Increase in Reserves at Tulkubash

RNS Number : 3997D

Chaarat Gold Holdings Ltd

19 February 2020

 

19 February 2020

Chaarat Gold Holdings Limited

("Chaarat" or "the Company")

2019 Drilling Programme delivers increase in Reserves at Tulkubash

Chaarat (AIM:CGH), the AIM-quoted gold mining Company with an operating mine in Armenia, and assets at various stages of development in the Kyrgyz Republic is pleased to announce an updated Resource and Reserve statement at its Tulkubash gold project in Kyrgyz Republic following the 20,000m drilling programme undertaken in 2019.

The objective of the drilling programme was to test targets northeast of the prior Resource boundary, enhance the project economics by adding ore to the previously defined pits, and to increase understanding of prospectivity of the wider licence area.

Drilling within the existing Resource footprint demonstrated increased continuity in and between the ore zones and was successful in optimizing pit designs. This contributed to the increase in reserves, as summarized below:

· Proven & Probable Reserves increased from 22Mt to almost 25Mt with a slightly increased grade of 0.95 g/t compared to 0.92 g/t before;

· The amount of ounces increased by 14% to 749 koz compared to 658 koz in the published bankable feasibility study;

· The pit shell optimisation for the reserve update was based on a USD$ 1,300/oz gold price; and,

· Construction continues at Tulkubash and first gold production is on track for late 2021.

In addition, the programme was successful in adding new ounces to the Resource along strike to the northeast of the prior Resource footprint, principally in the Shir Canyon area. The drilling to the northeast also disclosed significant additional mineralization that will require more drilling to demonstrate continuity to be a classified Resource in the future. This has defined a broad area of mineralisation, some of it high-grade, representing a significant target to be further explored

Artem Volynets, Chief Executive Officer, commented:
 

"I'm pleased to report the results of the 2019 drilling programme at our Tulkubash gold project in the Kyrgyz Republic. The drilling programme followed the announcement of the 2019 Feasibility Study and has delivered a 14% increase in the ore reserve statement to 749koz at a higher grade of 0.95g/t, adding even more years of life to what was already an economically robust project, while also improving our understanding of this exciting asset. The next phase of the work programme is focused on further developing the mine plan within the next couple of months. First production is still expected in late 2021."  

UpdateD Resource Statement

The results of the 2019 drilling have been incorporated into an updated JORC-compliant Mineral Resource Estimate. To be JORC-compliant, the Mineral Resource estimate must satisfy the requirement of "reasonable prospects for eventual economic extraction." In previous years, this requirement was addressed without constraining the Mineral Resource Estimates with an constraining pit shell. Now that the Tulkubash project has advanced to construction stage, with well-defined pits, the Company has decided to constrain the Resource estimate with an constrained pit shell in order to address this requirement. This has led to a decrease in tonnage and contained ounces in the Mineral Resource, with no effect on the Reserve. At the same time it ensures that a higher percentage of the Resource will be converted to Reserve. The Company considers this to be a robust Resource Estimate.

Drill spacing is sufficient in the Main Zone, which accounts for about 77% of the Reserve, for detailed pit design. Additional infill drilling will be required in the more north-easterly pits for final pit design.

The pit shell was generated using a gold price of $1,600 / ounce Au. Operating cost parameters used were the same as used for the Reserve estimation, as presented below.

The table below summarizes the constrained updated Tulkubash 2019 year-end Mineral Resource Estimate:

Tulkubash December 2019 Resource at 0.3 g/t Au cut-off grade constrained by USD$1,600/oz pit shell

Class	Tonnes	Au (g/t)	Metal (Oz)
Measured	5,266,000	1.28	215,568
Indicated	18,080,000	1.21	701,976
M&I	23,346,000	1.22	917,545
Inferred	910,000	0.90	26,205
TOTAL	24,256,000	1.21	943,749

Numbers are rounded in accordance with disclosure guidelines and may not sum accurately.
The Mineral Resource has been estimated using 10.0 m x 20.0 m x 5.0 m (x, y, z) blocks, with minimum sub-block dimensions of 1 m x 5 m x 2.5 m (x, y, z).
The estimate was constrained to the mineralised zone using wireframe solid models.
Grade estimates were based on 1.5 m composited assay data.
The interpolation of the metal grades was undertaken using OK.
A cut-off grade of 0.30 g/t gold was applied to report the Mineral Resources.

