QIS Update #5 - February 9, 2010

Included in this update:

• Boyuan Construction Group awarded contract valued at US$18.1 million for residential building
• Coronado Resources’ underground drill program proves an in-house estimate of 18,000 tons averaging 0.481 oz/t gold
• Diamcor Mining closes first tranche of private placement
• Drake Energy acquires Sousa and Jenner assets, announces re-completed Sousa oil well producing 120 bbl/d
• International Sovereign Energy provides operations update

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QIS Capital has recently initiated coverage of NTG Clarity Networks Inc. (NCI:TSX-V). Check out the introduction to this small-cap IT company here: www.qiscapital.com/showpage.php?article_id=437 .

QIS Capital has also initiated coverage of Alphinat Inc. (NPA:TSX-V). View the introduction to this small-cap software company here: www.qiscapital.com/showpage.php?article_id=440.

Please feel free to email us anytime at info@qiscapital.com or call us at (250) 376-8989. We look forward to your comments, questions, and feedback.

Boyuan Construction Group Inc. (BOY:TSX-V)
Website: www.boyuangroup.com
Current Price: $3.14 (coverage commenced Jul. 27/09 - $1.75)

Boyuan Construction Group has announced that it has been awarded a another contract valued at US$18.1 million to develop a 32-storey, 99,000 square meter residential building in the city of Weifang, in China's Shandong province. The project is expected to be completed by the second quarter of 2011.

Shandong has emerged as a market with significant potential, effectively positioning us for continued growth in 2010 and beyond, said Mr. Cai Liang Shou, Chairman of Boyuan Construction Group. While commercial projects will be our primary focus, today's contract win demonstrates that the region also provides opportunities to leverage our experience and reputation with residential projects.

Boyuan has signed four major contracts in Shandong since entering the market in September, 2009. With today's contract award, Boyuan's aggregate value of contracts signed thus far in Shandong is US $73.7 million.

Shandong is one of China's most economically diversified provinces with high concentrations of manufacturing as well as oil and gas production activities. Weifang, one of Shandong's principal cities, has a population of 8.5 million people.

QIS Capital Comments:

Another contract win for Boyuan Construction and a backlog that is continuing to grow. The company appears to be well on its way to achieving another excellent year with Q1 revenues of US$35 million and normalized earnings of US$3.0 million or $0.12 per share following which the company has already announced US$84 million in new contracts. Second quarter results will be announced prior to the end of February.

Coronado Resources Ltd. (CRD:TSX-V)
Website: www.coronadoresourcesltd.com
Current Price: $0.20 (coverage commenced Oct 22/09 - $0.22)

Coronado Resources announces gold estimates from its recent diamond drill program on its wholly owned Madison Gold/Copper property in Montana, USA. The results from this drilling allowed Coronado's chief onsite geologist/engineer to calculate an in-house estimate of 18,000 tons grading 0.481 oz/t gold (16.50 gm/mt au). The bulk of the gold from this estimate is at a vertical depth of 60 feet below the recently mined gold zone. Underground work is presently underway to allow this block to be extracted. The decline will be advanced 360 feet, which will take approximately two months. The mining, trucking and processing is estimated to be in the order of $325 per ton.

Drilling also confirms that the gold zone continues to plunge -70 degrees to the southwest and remains open to depth below the deepest drill hole. Coronado is extremely pleased with these results as they allow the company to move forward with limited share dilution. Several new copper zones have been encountered and are presently being assayed evaluated for additional drilling or mine development consideration.

The recent drilling consisted of five holes designed to test the size and grade of the advancing mineralization within the main gold zone with an additional three holes being exploration holes testing other promising areas. All holes reported gold intercepts as reported on the January 25th news release.

The estimates above are from the company's chief geologist on the Madison gold/copper project and are not National Policy 43-101 compliant. Assay work was completed by Norris Labs, a local Montana lab using the dry assay method. Norris Labs is not registered by the international standards organization and are used due to proximity and quick turnaround results. Eugene Larabie, P. Eng. is the “qualified person” overseeing the project.

