Lero Gold Corp. Bucholtz: Lero Gold New Frontiers in Mineral Exploration

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Malcolm Bucholtz B.Sc, MBA Analyst

Trading Note

April 4, 2008

Lero Gold (TSXv:LER) New Frontiers in Mineral Exploration�

Lero � Well Positioned in the Kyrgyz and Kazak Republics

At the Market Traders, we have grown weary of surveying the vast array of junior mining stocks that are jousting and jostling for investor�s attention. A close look at far too many of these stories reveals low grades, poor infrastructure or inexperienced management or sometimes a combination of all three.

Recently while attending the PDAC Show in Toronto, Canada I had the good fortune to be invited to a breakfast to meet with a relatively new company called Lero Gold. It did not take me much more than 1 cup of coffee to realize that Lero was the real deal. I have been studying the Lero story ever since and I like what I see.

LER -
Kyrgyzstan

Lero is well positioned in the former Soviet Republics of Kyrgystan and Kazakhstan. In Kazakhstan, Lero is focused on a Copper-Zinc VMS deposit called Karchiga. Drill results to date are excellent and the resource estimate due out in the next couple months should be quite significant. In Kyrgystan, Lero�s flagship Taldybulak-Talas property is situated in the prolific Tien-Shan gold belt in the North-West part of the country. This area of the country has quite a rich history of porphyry style deposits and the assortment of companies that are exploiting these deposits indicate that these known deposits host over 150 million ounces of gold. Since acquiring the Taldybulak-Talas property, the team at Lero have re-assessed old historical data and also undertaken 5500 meters of drilling to verify this old data. What has emerged from this work is a continuous zone of significant Copper-Gold mineralization with dimensions 1000 meters long x 350 meters wide x 500 meters deep located in the central portion of this 148 sq. km property. The east and west portions of this property could well end up hosting similar type deposits. The mineralization remains open at depth and along strike to the west. At some point in the next month or so, Lero will be coming out with a 43-101 compliant resource estimate on this deposit. Given the apparent size of what has been already identified, I suspect this resource estimate could be in the order of several million ounces Gold and many millions of pounds of Copper. And as I say, this is just in the central part of this property. The geology is such that there is considerable potential to identify other such deposits on the property.

The people and the ability to get the job done�

When it comes to doing business in this part of the world you have to have first hand knowledge of how things operate. And this is a major factor that sets Lero aside from other mining stories I have looked at in these countries. The Lero team is led by Dr. Sergy Kurzin who was one of the architects behind a company called Urasia Energy which was acquired for some serious amounts of money by a larger Uranium company. Dr. Kurzin is also part of the team behind Oriel Resources (TSXv:ORL). Oriel is now in the process of being sold for $1.5 billion. It is certainly an understatement to say that Dr. Kurzin knows his way around this part of the world and that he has the contacts and the skills to make things happen with blazing efficiency. It does not take too much of a stretch of the imagination to envision Dr. Kurzin and his team turning in a repeat performance with Lero Gold.

What the Markets Say�

LER

The markets obviously feel the same way about the Lero story that I do � they like it a lot. Share price is clearly trending up at a time when many juniors are treading water at best. With 71 million shares outstanding, the markets are saying that Lero is worth about $71 million. Let�s just say for argument sake that Lero�s resource estimate comes in at something like 2 million ounces gold inferred and 300 million pounds Copper inferred. Doing some simple back of the envelope math using a notional value of 5.5 cents per pound of Copper in-situ and $70 per ounce of Gold in-situ gives me a valuation of about $156 million. Even using these modest projections, it is easy to see that Lero at $1.00 a share is still undervalued. Factoring in the notion that the Karchiga property in Kazakhstan is also shaping up to be prolific in its own right lends considerable support to my position that Lero is undervalued at current prices.

Joint Venture Possibilities

Now, there is one more interesting twist to this story. South African mining giant Goldfields (NYSE, JSE: GFI), has until the end of Q2 to announce its intentions regarding a joint venture opportunity on the Taldybulak-Talas property. Goldfields can earn a 60% interest in the project by spending CAD$10 million and can earn a further 10% by spending whatever it may take to advance the project through to a bankable feasibility study.

Accumulate Lero Gold

The Lero Gold story is indeed an impressive one. At The Market Traders we are going to be following the Lero story with piqued interest going forward. We are initiating coverage of Lero Gold with a speculative buy rating. We are advising our readers to start accumulating a position in Lero Gold. We will be offering further updates once the true magnitude of the Taldybulak-Talas resource becomes apparent. For more details, be sure to visit the Lero website at www.lerogold.com.

Lero Gold
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