Elray Resource, Inc. (the "Company" or "we") was incorporated in Nevada on December 13, 2006. Angkor Wat Minerals Ltd. ("Angkor Wat"), the wholly owned subsidiary of the Company, was incorporated in Cambodia on June 26, 2006. We are an exploration stage company (i.e. a company engaged in the search for mineral deposits (reserves) which are not in either the development or production stage). We are engaged in the acquisition and exploration of mineral properties with a view to exploiting any mineral deposits we discover.
We currently own a 100% interest in three mining claims located in Cambodia and a 50% interest in a Joint Venture in Indonesia, described as follows:
•the Senator Cambodia Project;
•the Rom Dey Vein Cambodia Project;
•the Porphyry Creek Cambodia Project; and
•Zircon Sands/Gold Indonesia Project 50% Joint Venture.
Formal notice was given to the owners of the Analhi property and mining concessions in Mexico that we would not be exercising our rights under the 120 day purchase option agreement which expired on December 14, 2008.
On October 6, 2008 we acquired a 50% interest in a gold and zircon sands mining project in Central Kalimantan, Indonesia. The joint venture partner, PT. Indo Imperial Resources Jakarta, has been successfully operating the project on a small scale for the last two years, and is teaming up with the Company to provide the resources and technical expertise required to take production to the next level due to customer demands.

January 2009. As a result, we plan to conduct a comprehensive exploration program and independent feasibility study on the project. This will largely comprise drilling/test pitting programs, trace element analysis, metallurgical testing for plant specification and design, and financial modeling. By-product opportunities, including gold, illmenite and rutile will be investigated.
About Our Mineral Claims
In April, 2007, the Company commissioned mining industry consultants Behre Dolbear Australia Pty Ltd ("BDA") to prepare a Technical Report on its exploration projects in Cambodia in compliance with the requirements of Canadian National Instrument 43-101, Standard of Disclosure for Mineral Projects. The resulting Technical Report dated May 25, 2007 describes the essential features of the Company's exploration projects in Cambodia and the exploration programs recommended to evaluate the projects. The report reviews the areas of geology, exploration and notes the tenement, title and legal status of the projects.
The principal consultants engaged in the review on behalf of BDA were:
•George Brech (MSc, MAustIMM), a senior Associate of BDA and a geologist with over 35 years experience in exploration and mining projects in Australia, Southeast Asia and Africa. He has extensive experience in the areas of resource/reserve estimation, project feasibility and development, exploration and mine geology. For the past 15 years, Mr. Brech has been involved with exploration, mining project evaluation and feasibility studies in Southeast Asia and Australia.
•Malcolm Hancock (BA, MA, FAustIMM, FGS, MIMM, MGSA, MMICA) is Executive Director of BDA and a geologist with more than 35 years experience in exploration and mining projects, principally in Australia, Africa and Southeast Asia. He has extensive experience in the areas of resource/reserve estimation, reconciliation, project feasibility and review, independent expert and due diligence report, mine geology and mining operations. He has been involved in the feasibility, construction and commissioning of several mining operations. He has worked on both open pit and underground mines.
BDA's parent company, Behre Dolbear & Company Inc., was founded in 1911 and is the oldest continually operating mineral industry consulting firm in the world. The firm specializes in mineral evaluations, due diligence assessments, independent expert reports and strategic planning, as well as technical geological, mining and process consulting.
None of BDA, Mr. Brech or Mr. Hancock have any family or other relationship with the Company, its executive officers or directors.
Neither the principals nor associates of BDA have any material interest or entitlement in the securities or assets of the Company. BDA was paid a fee for the Technical Report comprising its normal professional rates and reimbursement of expenses. The fee was not contingent on the conclusions contained in the Technical Report.
Further to their review, BDA made the following general recommendations:
•The Company recruit a highly experienced senior geologist with both exploration and resource definition experience to manage the exploration program and negate potential logistical and cost problems that could ensue from running geographically widely spread, logistically difficult, and time constrained exploration programs.
•The Company consider giving priority to the evaluation of the Senator and Rom Dey Vein projects which have known gold mineralization and to move immediately to commence drilling the grassroots copper and gold project of the Porphyry Creek project currently planned for Year 2 of the Company's exploration and drilling program.
In a report dated December 12, 2008, geologist A.J.McDougall Bsc, Msc (hons), MAusIMM of Earth Worx Geological Services reported on the Porphyry Creek Test Pitting Program conducted from December 2 through December 9, 2008. The program involved the completion of 2 exploration trenches. Trench 1 was cut on a line perpendicular to Porphyry Creek, and commenced in the area where mineralized outcrop has been observed in the past, and around the bed of Porphyry Creek. Trench 2 was located immediately adjacent to the area known as "the French Pit".
In a report dated February 2, 2009 Mr. McDougall reported on the Company's 50% Joint Venture Zircon Sands/Gold Indonesia Project. The zircon and gold are hosted in alluvial quartz sand and gravel deposits that appear to cover most of the 9,000 ha ("hectares") concession area. Both the gold and zircon should be amenable to recovery by gravity separation method.
A.J.McDougall graduated from Canterbury University (NZ) with a BSc in 1991 and a MSc honours degree (Geology) in 1994. He has had a strong and proven background in the mining industry with more than 15 years experience. His specialist areas include gold, silver, copper, coal and mineral sands exploration; resource assessment, modeling and estimation; structural, coal and gold geology. He is an independent geologist with Earth Worx Geological Services.
Neither A.J.McDougall nor Earth Worx Geological Services have any material interest or entitlement in the securities or assets of the Company. McDougall and Earth Worx were paid fees for the Technical Reports and Assessments struck at normal professional rates and reimbursement of expenses. The fees paid were not contingent on the conclusions contained in the Technical Reports.
A.J.McDougall has no family or other relationship with our executive officers and/or directors.
Mineral Exploration Licences in Cambodia
The Company is registered with the Cambodian Ministry of Industry, Mines and Energy ("MIME") to conduct exploration and mining activities in Cambodia. The Company is also licensed to conduct exploration activities on each of its Cambodian properties.
Mineral Exploration Licenses in Cambodia are normally granted for initial periods of two years, renewable twice for additional two year periods, providing for a total exploration period of six years. At the end of the six year exploration period, a license holder can apply to MIME for an extension to carry out feasibility studies on any potential mining project located within the license area. Land rental costs for exploration licenses are $20 per sq km for the first two years, rising to $30 for years 3 and 4 and $40 for years 5 and 6. Relinquishment of 30% of the license area is required at the end of Year 2, however the Company may decide on which 30% may be relinquished.

On completion of a feasibility study, the license holder can apply to the Council for the Development of Cambodia ("CDC") for an Industrial Mining License ("IML") which can be granted for a period of up to 30 years. Mineral royalties, tax rates and other conditions relating to a mining operation in Cambodia are normally negotiated with the Government at the time of the application for an IML.
All mineral exploration licences for Cambodian projects have been renewed where appropriate and are in good standing.