Diamcor Mining Inc. (DMI:TSX-V)
Website: www.diamcormining.com
Current Price: $0.33 (coverage commenced Dec. 17/09 - $0.37)

Diamcor Mining Inc. has announced that, further to its news release of January 26, 2010, the company has closed a first tranche of $2,152,121 of its non-brokered private placement. Proceeds of this first tranche will be used for the continued advancement of pre-closing items associated with the previously announced pending acquisition of the Krone-Endora diamond deposit from De Beers Consolidated Mines, the ongoing planning and preparation of post-closing operational items associated with the project, the continued advancement of future potential acquisitions, and for general corporate purposes.

Diamcor plans to close a second and final tranche of the financing in the coming weeks which, in conjunction with the first tranche, would allow the company to fully fund all remaining costs associated with the acquisition, which includes the company's portion of the estimated $1,750,000 due at closing, the purchase and deployment of additional equipment for near-term trial-mining, the procurement of a closer grid drilling programme aimed at determining the full potential of both the initial known areas of the project and other areas of geological interest and, in part, for general corporate purposes.

The first tranche consists of 7,173,739 units at a price of $0.30 per unit. Each unit consists of one company common share, and one-half of one common share purchase warrant. Each whole warrant entitles the holder to acquire one additional common share at an exercise price of $0.50 until February 8, 2012.

In conjunction with the closing of the first tranche of this financing, the company will pay finder's fees of an aggregate $174,648.87 in cash and issue an aggregate 474,281 broker warrants, with each broker warrant entitling the holder thereof to purchase a share at a price of $0.50 per share until February 8, 2011.

All private placements are subject to regulatory and/or final approval of the TSX Venture Exchange along with completion of all definitive documentation and filings as required. Securities issued pursuant to the above will be subject to a hold period which does not expire until June 9, 2010.

QIS Capital Comments:

As mentioned, this financing should be sufficient to close the acquisition of the Krone-Endora property from DeBeers as wells as deploy equipment for near-term trial mining. The company is targeting to commence production during the second quarter of 2010. Diamcor is working to complete the second tranche of financing at $0.30 per share with a half warrant at $0.50 as quickly as possible. We believe there is still some room available so if anyone is interested please contact us or visit the Financings section of the website for more information.

Drake Energy Ltd. (DPE:TSX-V)
Website: www.drake-energy.com
Current Price: $0.145 (coverage commenced Jun. 13/08 - $0.34)

Drake Energy Ltd. has recently provided the following corporate update.

Acquisition

Drake has acquired the remaining 25% working interest in its Sousa property and 40% of the 13-06 Jenner well from a partner, a private oil and gas company which is currently in receivership. The assets were acquired for $250,000 cash and the offset of receivables due from the partner. The transaction was completed on January 27, 2010 and is effective July 1, 2009. This acquisition has a reserve value before tax of proved and probable reserves (NPV 10%) of approximately $3,508,000 based on the evaluation at April 1, 2009 by Fekete Associates Inc. The assets include those that recently underwent drilling and optimization as reported in Drake's February 2, 2010 release.

Sousa Gas Optimization

Drake's optimization program at Sousa included the work at the 11-12 and 13-12 wells, which have seen significant increases in gas production and significant new production of NGLs. Production from the two wells is expected to level out at 300 mcf/d with additional NGLs for total production of 52 boe/d.

Sousa Oil Program

The company's oil program at Sousa included the optimization of a producing well at 09-02 and the re-entry of a horizontal well at 01-24. Both programs are nearly completed and currently on production. The approximate current field level production for 09-02 oil well has now stabilized at 20 bbl/d. The 01-24 well is still being tested and details should follow next week. Both wells have follow up locations under consideration.

Sousa is a key area for Drake. This acquisition gives us an effective 100% interest in the area and allows us to pursue our expansion program as quickly and effectively as we can. It adds significant value to our company and resolves a difficult situation with our partner who went into receivership. said Drake president, Mr. Neil Orr.

