Mr. Dino Titaro reports

REVIEW OF CARPATHIAN'S 2010 ACTIVITIES & OUTLOOK FOR 2011

Carpathian Gold Inc. has provided a review of the results, progress and achievements for 2010 and an outlook for 2011.

For 2010, the corporation established goals for the continued advancement of its two wholly owned exploration/development projects, the Riacho dos Machados gold project, located in Minas Gerais state, Brazil, and the Rovina Valley project, which is a gold-copper porphyry system located in central Romania.

The Riacho dos Machados gold project is the more advanced of the two projects as it represents a near-term production project that will elevate the corporation to a gold-producing company. The primary objectives set out by the corporation for 2010 were to:

1. Complete an updated resource estimate;
2. Complete a feasibility study for the open-pit portion of the deposit in mid- to late 2010;
3. Proceed with a construction decision.

In July of 2010, the corporation announced an updated resource estimate in which the open-pit portion of the resource contained 806,200 ounces in the measured plus indicated category and 355,900 ounces in the inferred category. A large percentage of the inferred resource is situated at the bottom of the open pit as determined by the pit shell optimization program, and the corporation determined it would be prudent to conduct a follow-up drill program. The goal of the program was to upgrade additional inferred resources to the measured plus indicated category, particularly at depth, to ensure the proper mine design and scheduling were established so as to avoid the risk of the loss of those resources through the open-pit mine plan as well as to lengthen the open-pit mine life. This additional drill program was completed in late 2010 and it is now anticipated that an updated resource estimate will be completed in January of 2011. Initial results indicate that this program was successful in converting a high percentage of the targeted inferred resources that will be incorporated into the measured plus indicated category. This new open-pit resource will then be incorporated into the final feasibility study to be released during the first quarter of 2011.

For the Rovina Valley project, the corporation set out the following objective for 2010:

1. To complete and release a detailed preliminary economic assessment in the second quarter of 2010;
2. To complete a three-hole deep drill program on the Ciresata porphyry system, the highest grade and one of three proximal Au-Cu porphyry deposits as previous drilling showed that many of the drill holes within the Ciresata porphyry system ended in higher-grade gold plus copper mineralization;
3. To complete the required work and documentation to be submitted to the relevant government authorities by the end of the year for the conversion of the Rovina exploration licence to a mining licence.

All of the targeted objectives set out for this project for 2010 were accomplished. The PEA was released in March, 2010, and established an economically viable, long-mine-life project of approximately 19 years producing on average approximately 200,000 ounces of gold plus 50 million pounds of copper per year. The three-deep-drill-hole program was designed to:

1. Test the depth extension of the gold plus copper mineralization within the Ciresata porphyry system in the context of using a bulk underground mining method as outlined in the results of the PEA;
2. Confirm the geologic model for the deposit;
3. Begin upgrading the resource to measured plus indicated categories.

The results of this drilling program met all of the objectives established and have successfully determined that the Ciresata porphyry system is open and could be significantly larger. The technical reports for the conversion of the Rovina exploration licence to a mining licence have been completed with subsequent information as requested by the government being delivered.

At the corporate level during 2010, the following was achieved:

1. As reported in Stockwatch news on May 21, 2010, the corporation concluded a gold purchase and sale agreement for $30-million (U.S.) with Macquarie Bank Ltd. for its RDM gold project in Brazil. Under the terms of the agreement, Macquarie Bank will make upfront cash payments totalling $30-million (U.S.) in return for which it will have the right to purchase 12.5 per cent of the gold produced from the project at a price of $400 (U.S.) per ounce of payable gold delivered. The price per delivered gold ounce to the corporation will be subject to an inflation escalator as well as upside price participation for the corporation of 25 per cent of every delivered gold ounce delivered at a price above $1,850 (U.S.) per ounce. Macquarie Bank will also have the right to extend its participation to purchase 12.5 per cent of the additional gold produced from any underground operation within the mining concession and five contiguous exploration licences, as well as any open-pit and/or underground operation on the balance of the property, by contributing 12.5 per cent of the capital required to develop the expanded production and paying $450 (U.S.) per delivered gold ounce. This price per ounce will also be subject to adjustment by the price escalation and inflation factor described above.
2. As reported in Stockwatch news on Sept. 21, 2010, the corporation signed a mandate letter with Macquarie Bank for it to arrange a project financing facility of up to $75-million (U.S.) to be used to partially finance the development of the corporation's RDM gold project, Brazil. In addition, the corporation also mandated Caterpillar Financial Services Corp. to arrange an equipment leasing facility for up to $22-million (U.S.) for the project. The mandate letters were signed on the basis of indicative term sheets that are normal for transactions of this nature. Due diligence in connection with these mandates is currently under way pending the results of the final release of the feasibility study.
3. As reported in Stockwatch news on Nov. 3, 2010, the corporation closed a bought deal financing for gross proceeds in the amount of $51.6-million.

