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Field work conducted in 2006 has provided Red Hill with a number of targets for advanced exploration in 2007. This will include gamma-spectrometry, AlphaCard and AlphaTrack radon emanation studies, Vertical Electric Sounding, downhole electric gradient surveys, reverse circulation drilling and diamond drilling.

In 2006, Red Hillís Canadian, Russian and Mongolian geologists made a number of week-long prospecting forays to 8 areas in 6 provinces in central, southern and eastern Mongolia in order to evaluate prospective open ground for acquisition. These trips were based on information obtained from historic database files stored outside Mongolia and through discussions with highly informed semi-retired Russian geologists who participated in 1970ís exploration in Mongolia. Results of these reconnaissance forays are extremely promising and as a result, certain areas were applied for in late 2006, and other applications will be made in 2007. Our Russian uranium experts have pointed out that a number of highly prospective areas, blanket-staked by numerous under- and non-financed individuals and companies in the rush of 2004 and 2005, will be coming open in 2007. All of Red Hillís uranium properties received at least several days of field reconnaissance in 2006.

Prospecting and mapping of the Jargalan license areas in 2006 provided new insights into the potential of the property. Two paleovalleys viewed as highly prospective for uranium deposits will be drilled later this year. An initial 1,150 meters of drilling has been planned. If results are good, the drill program will be expanded.

In addition to Jargalan, the following 6 properties have been selected for further work in 2007: Ganga (Dornogovi Province), Khashaat (Dundgovi Province), Naidal (Tuv Province), Emeelt (Dornogovi Province), Elgen (Tuv Province) and Ulziit (Dornod Province).

The Ulziit property is a new acquisition, having been granted to RH-Mega on 20 Dec 2006. This 5,849 hectare license in far eastern Mongolia was selected based upon information found in archives together with a verification reconnaissance trip. Several licenses deemed unfavorable for economic concentrations of uranium mineralization will be allowed to lapse in 2007. In addition to Ulziit, applications for other licenses have been submitted and negotiations are underway to purchase additional properties.

Historical information and supporting field observations made in 2006 indicate that there are drill-ready targets on the Ganga, Khashaat and Naidal properties. An initial 2,500 combined meters of drilling is budgeted for these properties.

Red Hill has selected 3 areas for exploration on its large Ganga (72000 Ha.) property and plans to drill at least 1000 meters in 2007. In 1976 previous workers discovered a roll front type uranium occurrence at 200-300 meters depth about 2 to 5 km south of the property. Red Hill geologists will search for evidence of a shallower roll front deposit within the property.

On and adjacent to Red Hillís Khashaat Property are a number of uraniferous phosphorite occurrences that have historically been known as Ore Bodies #1, #2, #3 and #4. The principal Bodies, held by International Uranium Corp, are located to the NE of the Khashaat license area. Fault-controlled Ore Body #4 is on Red Hillís property. Red Hill geologists briefly prospected Khashaat in May 2006 and found anomalous radiometric readings within the northwest part of the license area. Red Hill plans to drill an 800 metres long target on Orebody #4 this year. Red Hill has also identified uranium targets in the vicinity of Orebody #4 and in the south central part of the property.

Red Hill has not fully assessed the Naidal property through field work. However, in 2007 it intends to investigate a number of untested uranium anomalies to the north and west of the area that was the focus of previous exploration.

A brief examination of the Emeelt Property was made in June 2006. Red Hill found signs that significant uranium mineralization may be present. These include anomalous uranium in volcanic rocks showing epithermal alteration. The northwest corner of the Emeelt property will be explored in 2007. It is underlain by Jurassic-Cretaceous rhyolite, tuffs and basalts which have been intensely metasomatized. These rocks lie within the northeast trending Ulaan Nur volcano-tectonic structure that is a known uranium host. The Ulaan Nur Uranium deposit is located within this structure about 20 km to the northeast of the property.

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