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Drake has released the details of the testing performed at its re-completed Sousa 01-24 oil well.

Sousa Oil Program

The Company's oil program at Sousa included the re-entry of a horizontal well at 01-24. The well is currently producing over 120 BBLD of light sweet crude oil. The well has been producing since the beginning of the month and has seen steadily increasing levels of production. The well has opened up multiple follow-up locations which are under consideration. The 01-24 well is expected to qualify for both the 5% royalty program and the transitional royalty rates.

Our oil program at our core area of Sousa is off to a great start. We have recently acquired the remaining 25% working interest in the area and our oil well re-completion is producing at excellent rates. We own 100% of the infrastructure necessary to continue our growth and we have over 35 sections with numerous oil and gas locations. The company is poised to continue our growth trend and gain value for our shareholders. said Drake president, Mr. Neil Orr.

QIS Capital Comments:

Drake was able to complete a very cost efficient purchase of the remaining interests in its Sousa area from a bankruptcy sale. This was very strategic as the company subsequently announced a significant well at 01-24 which is currently producing at 120 bopd. Drake was at only 129 boepd during Q3/09 with negative cash flow for the quarter and a depressed share price. The company recently announced that it was producing over 250 boepd and has now announced an additional well which will have a major impact on future revenues and cash flow. Based on the production numbers released, we are forecasting annualized cash flow of approximately $1.5 - $1.7 million or $0.07 per share. While Drake’s shares are now performing well, the company is still trading at only 2x forward cash flow. In addition, the company’s net asset value should increase about $6.0 million due to this well which should put Drake’s net asset value in the $1.00 per share range. There could still be lots of steam left in the company’s recent momentum. Investors can view some of the recent QIS Forum postings for additional information.

International Sovereign Energy Corp. (ISR:TSX)
Website: www.isove.com
Current Price: $0.56 (coverage commenced Apr 3/09 - $0.70)

International Sovereign Energy Corp. reports that two wells were drilled during the latter part of the fourth quarter 2009/early first quarter 2010 with varied results. The first well, Sakwatamau 1-1, was drilled to a measured depth of 1804 m and was cased for potential commercial gas production. Results of the completion will be reported once available.

The second well, Cranberry 10-2, was drilled to a depth of 860m and was abandoned after log results were interpreted. The well did have the expected Bluesky sand anomaly but unfortunately the sand came in too low and as a result was 'wet'.

The company recently had one of its major wells, Berwyn 2-11; go down due to water problems. Since then the well has been re-completed in a uphole formation and is back online and currently contributing 600 mcf/d (100 boe/d). This brings the production up to 77% of production prior to water problems. Once stabilized rates & pressures have been obtained, the company plans to gradually increase this production. The company estimates that there is an additional 1,200 mcf/d (200 boe/d) behind pipe.

QIS Capital Comments:

International Sovereign has had a very challenging past 12 months but should start to show financial improvement due mainly to increasing commodity prices. Management is refocusing its efforts on areas of success and is working to stabilize production and then start to again show production increases. A little more patience may be required but the company has a stable balance sheet and a good platform from which to grow. We also expect that over the next few quarters, the current trading price will reflect a substantially lower price to cash flow ratio than the current industry average, although it is still too early to accurately forecast cash flow for ISR.

Disclaimer: This article is for informational purposes only. The information contained within this article should not be construed as offering investment advice. Those seeking direct investment advice should consult a qualified, registered, investment professional. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock. The author(s) owns directly or indirectly 7,300 shares of Boyuan Construction Group Inc., 113,500 shares of Coronado Resources Ltd., 239,000 shares of Diamcor Mining Inc., 628,500 shares of Drake Energy Ltd. and 15,400 shares of International Sovereign Energy Corp. QIS Capital has a financial relationship with Diamcor Mining, Drake Energy and International Sovereign and may trade in the stocks mentioned. No stock exchange has approved or disapproved of the information contained herein. Copyright © 2003 - 2010 QIS Capital Corporation.