4.55 (-0.40)
27.9 (+0.08)

Letter to Shareholders

May 5, 2004
Dear Shareholders,

The past year has seen renewed investor interest in gold and base metals and an increased awareness for China's growing importance in world mining and metals markets. Two decades of rapid industrialization and sustained high economic growth in China have fuelled the demand for minerals, while economic reform and greater openness to foreign investment have stimulated exploration and production.

China is one of the richest countries in the world when it comes to highly prospective mineral properties. Jinshan Gold Mines has strategically positioned itself to benefit from China's exploration potential and ever-increasing need for minerals. We expect to be producing gold and platinum-group metals from our most advanced projects in the near future. Our exploration team has successfully identified and acquired mineral properties with the potential to host major mineral deposits and our 2004 regional exploration programs are underway. We are confident that it will be a successful year.

To fulfill our goal of becoming a significant China-based mining production company, we have strengthened our strategic alliance with Ivanhoe Mines by tapping the resources of Ivanhoe's management and integrating our technical teams and databases. Our team of geologists and engineers has grown over the past year and now consists of internationally recognized experts in gold, copper, nickel and platinumgroup metals.

We believe that China has excellent geological potential to host a wide spectrum of major new mineral deposits, similar to Ivanhoe's Oyu Tolgoi copper and gold discovery in Mongolia. As such, we are aggressively seeking new exploration properties to increase our portfolio of projects in targeted areas of China.

We are building from a solid resource base of two of our most advanced projects - the 217 Gold Project and the JBS Platinum and Palladium Project. The 217 Project in Inner Mongolia is expected to pour its first bar of gold in 2004 from a planned pilot project. The pilot project will test optimal metallurgical recoveries and improve our understanding of the deposit. Additional delineation drilling and environmental and feasibility studies are planned this year to help secure the mining and environmental permits required to put the mine into full production. Results from an ongoing scoping study are expected shortly.

Scoping studies have commenced at the JBS Project, in the province of Yunnan. Strong platinum prices and expected stronger palladium prices have created the right environment to advance the JBS project toward production.

While our short-term goal is to become a producer of gold and platinum-group metals, we recognize that one of the best ways to significantly increase shareholder value is to make a major new mineral discovery. As such, we will continue to aggressively explore large-scale targets using leading-edge exploration techniques.


In July 2003, the Dandong (QCZ) Gold project agreement in Liaoning Province was signed and the business licence for the Sino-foreign joint-venture company, Liaoning Pacific Gold Mining Co. Ltd., was issued on September 30, 2003.

By the end of September, 2003, the 6,054-metre drilling program at the 217 Gold project was completed and a resource block model and metallurgical studies were advanced during the fourth quarter. This was followed by a new resource estimate in January, 2004.

In October, 2003, Ivanhoe Mines and Jinshan reached an agreement in principle to restructure their May, 2002 mineral exploration and development joint venture. The agreement will reduce from 80% to 50% Ivanhoe's maximum earn-ins on Jinshan's interest in projects in China, including: the 217 Gold Project in the Inner Mongolia Region; the Dandong (QCZ) Gold Project in Liaoning Province; and the JBS Platinum and Palladium development and exploration projects in Yunnan Province. Ivanhoe will reimburse Jinshan 50% of expenditures incurred to date on these three projects. Ivanhoe retains the right to earn up to 80% of the available interest in any new projects acquired by Jinshan in China (excluding properties acquired by Jinshan in Anhui and Liaoning provinces) under terms similar to those announced in June, 2002. The revised agreement also contains a mutual non-compete clause, whereby Jinshan agrees not to compete for any new mineral properties in the Inner Mongolia Region and Ivanhoe undertakes not to compete for any new mineral properties in Liaoning Province.

In November, 2003, Greg Shenton was appointed as the company's Chief Financial Officer and in March, 2004, Jay Chmelauskas was appointed President and a Director of Jinshan. Mr. Chmelauskas replaced Daniel Kunz, who remains actively involved in the management of the company as a director.

In December, 2003, Jinshan closed two private placements with net proceeds totaling CDN $9.2 million.

In March, 2004, exploration permits were received for four exploration blocks in the western region of Inner Mongolia. The prospects, which total 281 square kilometres, will be tested for epithermal and porphyry copper and gold mineralization.

In April, 2004, an exclusive option agreement was obtained on a 730-square-kilometre area in the Zhongdian Porphyry Copper-Gold district in northwest Yunnan, which will provide Jinshan with further exploration opportunities.

In April, 2004, resource consultants McDonald Speijers of Perth, Australia, prepared an independent resource estimate for the JBS Platinum and Palladium Project. This blockmodel estimate focused on the project's high-grade core. Metallurgical test work was also conducted, achieving gold recoveries of between 70% and 80%.


We continue to see tremendous opportunities in the Chinese markets where exploration and mining development has been under-capitalized for many decades.

Given Jinshan's large portfolio of mineral projects, a talented technical team of Chinese and Western geologists and engineers, and a strong balance sheet, it is clear that we are well positioned to make a major discovery in China. With mine development expected to commence in the near term, we soon could begin to generate cash flow on our way to becoming an intermediate producer. Jinshan continues to maintain focus and to strive to increase shareholder value through advancement of existing exploration projects, new exploration and advanced-stage project acquisitions.


Jay Chmelauskas

Forward-Looking Statements: Statements in this document that are forward-looking Statements are subject to various risks and uncertainties concerning the specific factors disclosed under the heading "Risk Factors" and elsewhere in the company's periodic filings with Canadian securities regulators. Such information contained herein represents managem ent's best judgment as of the date hereof based on information currently available. The company does not assume the obligation to update any forwardlooking statement.