The Reserve is higher tonnage than the Resource due to dilution. Grade and contained gold are higher in the Resource than in the Reserve.

The pit shell constraint reduced the Tulkubash Resource by approximately 640,000 ounces of gold that would otherwise have been included in the Resource estimate. The loss in tonnage and ounces with respect to the 2018 year-end Mineral Resource Estimate is due principally to the pit shell constraint that was not applied in 2018, which excludes from the Resource estimate mineralisation that does not fall within the $1,600 gold price pit shell. Almost all of this is due to the mineralization being too deep to support the strip ratio that would be required for open pit mining. If future drilling widens the mineralised structures, some of this mineralisation may be reclassified as Resource and possibly Reserve in the future. Several drill targets with this objective have been identified at Tulkubash. A minor proportion of the reduction in Resource is due to a somewhat more conservative modeling methodology that limits the inclusion of small structures and the strike extent of larger structures within the Resource. This increased conservatism is considered appropriate now that the project is approaching production.

In addition to the mineralisation in Shir Canyon, district-scale exploration conducted during 2019 identified several additional new target areas, confirming the Company's belief that Tulkubash has the potential to be an emerging world-class gold district. To date, only about 4.5 kms of a prospective 24 km trend has been drilled.

A JORC Table 1 appears as an Appendix to this press release.

Resource Estimation Assumptions and Methods

Key Assumptions used to estimate the Mineral Resources are:

§ The Mineral Resource has been estimated using 10 metre ("m") x 20 m x 5 m (x, y, z) blocks, with minimum sub-block dimensions of 1 m x 5 m x 2.5 m (x, y, z).

§ The estimate was constrained to the mineralised zone using wireframe solid models. The wireframes were sub-domained to isolate the sulphide zone from the mixed oxide zone.

§ Grade estimates were based on 1.5 m composited assay data.

§ The interpolation of the metal grades was undertaken using Ordinary Kriging.

§ A cut-off grade of 0.30 g/t gold has been applied to report Resources.

Quality Assurance/Quality Control Procedures: Sampling Methodology and Quality Control

All results are from diamond core holes. Samples are shipped to the ALS Global Laboratory in Kara-Balta, Kyrgyz Republic for sample preparation and assay. Gold is analysed using a 30-gramme fire assay with an atomic absorption spectroscopy (AAS) finish. A quality control/quality assurance protocol is employed in the programme which includes standards and blanks in every batch of assays. Check assays are conducted on every 20^th sample by a second independent laboratory.

Geological Modelling Procedures

Sampling data was used to construct two wireframes representing the mineralised structures at Tulkubash in Leapfrog Geo 5. The wireframes were exported and estimated by ordinary kriging in Datamine Studio RM. Variography and exploratory data analysis was completed in [Datamine and Leapfrog Geo.

UpdateD Reserve Statement

The updated mining reserve for the Tulkubash Project based on a gold price of $1,300/oz is shown below. Total Ore Reserves are estimated at 24.6 Mt grading 0.95 g/t Au, and containing 749,000 oz of gold. Proven material constitutes 26% of the reserve while the balance is classified as Probable.

Updated Tulkubash Reserve by Classification

Classification	Ore	Grade	Contained Au
	Mt	g/t Au	Koz
Proven	6.3	0.98	197
Probable	18.3	0.93	552
Total	24.6	0.95	749

Numbers are rounded in accordance with disclosure guidelines and may not sum accurately.

The Reserves tonnage nominally exceeds that of the Resources Measured and Indicated because of factoring in mining dilution as part of the Reserves calculation. This is not considered when calculating the Resource.

The Reserve has an average recovery of 73.3% representing 549,000 oz Au recovered.  Waste associated with the ore tonnage totals 96.4 Mt results in a strip ratio of 3.9:1. Silver is not reported as part of the reserve as its contribution to the project value is immaterial.

