TORONTO, July 4 - Dragon Capital Corporation ("Dragon") (TSX-V:DGN.P) announced today that it has entered into an agreement in principal with Arehada Mining Corporation in respect of a proposed "qualifying transaction" for the purposes of the policies of the TSX Venture Exchange (the "Exchange").

Under the letter agreement it is proposed that Dragon, a capital pool company listed on the Exchange, will acquire all of the issued and outstanding securities of Arehada or complete some other form of transaction that has the same effect. Shares of Arehada will be exchanged for shares of Dragon such that following the exchange, current holders of Dragon shares will hold approximately 6.5% of the Dragon shares and current holders of Arehada shares will hold approximately 93.5% of the Dragon shares.

Completion of the transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and if applicable pursuant to Exchange Requirements, majority of the minority shareholder approval. Where applicable, the transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Arehada is a private mining and exploration company operating in Inner Mongolia, China.

A press release with further particulars relating to the proposed transaction will follow in accordance with the policies of the Exchange.

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the transaction, any information released or received with respect to the transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release. The TSX Venture Exchange Inc. does not accept responsibility for the adequacy or accuracy of this release.

This news release may contain forward-looking statements that are based on Dragon's expectations, estimates and projections regarding its business and the economic environment in which it operates. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to control or predict. Therefore, actual outcomes and results may differ materially from those expressed in these forward-looking statements and readers should not place undue reliance on such statements. Statements speak only as of the date on which they are made, and Dragon undertakes no obligation to update them publicly to reflect new information or the occurrence of future events or circumstances.

For further information:
Mr. Barry M. Polisuk
Director,
Dragon Capital Corporation
(416) 869-1234

Mr. Oliver Xing
Technical Consultant to Dragon Capital Corporation
(416) 510-2991

Neither the TSXV or the TSX has in any way passed upon the merits of this press release and has neither approved nor disapproved the contents of this press release.