The Mabuhay Project

The Mabuhay Gold project (“Mabuhay” or the “Project”) located 12 kilometres (“km”) south of Surigao City, the capital city in the province of Surigao del Norte, Philippines. Mabuhay, formerly known as “The Mindanao Mother Lode Mine” (“Mother Lode”) was an epithermal vein style bonanza-grade gold mine that is estimated to have produced around 500,000 ounces of gold from 1937 through to 1953. Mother Lode, which was once one of the Philippines’ highest grade gold producers, is located in the centre of the Project’s tenements. Rugby is now currently drilling at Mabuhay and the Company believes porphyry discovery potential exists at depth, below the old workings.

The Project covers an area of 878 hectares (“ha”) comprising a Mineral Production Sharing Agreement application (APSA No. 000029-X) which is currently awaiting approval. A group of pre-existing mining lease contracts covering an aggregate area of 686 ha, which are also included in the agreement, are located within APSA No. 000029-X.

Mabuhay is situated within a 15 km radius of numerous multi-million ounce gold and gold/copper porphyry deposits and mines, which include Philex Gold Inc.’s Boyongan and Bayugo gold/copper porphyry deposits, Manila Mining Corporation’s previously operating gold/copper mines and Red5 Limited’s (“Red5”) Siana gold deposit.

Past drilling conducted on the Mabuhay property, which targeted the epithermal vein system at Mother Lode, returned significant results including 15.5m at 5.92g/t gold and 3.9m at 18.11g/t gold.

The Company has completed a +30 line kilometres of 3D-IP surveying designed to delineate porphyry style gold-copper mineralization in the immediate vicinity and surrounding the epithermal vein system. Data are currently being interpreted to provide a basis for ongoing targeting for drilling.

Initial drilling will focus on testing for porphyry gold copper targets immediately adjacent to the epithermal veins, and also targets generated from the IP surveying. Previous drilling intersected 15 metres grading 1.53g/t gold and 0.6% copper within the porphyry style mineralisation at the base of the drilhole (vertical depth of approx. 300 metres).

Recently, Red5 announced a new gold/copper porphyry discovery at Mapawa which is positioned directly adjacent to Mabuhay’s northern border. Drilling results included a 254m intersection grading 1.2g/t gold and 0.16% copper (See Red5’s press release: http://www.asx.com.au/asxpdf/20100712/pdf/31r8k0njsprdz3.pdf).

Agreement terms

The agreement with Pelican Resources Limited (“Pelican”) and its Philippine subsidiary, SunPacific Resources Philippines, Inc. (“SunPacific”), together with the agreement with All-Acacia Resources Inc. (“All-Acacia”) (the “Agreement”) grant Rugby the right and option to earn an 80% interest in the Project. Under the Agreement, Rugby will be required to make staged payments to Pelican and All-Acacia totalling US$900,000 over three years and incur staged expenditures of US$6.5 million over six years. In addition, Rugby has paid Pelican a signature fee of US$20,000. Pelican will be paid a further US$5 million if commercial production commences at Mabuhay. A pre-feasibility study on the Property must also be completed. Upon the exercise of the Option, All-Acacia and the Company will form a joint venture with respect to the development of and conduct of mining operations on the Property and on each anniversary date thereafter, the Company must pay an additional US$200,000 to All-Acacia towards All-Acacia’s pro-rata share of expenditures until commencement of production from the Property.