Breakdown of the Updated Reserves by Zone

Zone	Ore	Au		Recovery		Waste	Total	Strip Ratio
	Mt	g/t	Koz	% Au	Koz	Mt	Mt	w:o
Main	18.2	1.00	586	72.8	426	73.4	91.6	4.0
Mid	3.9	0.75	95	76.6	73	11.7	15.6	3.0
East	2.5	0.84	68	72.9	50	11.3	13.8	4.6
Total	24.6	0.95	749	73.3	549	96.4	121.0	3.9

The largest portion of the reserve is contained in the Main Zone (MZ) Pit (18.2 Mt). To the northeast of the MZ Pit lies the Mid Zone, composed of nine small satellite pits, accounting for a further 3.9 Mt of ore. Beyond the Mid Zone lies the East Zone, which contains another 2.5 Mt in two separate pits. The East Zone is not fully drilled off and offers the opportunity to continue growing the reserve in the 2020 drill season. 

FEASIBILITY STUDY COMPARISON

The 2019 EOY reserve is associated with significantly more waste (65%) and has a 50% higher strip ratio. This is because increases in grade (+3%), recovery (+6%), and gold price (+8%) have made new mineralization at depth in the Main and East Zones economic but require more waste to be removed. 

Comparison of 2019 EOY and FS Reserves

Zone	Ore	Au		Recovery		Waste	Total	Strip Ratio
	Mt	g/t	Koz	% Au	Koz	Mt	Mt	w:o
2019 FS	22.2	0.92	658	68.9	453	58.6	80.8	2.6
2019 EOY	24.6	0.95	749	73.3	549	96.4	121.0	3.9
Variance	+11%	+3%	+14%	+6%	+21%	+65%	+50%	+50%

FURTHER WORK

Work is currently underway to optimize the mine plan based on the updated reserve.  The optimized mine plan will be used to update the the project economic model and subsequently support a revision of the project feasibility study.

PIT OPTIMIZATION

Mining reserves were defined as a subset of Measured and Indicated resources. Whittle 4X pit optimization software was applied to the resource block model to develop a series of nested pit shells, each corresponding to a different gold price ranging from $800/oz to $1500/oz.

The cost parameters used to drive the optimization are shown in Table 1. The mining and refining costs have been updated from the 2019 feasibility study (FS) based on the finalization of each respective contract. All other operating costs are the same as those applied in the 2019 FS.

The pit slopes used during the optimization varied between 49 degrees and 55 degrees based on feasibility design recommendations for the MZ Pit area. Slopes in the Irisay Fault Zone were reduced to 45degrees and all slopes were adjusted to reflect the need for ramp access in pit walls.

Cost Parameters applied for Pit Optimization

Operating Cost	Units	Value
Mining (ore)	$/t mined	2.73
Mining (waste)	$/t mined	1.89
Mining (owner)	$/t processed	0.34
Process	$/t processed	4.79
G&A	$/t processed	1.27
Refining	$/oz	9.72
Royalty	%	8.0*

*   Sliding scale royalty appropriate at Au prices of $1,000-$1,300/oz

Gold recovery for the updated reserve averaged 73%. Recovery was estimated on a block-by-block basis using oxidation state and extractions derived from metallurgical test work The improvement in recovery from the 2019 FS was due to the inclusion of new test work from the 2019 programme and results from 2017 test work revalidated.

OPTIMIZATION RESULTS

The results of the pit optimization indicated that a gold price of $1,300/oz produced the highest value shell. The shell was composed of twelve separate entities, collectively containing 23.7 Mt ore at a grade of 1.04 g/t Au and a strip ratio of 3.8:1. This pit shell was selected as the basis for developing minable pit designs.

MINE DESIGN

The shell for each separate pit was used to guide a manual design process. Constructible features such as ramps and safety benches were designed within the optimized pit limits to turn the three-dimensional surface into a minable pit design.

The contained tonnage and grade in the minable pits, was then adjusted for mining dilution and ore losses resulting from the mining process. Mining dilution was calculated directly from the block model along the ore/waste contacts. Dilution was estimated at 11% and varied from zone to zone. Ore losses from mining were applied at 2.5%.

Enquiries

Chaarat Gold Holdings Limited Artem Volynets (CEO)	[phone]
	[e-mail]
Numis Securities Limited
John Prior, Paul Gillam (NOMAD)	[phone]
James Black (Corporate Broking)
SP Angel	[phone]
Ewan Leggat (Joint Broker)
Tavistock
Charles Vivian	[phone]
Gareth Tredway Barney Hayward	[e-mail]

About Chaarat

Chaarat is a gold mining company which owns the Kapan operating mine in Armenia as well as Tulkubash and Kyzyltash Gold Projects in the Kyrgyz Republic. The Company has a clear strategy to build a leading emerging markets gold company with an initial focus on Central Asia and the FSU through organic growth and selective M&A.