The following details the results and major achievements established in 2010.

Riacho dos Machados gold project, Brazil:

• In July, 2010, the corporation announced the results of an updated National Instrument 43- 101 resource estimate.

The open-pit resource includes:

• Measured plus indicated -- 17.20 million tonnes at 1.46 grams per tonne gold for 806,200 ounces gold;
• Inferred -- 7.18 million tonnes at 1.54 grams per tonne gold for 355,900 ounces gold.

The underground resource includes:

• Measured plus indicated -- 530,000 tonnes at 3.63 grams per tonne gold for 6,200 ounces gold;
• Inferred -- 3.92 million tonnes at 2.67 grams per tonne gold for 377,000 ounces gold.

The combined open-pit and underground resource includes:

• Measured plus indicated -- 17.25 million tonnes at 1.46 grams per tonne gold for 812,300 ounces gold;
• Inferred -- 11.10 million tonnes at 1.94 grams per tonne gold for 692,900 ounces gold.

Of the total 2010 resource estimate, 99.2 per cent of the measured and indicated resource and 51.4 per cent of the inferred resource is located within a Whittle pit shell. The pit shell was obtained using pit-optimizer software (Whittle Four-X) using appropriate mining and processing costs from the feasibility study, a $950-(U.S.)-per-ounce gold price and a 0.36-gram-per-tonne-gold cut-off grade. Within this open-pit shell, the measured plus indicated gold resource in the 2010 resource estimate has increased by 537,400 ounces, from 268,800 ounces to 806,200 ounces, a 200-per-cent increase compared to the 2009 resource estimate. Below the open-pit shell and excluding a 15-metre crown pillar, a higher-grade cut-off was used (1.09 grams per tonne gold), based on potential economic parameters along with engineering considerations, to define a resource with underground mining potential.

The gold mineralization at RDM is situated within a continuous 14.0-kilometre-long shear zone hosted in pre-Cambrian metamorphic rocks with a demonstrated gold endowment. This shear zone is fully covered by the corporation's mining concession and exploration licences that extend over a continuous length of approximately 30 kilometres covering an area of approximately 22,000 hectares. The most intensely explored zone and location of the current 2010 resource estimate only represents approximately two kilometres of the southern portion of this shear zone. There are numerous surface gold targets of similar gold grade that occur along strike within this shear zone and to date a total of seven exploration targets have been outlined north of the open-pit resource area and one to the south.

In addition to the strike extension targets and defined satellite exploration targets, the gold mineralization at RDM is also open at depth. Once the open pit is in production the corporation plans to evaluate the underground resource, which is higher grade, that could add to the overall operation both in terms of extending the mine life of the project and potentially increasing the annual production rate by an additional 50 per cent.

Other highlights were:

• The corporation retained an engineering and environmental consortium group consisting of Tecnomin Projetos e Consultoria Ltda., NCL Brasil Ltda., Golder Associates Brasil Consultoria e Projetos Ltda. and YKS Services Ltda. to complete a feasibility study. The scope of the feasibility study was to concentrate solely on placing into production the open-pit mineralization. The project will be a conventional open-pit mine with down-the-hole drill rigs and blasting, backhoe excavators, and conventional haul trucks. The processing operation will include crushing the ore and processing it in an industry-standard carbon in leach and ADR (adsorption, desorption and recovery) plant followed by a detoxification process prior to placing the tailings in an impoundment area. Based on metallurgical testwork, the gold recovery is estimated at 90 per cent. The open-pit mining operation is envisioned to be at a rate of approximately 7,000 tonnes per day. The capital costs, operating costs, infrastructure, layout design required for the feasibility study are essentially complete with some optimization work in progress while final open-pit design and mine schedule are being completed based on the additional drilling results carried out in late 2010. It is envisioned that the feasibility study will be completed and released during the first quarter of 2011.
• Subsequent to the release of the 2010 resource estimate in July, the corporation drilled an additional 74 core holes for 9,938 metres with the objective of converting additional inferred resources in the open pit to the measured plus indicated categories. As of Dec. 31, 2010, a total of 446 drill holes have been incorporated into the database representing approximately 66,421 metres. Additionally, during 2010, the corporation completed condemnation drilling in the proposed areas designated for the waste pile and tailings dam, along with significant geotechnical, metallurgical and acid rock drainage testwork.
• In 2010, the corporation completed the purchase of all surface lands required for the life-of-mine footprint for the open-pit mining operation.
• The corporation was also granted the critical path timeline licence, the Licenca Previa that allows all earthworks in the mine and water retention dams and tailing dams to be constructed. All technical documentation required for the Licenca Instalacao that will allow construction to begin on the project has been compiled and submitted to the appropriate government authority for approval.
• During the year, the corporation also continued to advance base line environmental work and social programs.

