Jipangu now classified as a mining company

As of October 3rd, 2011, JASDAQ shifted Jipangu from the Retailing Sector to the Mining Sector. Jipangu is now the only JASDAQ listed company categorized as being in the Mining Sector. It implies that we are in a more suitable position, where investors and markets will evaluate us as a company with the earnings structures of the mining industry.

Indexes generally used for measuring corporate profitability are also used in the mining industry. In addition, we conduct production cost management on a daily basis to generate the bottom line. However, these conventional tools alone are not sufficient to fully represent the true business model and corporate evaluation of the mining business.

Mining is a business model in which production can begin only after completing drilling probe (ex. sample test), exploration, resource indication, mining method design, measurement of investment feasibility, and permit procedures.

Given that a substantial amount of time and money is required before the production stage, mining companies often employ mergers and acquisitions (M&A) without going through the conventional steps, which enable the companies to immediately obtain ore reserves and move to the producing operation.
Regardless of whether companies develop mining operations with their own resources or take an M&A approach, invested funds cannot be recovered for a period when the mining project starts, so it is often the case that they have to sustain short-term losses.

Confirmed proved reserves are, however, the most valuable management resources helping mining companies achieve stable gold production for many years to come. Reserves are also extremely important to ensure that their mining business continues for five or ten years into the future. In fact, reports from Standard & Poors state that reserves serve as a significant index for evaluating the corporate value of mining companies. Moreover, it is no exaggeration to say that reserves themselves are the M&A targets in the mining industry.

On October 3rd, 2011, Jipangu restarted confirmation exploration at the mining properties of the Florida Canyon mine. The exploration areas are expected to gradually expand. If this broad exploration project continuing over more than two years generates sound results, Jipangu’s reserves and resources are believed to increase dramatically with the large extension of mine life.

Once again, we would like to remind you that the characteristics of the mining industry are unlikely to be found in other industries. Thank you very much for your kind support.