Chaarat is engaged in active community engagement programmes to optimise the value of the Chaarat investment proposition.

Chaarat aims to create value for its shareholders, employees and communities from its high-quality gold and mineral deposits by building relationships based on trust and operating to the best environmental, social and employment standards. Further information is available at  www.chaarat.com .

Competent Person - Mineral Reserve Estimate

The updated Mineral Reserve estimate was prepared by Chaarat engineering staff at their Bishkek offices in the Kyrgyz Republic.  The work was reviewed by Peter C. Carter, BSc, MBA, P.Eng, a consulting engineer registered in the province of British Columbia, Canada. Mr. Carter is qualified as a CP as defined by the JORC code. He has reviewed the technical information related to the development of Mineral Reserves in this press release and approves their use herein.

Competent Person- Mineral Resource Estimate

The updated Mineral Resource estimate was prepared by Mr. Joe Hirst, B.Sc., M.Sc. European Geologist (EurGeol) and Chartered Geologist (CGeol). Mr. Hirst is Senior Resource Geologist at Chaarat and is a "Competent Person" (CP) as such term is defined by the JORC code.

The work was supervised by Dorian L. (Dusty) Nicol, B.Sc., M.Sc., FAusIMM, RG, who was the Company's Senior Vice President, Exploration at the time this work was conducted. Mr. Nicol is a CP as defined by the JORC code. He has reviewed the technical and scientific information in this press release relating to the Mineral Resource estimates and has approved the use of the information contained herein.

Glossary of Technical Terms

"Ag"  chemical symbol for silver

"Au" "AuEq" "Cu"	chemical symbol for gold the value of a tonne of mineralised material calculated by summing the value of each contained payable metal and expressing it as an equivalent gold content at a given set of metals prices the chemical symbol for copper
"cut off"	the lowest grade value that is included in a Resource statement. It must comply with JORC requirement 19: "reasonable prospects for eventual economic extraction" the lowest grade, or quality, of mineralised material that qualifies as economically mineable and available in a given deposit. It may be defined on the basis of economic evaluation, or on physical or chemical attributes that define an acceptable product specification
"g/t"	grammes per tonne, equivalent to parts per million
"Inferred Resource"	that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability
"Indicated Resource"	that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed
"JORC"	The Australasian Joint Ore Reserves Committee Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 (the "JORC Code" or "the Code"). The Code sets out minimum standards, recommendations and guidelines for Public Reporting in Australasia of Exploration Results, Mineral Resources and Ore Reserves
"koz"	thousand troy ounces of gold
"Measured Resource"	that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and grade continuity
"Mineral Resource"	a concentration or occurrence of material of intrinsic economic interest in or on the Earth's crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories when reporting under JORC
"Mt"	million tonnes
"oz" "Pb" "Probable Reserve" "Proven Reserve"	troy ounce (= 31.103477 grammes) the chemical symbol for lead the part of Indicated and in some cases Measured Resource that can be mined at a profit.  It includes diluting materials and allowances for losses that may occur during mining. the part of Indicated Measured Resource that can be mined at a profit.  It includes diluting materials and allowances for losses that may occur during mining.
"Reserve"	the part of a Measured and/or Indicated Mineral Resource that can be mined at a profit.  Reserves are subdivided in order of increasing confidence into Probable and Proven categories when reporting under JORC.
"t" "Zn"	tonne (= 1 million grammes) the chemical symbol for zinc