Rovina Valley project, Romania

RVP comprises three gold-copper porphyry systems discovered by the corporation on its 100-per-cent-owned Rovina exploration licence in central Romania. From 2006 to 2009, 181 diamond drill holes totalling 71,375 metres have been completed on the project. In late 2008, PEG Mining Consultants Inc. completed a National Instrument 43-101 resource estimate. This resource estimate is based on the drill results from each of the Colnic, Rovina and Ciresata porphyry deposits, using diamond drill hole data from the 2006, 2007 and 2008 drilling campaigns, and is summarized below:

• Measured plus indicated -- 193.1 million tonnes at 0.49 gram per tonne gold for 3.07 million ounces Au and 0.18 per cent copper for 759.1 million pounds copper;
• Inferred -- 177.7 million tonnes at 0.68 gram per tonne gold for 3.89 million ounces gold and 0.17 per cent copper for 663.1 million pounds copper.

Base case cut-offs used are 0.45 gram per tonne gold equivalent for the Colnic deposit, 0.70 gram per tonne gold equivalent for the Ciresata deposit and 0.30 per cent copper equivalent for the Rovina deposit.

Gold equivalent determined by using a gold price of $675 (U.S.) per ounce and a copper price of $1.80 (U.S.) per pound as defined by PEG.

Metallurgical recoveries are not taken into account.

The 2008 resource estimate includes enough contained gold-only ounces (3.07 million ounces in the measured plus indicated category and 3.89 million ounces in the inferred category) to place the corporation within the top tier of advanced exploration companies (top 20) hosting resources that have not yet been developed. Drilling has indicated that the total resource size of this project has not yet been fully defined and further immediate potential exists to expand the current resource estimate. Essentially every drill hole in the Ciresata porphyry bottomed in higher-grade gold and copper mineralization. In addition, results from a soil-geochemistry infill program highlighted a coincident gold plus copper anomaly extending 300 metres west from the present drill hole pattern with greater than 10 parts per billion gold and greater than 20 parts per million copper. This anomaly is a high-priority drill target for extending the Ciresata mineralization laterally.

During 2010 the following activities were completed:

• A detailed PEA was released as reported in Stockwatch news on March 23, 2010. The PEA was completed by PEG Mining Consultants, which led a consortium of specialists assembled for the study. The project is envisioned to be a conventional open-pit mine with down-the-hole drill blast holes, hydraulic shovels and conventional haul trucks for the Rovina and Colnic deposits located approximately 2.5 kilometres apart. Mine production from the combined two open pits is planned at 20,000 tonnes per day. The Ciresata deposit will be mined by a combination of a sublevel panel retreat mining in the upper levels of the deposit accessed by a decline from the surface, and an induced block cave method for the lower part of the deposit. The upper sublevel panel retreat mining will allow mining access to high-grade ore while development is undertaken to prepare for the induced block cave operation at depth. At full capacity, the underground operation will mine 20,000 tonnes per day. Ore from the induced block cave operation will be fed to a centralized process plant located between the Rovina and Colnic deposits via a six-kilometre inclined conveyor tunnel to the surface.

The on-site metallurgical facility will include conventional unit operations such as crushing, grinding, froth flotation and dewatering to produce a gold-rich copper flotation concentrate. Ore processing will use an industry-standard flotation process-only at a rate of 40,000 tonnes per day to produce a gold-rich saleable copper concentrate containing 18 to 22 per cent Cu and 50 to 60 grams per tonne gold. This process does not require the use of cyanide.

