Updated resource report and PEA on gigantic project coming, revaluation imminent

Updated resource report and PEA on gigantic project coming

, revaluation imminent

Booth # 2502 alhambraresources.com 403.228.2855

Ihor P. Wasylkiw

Vice President &

Chief Information Officer

Alhambra Resources Ltd (TSXV:ALH) is a Canadian exploration and gold production company that's now in its eighth year of operations in the Republic of Kazakhstan. Its property measures an astounding 2.7 million acres (around 11,000 km2) and hosts 100 gold targets, of which seven are being currently advanced. It is easy to see why Vice-President and CIO Ihor Wasylkiw is excited about the company's main asset, the Uzboy Project. This quarter, the company will release an updated resource report and PEA, which would reflect not only additional drilling results gathered since the December 2007 report, but also today's high gold prices. "Based on a gold price of $850 per ounce when the PEA was done in December of 2009 based on the resource report of 2007, the NPV of this property discounted at 10% ranges from $90 million to $203 million or $0.87 to $1.95 per share. The current prices, which translate to a 65% increase in the price of gold, could potentially increase the NPV by a factor of over two times," he tells Resource Intelligence. He discusses the company's goals and why investors should put their money into Alhambra.

Resource Intelligence: Let's talk about exploring and mining in Kazakhstan. How does the government there treat miners and what is the permit process like?

Ihor Wasylkiw: First and foremost, Kazakhstan is a very resource-rich country. They have large reserves of precious metals, semi-precious metals, oil and gas. Their resources of gold, coal and iron rank in the top 10 in the world and they have the world's second largest resources of uranium, chromium, lead and zinc. Due to the fact that this is such a resource-rich country the government has been able to put together a very comprehensive process under which the mining industry operates. They have built a very solid framework where they have established specific ministries within the government to deal with the mining sector.

RI: Would you compare them to other positive jurisdictions such as Quebec or Chile?

IW: They are pro-mining. To compare them to other places is difficult because comparisons are very subjective. We have shareholders all over the world and I can tell you that many of our North American shareholders don't know where Kazakhstan is or how the government operates; hence, they have a more risk averse approach to Kazakhstan. But when I talk to our investors in Asia, they react differently: their view of Kazakhstan is much more liberal as they are more knowledgeable about the country. This knowledge stems from the fact that Asia is right next door to Kazakhstan and there are many Asian companies that have been involved actively in Kazakhstan for many years.

RI: It sounds like a good place to do business and a lot of people closer to that region have that experience.

IW: Correct. The development of investments in Kazakhstan actually came in waves. The first wave of investment with foreigners was in oil and gas from the time Kazakhstan became a sovereign nation in 1991. That paved the way for the mining industry. In those early days, the challenge that Kazakhstan faced was that it had limited financial and human resources to develop its vast mineral resources. The government has since become very proactive in setting up regimes both in terms of government committees and fiscal regimes to attract foreign companies such as Alhambra into Kazakhstan.

RI: Let's talk about your Uzboy Project. Can you give investors a sense of the economic value of this project?

IW: Within our project area called the Uzboy Project we have over 100 gold targets, seven of which we are currently focusing on. Three of those seven projects are advanced while the other four are early-stage exploration projects. One of those advanced projects is called the Uzboy gold deposit or Uzboy, which comprises less than two percent of our land mass. It is where we have our open-pit heap leach mine that's currently in production. The Uzboy gold deposit has an independent National Instrument 43-101 compliant resource report and an independent preliminary economic assessment (PEA). As of December 31, 2007 our independent consultants determined that we had 21.3 million tonnes of gold resource in the measured and indicated category grading 1.42 g/t or just under 1 million ounces. In the inferred category we had 11.3 million tonnes grading 1.17 g/t or just under 500,000 ounces. The PEA was done based on various operating and technical parameters, including a gold price of $850 per ounce. It determined that the net present value (NPV) of this property based on a 0.4 g/t cut-off, discounted at 10% ranges from $90 million to $203 million or $0.87 to $1.95 per share.

RI: That is just one project and right now you are trading at $0.90 per share.

IW: Yes. Our consultants are in the process of updating both the resource report and PEA and we anticipate having them out to our investors before the end of the first quarter of this year. Not only are we excited about the fact that this resource report will now be updated for additional years of drilling results but also due to the fact that the evaluation will be done at the higher current gold prices.

RI: By how many percent do you think the project resource estimate will grow?

IW: At this time I can't say by what percentage our resources may have grown. However, from a valuation perspective we have done internal sensitivity analysis that tells us that a 10% change in the price of gold could lead to a 27% change in the NPV. With current gold prices being about $1,400 per ounce, this 65% increase in the price of gold (relative to that used in our last PEA), could potentially increase the project NPV by a factor of over two times.

RI: This is an open-pit deposit, what is the mine life?

IW: Yes, this is an open-pit deposit. Regarding mine life, the PEA presents eight optimal pits with mine lives ranging from four to twelve years, the median mine life being six to eight years.

RI: You have a lot of land and a lot of projects. For the Uzboy gold deposit only, what percentage have you drilled and how much more do you plan to drill?

