration team consisting of four geologists and
10 support personal has been formed to complete these tasks before an extensive
drilling programme commences late in the second quarter 2008.

STRATEGY AND TARGETS MOVING FORWARD

* Completion of a Pre-Feasibility study on the Gold Mountain Project by mid
2008. The company is targeting a low cost, low capex open pit, heap leach
mining operation initially processing 5Mt per annum for initial 80,000 -
100,000 oz Au per annum;

* Submitting a Mining Licence Application to MOLAR in the latter half of this
year. The Company has commenced discussions with a short list of preferred
PRC Design Institutes with the aim of selecting appropriate institutes to
conduct the Chinese Feasibility Study and the Chinese ESIA;

* Commence 2008 Field Programme early May with resource drilling to identify
higher grade feeder zones confirmed at Jinxi and possibly Yelmand. A 7,500
metre diamond drilling programme is planned which will also include
geotechnical pit slope drilling; and

* Commence regional exploration programme in second quarter of 12,500 metres
of combined reverse circulation and diamond drilling to be undertaken in
conjunction with evaluation of 31 prospects defined by prior exploration
and review of the extensive data set commencing early Q2 2008.

CORPORATE

Board and Management Changes

During the Quarter the Company advised that Mr. David Evans moved to a Non
Executive Director position with the Company allowing him opportunity to focus
on other commitments. Mr. Evans had been an Executive Director for the Company
since April 2005 including being the Managing Director for a year during the
time of the Company listing on the AIM market. Mr Evans will retain an oversight
consulting role on the development of the 2.6Moz Gold Mountain Project allowing
Tianshan to draw on Mr. Evans' + 30 years experience in the development of
resource projects.

Mr Jason Bontempo was appointed as an Executive Director of the Company. Mr
Bontempo has worked with the Company in the capacity of Chief Financial Officer
for the last two years. Mr Bontempo was closely involved with the AIM listing of
Tianshan and its ongoing corporate and financial affairs.

In February Mark Bolton tendered his resignation as Joint Company Secretary of
Tianshan in order to focus on other commitments. Mr Bolton was instrumental in
securing Tianshan's initial investment in its Gold Mountain Project in 2003 and
has been closely involved in its development to date. The Company would like to
extend its appreciation to Mr Bolton for his valued contribution to the
development of the company and wish him every success in the future.

Shareholders Meeting

A shareholders meeting held on the 15 February 2008 approved the allotment and
issue of tranche 2 of the November placement being 3,000,000 fully paid ordinary
shares at an issue price of 50 cents. At the same meeting shareholders approved
the issue of 8,150,000 Unlisted Incentive Options at an exercise price of 60c
expiring 31st December 2010. During the quarter 750,000 Unlisted Executive
Options at an exercise price of 60c expiring 31st December 2010 were issued to
Robin Jones under the terms of the Company's Employee Option scheme.

Cash on Hand

As at 31 March 2008, the cash balance was:

Tianshan Goldfields Limited A$16.348 million (Australia)
Xinjiang Gold Mountain Mining Company Limited A$ 0.784 million (China)
A$ 17.132 million

Mr S Allnutt (MAusIMM and MAIG), Chief Geologist of Tianshan Goldfields Limited,
compiled the technical aspects of this report relating to the Gold Mountain
Project and content of this release. Mr Allnutt has sufficient experience that
is relevant to the style of mineralisation and type of deposit under
consideration and to the activity that is being reported on to qualify as a
Competent Person as defined in the 2004 Edition of the Australasian Code for
Reporting of Mineral Resources and Ore Reserves (the JORC Code). Mr Allnutt
consents to the inclusion in the report of the matters in the form and context
in which it appears.

For Further Information, Please Contact:

Tianshan Goldfields Limited
Level 22, Allendale Square
77 St Georges Terrace
Perth WA 6000
Telephone: +61 8 9221 7729
Fax: +61 8 9221 7866

Keith Liddell - Chairman
Grant Thomas - Managing Director
Jason Bontempo - Chief Financial Officer

WH Ireland Limited
11 St James's Square
Manchester
M2 6WH
Telephone: +44 161 8322174

David Youngman
Katy Mitchell

This information is provided by RNS
The company news service from the London Stock Exchange
END
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