A summary of the PEA results is as follows:

• Average annual gold production of 238,000 ounces per year for the first five years and averaging 196,000 ounces per year over the mine life of 19 years, for a total of 3.72 million ounces of recoverable gold over the life-of-mine (LOM).
• Average annual copper production of 53.5 million pounds for the first five years and averaging 49.4 million pounds per year over the 19-year mine life, totalling 938 million pounds of recoverable copper over LOM.
• Total gold equivalent ounces produced over the 19-year mine life is 6.22 million.
• Total operating cash cost of $81 (U.S.) per ounce with copper as a byproduct credit and $446 (U.S.) per ounce gold on a co-product basis (copper cash cost is $1.05 (U.S.) per pound on a co-product basis), using metal prices of $1,000 (U.S.) per ounce gold and $3 (U.S.) per pound copper.
• At metal prices of $1,000 (U.S.) per ounce gold and $3 (U.S.) per ounce copper the net present value is $1.13-billion (U.S.) based on a 5-per-cent discount rate.
• Project internal rate of return of 24.2 per cent, with an approximate 3.3-year payback, on an initial project capital expenditure of $509.4-million (U.S.), at a gold price of $1,000 (U.S.) per ounce and copper price of $3 (U.S.) per pound.

There has been no previous commercial mining activity at RVP and the proposed mine site footprint as defined by the PEA does not include any known protected heritage sites or archeological occurrences and has been designed to minimize impact in the nearby communities of Rovina and Bucuresci.

Other highlights were:

• Three deep, vertical core holes for approximately 3,000 metres were completed in 2010 to test for the depth extension of the Ciresata mineralization as the results of the PEA highlighted additional upside potential for the resource growth at Ciresata as essentially every drill hole bottomed in higher-grade gold and copper mineralization. The drill program was designed not only to test for the depth extension of the mineralization but also to provide infill drill hole data useful for upgrading the present resource category from inferred to indicated. The results of this drilling program have successfully met the objectives and have added significant depth extensions of gold and copper mineralization below previous drilling in addition to verifying and upgrading the grade tenor of the inferred resource estimate. Results of the three deep drill holes have added 280 to 300 metres depth extension of gold-copper mineralization below the previous drilling, and indicate that the deposit is still open laterally.
• Throughout 2010, the corporation, through its wholly owned operating subsidiary in Romania, has maintained its pro-active local stakeholder engagement program. The program includes local community hall public meetings, a public information centre and partnership programs with local NGOs (partly funded by the European Union) and community leaders to implement community-based projects. The good relations with the community have allowed unhindered surface access for drilling in the project area which requires permission from landowners. In addition, throughout the year the corporation continued with its long-lead-time work activities for both EIA and SIA documentation that will be required for the permitting of the project.
• Using the base results of the PEA, the corporation retained a consortium of state-recognized consulting groups to prepare detailed technical studies required to convert the Rovina exploration licence into a mining licence as per the norms of the National Agency of Mineral Resources. These studies include preliminary evaluations of social and environmental impacts, risk factors and economic benefits to be reviewed solely by the NAMR for mining licence designation. These documents have been completed, with additional follow up by documentation being submitted as requested the NAMR for their review. Acceptance and conversion of the exploration licence to a mining licence are anticipated to be in early 2011.

Hungary

No fieldwork was completed in Hungary during the year and the corporation will be terminating its activities within the country.

2011 outlook

The corporation's priorities are to continue to advance the RDM gold project towards a construction decision as well as to continue to advance and expand the resources at the Rovina Valley project. The following lists the major objectives for 2011.

RDM gold project, Brazil:

• Complete an updated resource estimate, followed by a reserve estimate and feasibility study within the first quarter of 2011;
• Announce a construction decision within the first quarter of 2011 in preparation for targeted production in late 2012;
• Finalize and secure the necessary project financing for construction of the project;
• Continue exploration drilling (approximately 13,000 metres) primarily on strike following up on the positive results obtained to outline additional shallow resources for future growth and extend the mine life of the project;
• Commence evaluation studies for the exploitation of deeper resources via an underground operation with the objective of adding approximately 50 per cent more minable material approximately halfway through the open-pit mining operation.

Rovina Valley project, Romania:

• Obtain final approval for the conversion of the exploration licence to a mining licence;
• Complete an initial planned drilling program of 20,000 metres, which commenced in late 2010 with the primary objective of drilling a combination of infill holes and lateral extension holes on the Ciresata deposit in order to build upon the size of the deposit as well as to test satellite targets on the project;
• Advance the project to the prefeasibility stage and complete an updated resource estimate;
• Continue EIA and SIA programs throughout the year as well as all long-lead-time programs that will be required for permitting of the project;
• Initiate the detailed permitting process in order to put the project into production.

Further details on the corporation and the individual projects can be found on the corporation's website.

Mr. Titaro is the qualified person (as defined in National Instrument 43-101) overseeing the design and implementation of the present exploration programs. He is responsible for preparing the technical information contained in this news release.

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