IW: It's hard to say what percentage we have drilled. The current exploration target area for Uzboy is approximately 1.6 kms by 0.9 kms. As we continue drilling we continue to step out more and continue to increase the target area for Uzboy. In 2010 our aggressive drill program focused not only on shallow oxide core drilling but also on deep sulfide drilling. The reason is that the Uzboy gold deposit is characterized by an upper layer oxide that ranges from 50 to 75 metres in depth underlain by a shallow transitional layer underlain by a richer sulfide layer. We have drilled down to about 525 metres and we're still open at depth and at strike. We are focused on finding additional lenses of oxide mineralization and continue to drill the deeper sulfide mineralization. As this drilling continues we hope that we will be able to expand the target area.

Mining operations at the Uzboy gold deposit

RI: What projects are you focused on now in terms of drilling?

IW: Currently, we are focused on Uzboy and a project area called Shirotnaia, which is located on the southern boundary of our license area. Shirotnaia is adjacent to a world-class gold deposit, called Aksu, which has reported resources of 15 million ounces. We are very excited about Shirotnaia not only because of its proximity to Aksu but also because our exploration target area for Shirotnaia is very large. It is 10 kms by 2 kms, which is about 15 times the target size of our current producing gold mine at Uzboy. Over the past number of years weve made numerous gold discoveries as a result of our drilling. Our last recently reported drill program resulted in the discovery of two new zones of higher grade gold mineralization with a peak grade of over 77 g/t. Our focus is to continue drilling. We still have a large amount of drill samples collected in 2010 that have not been assayed and they include samples from Shirotnaia. We're excited about continuing drilling to further identify the geology and potential of the resource here and also getting those samples assayed so we can formalize a 2011 drill program. One of the exciting things planned for Shirotnaia in 2011 is to have our independent consultants complete an initial NI 43-101 compliant resource report. We're going to be drilling as much as we can, getting those drill samples assayed before that initial NI 43-101 report is completed in the second half of 2011.

RI: Are Uzboy and Shirotnaia your main focus?

IW: Those are two, and the third main focus area is called Dombraly, which is located on the eastern flank of our license area. Dombraly was a former producing gold mine. What's exciting about this is that it was in production back in the 1980s and at that time the gold mine was being produced to a cut off of between 5 to 6 g/t, which is a very high cut off. What that led to was a very rich waste pile that averages 1.52 g/t of gold. The other exciting thing is that Dombraly has Soviet-style resources assigned to it on the state balance. Our objective is to enable our independent consultants to reclassify these resources into industry-standard NI 43-101 resources. This will be achieved through an ongoing drilling program which we started in 2010. We anticipate that an initial NI 43-101 resource report for Dombraly will be completed by our consultants in the second half of 2011.

RI: What is your exploration target for Dombraly?

IW: Our minimum exploration target is 5 million to 7 million tonnes with gold grades ranging from 1.4 to 1.8 g/t, or between approximately a quarter million ounces to roughly 400,000 ounces.

RI: Are you thinking of an open pit?

IW: Yes, Dombraly could be mined as an open pit, in essentially the same manner as Uzboy. Given the existing waste pile we could easily leach that.

RI: At Shirotnaia the grades were fantastic but the links were also very good weren't they?

IW: We've had a variety of drilling results. We've reported drill intercepts of 4.32 g/t over 36 metres, 2.13 g/t over 20 metres and 1.79 g/t over 73 metres. Our drill results have been very positive. We are very excited about this area given the recent gold discoveries that we've made, the large target size and the close proximity to Aksu, a world-class multi-million-ounce gold deposit.

RI: What are the main reasons that investors should put their money into Alhambra?

IW: First of all, we are undervalued. The PEA on just one of our project areas, the Uzboy gold deposit, is above where we are currently trading. Secondly, we have significant exploration upside. We have over 100 gold targets within our license area. Third, we are producing gold so we are a cash-flow generator. Fourth, insiders, (i.e. management, officers and directors) own 27% of the stock of the corporation. Our interests are aligned with those of the investors. Lastly, we are committed in growing the company and adding shareholder value.

RI: How many ounces are you producing?

IW: Historically, we have produced between 15,000 to 20,000 ounces of gold per year. For the first nine months of 2010 our production was just over 12,300 ounces. Based on our PEA, production for Uzboy could potentially be increased by a factor of ten. This is predicated on building a new facility to handle the harder and deeper sulfide. We're excited about what that would mean in terms of growth, cash flow and future opportunities.

RI: Is there anything else that is uniqueabout Alhambra?

IW: Yes, there is. Alhambra is currently the only Canadian company actually producing gold in Kazakhstan. There are other Canadian companies in Kazakhstan, but none of them are currently

producing gold.

Investor Highlights:

Stage: Exploration drilling

Market capitalization: $93.6 million as of February 25, 2011

Share price: $0.90 as of February 25, 2011

Commodity: Gold

Highlights:

A gold producer with cash flow and the ability to increase gold production

Over 100 gold targets in one property presents potential significant exploration upside

Exploring in a prolific proven gold belt

Positive PEA of the Uzboy gold deposit

Commitment to growth

Experienced management team

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