Appendix 1 to Resource and Reserve Press release

JORC Code, 2012 Edition - Table 1 report template

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria	JORC Code explanation	Commentary
Sampling techniques	· Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling. · Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used. · Aspects of the determination of mineralisation that are Material to the Public Report. · In cases where 'industry standard' work has been done this would be relatively simple (eg 'reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay'). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information.	· All drilling was undertaken by standard and triple tube core barrel diamond core drilling, with all sampling in accordance with industry standard techniques. · Diamond core is cut in half using a core saw, creating half core samples typically 1.5 m in length. · Road cut samples are collected using continuous random rock chips in 2.0m lengths along road cut exposures. · Trench samples are collected from carefully cut channels in either 1.0 or 2.0 m lengths. · Duplicate samples are created from coarse rejects and from pulps. · Sample preparation is undertaken at ALS Global (Kara Balta) followed by 30 g charge fire assay with an AA finish.  Multi-element analysis is conducted using ICP -AES after aqua regia digestion.  Total Sulphur is determined using a LECO analyser.
Drilling techniques	· Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).	· In 2019 a total of 19,974 m of sampling across 130 drillholes, and 3,240 m of sampling from channels has been completed across the Tulkubash deposit. The totals for the project are 97,889m of sampling from 681 drillholes and 23,200m of sampling from 795 trenches or similar. · Diamond drillholes are predominantly HQ size using standard and triple tube holes reducing to NQ diameter where ground conditions are poorer. · Holes are drilled using contractor drill rigs.
Drill sample recovery	· Method of recording and assessing core and chip sample recoveries and results assessed. · Measures taken to maximise sample recovery and ensure representative nature of the samples. · Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.	· Core recovery is measured and recorded by Chaarat geologists, with an average recovery of +95%. · In areas of highly fractured rock triple-tube core drilling has been utilized.
Logging	· Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies. · Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography. · The total length and percentage of the relevant intersections logged.	· Historically, core was logged geologically and geotechnically by company geologist into standard hard copy logging sheets and transcribed into Microsoft Excel®.  Since 2018, core is logged digitally using AGR4 software. · Logging is performed at nominal 1.5 m intervals, reducing to shorter lengths when required. · Logging does cross mineralised boundaries due to the mineralisation style being fracture controlled in a brittle unit containing few obvious contacts. · The core is photographed wet with photographs stored within the database. · All drillholes up to the end of the 2019 season have been logged. · Logging is to a standard suitable for the support of a Mineral Resource Estimate.
Sub-sampling techniques and sample preparation	· If core, whether cut or sawn and whether quarter, half or all core taken. · If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry. · For all sample types, the nature, quality and appropriateness of the sample preparation technique. · Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples. · Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/second-half sampling. · Whether sample sizes are appropriate to the grain size of the material being sampled.	· Competent core samples are split on site using a core saw, while highly fractured material is sampled with a trowel. · Half core samples are placed in labelled polyethylene sample bags and weighed. · All current samples are transported to ALS Global (Kara Balta) for sample preparation and analysis, where crushing, milling, homogenization and sample splitting was completed in accordance with company standards. · Duplicate sample for QA/QC were taken every 20 samples from crushed rejects and duplicate pulps.
Quality of assay data and laboratory tests	· The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total. · For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc. · Nature of quality control procedures adopted (eg standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and precision have been established.	· Samples collected from 2007 to 2013 were prepared and assayed at the IRC Laboratory in Kara Balta. All samples are analyses for gold by aqua regia digestion followed by atomic absorption. Sample returning grades higher than 0.3 g/t Au were sent to ALS Global (Kara Balta) for re-testing by 30 g fire assay. · The 2014 sample preparation took place at the IRC Laboratory in Kara Balta, with analysis taking place at ALS Global (Kara Balta). · From 2017 all sample preparation and analysis are undertaken at the ALS Global laboratory in Kara Balta. Referee check samples are sent to SGS Vostok for analysis. · Assay quality control was achieved by the use of duplicates, blanks and standard reference material (SRM). · The QA/QC programme and results are in line with industry best practice and the resultant dataset is suitable for Resource estimation.
Verification of sampling and assaying	· The verification of significant intersections by either independent or alternative company personnel. · The use of twinned holes. · Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols. · Discuss any adjustment to assay data.	· Below detection limit assay results have been replaced with values of half detection limit (0.025 g/t Au) and absent values have been replaced with 0.0001 g/t Au.
Location of data points	· Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation. · Specification of the grid system used. · Quality and adequacy of topographic control.	· All collar locations are reported in Gauss Kruger Pulkovo 1942 Zone 12 with their locations recorded using a Leica Total Station (centimetre accuracy) · Downhole surveys were recorded with Reflex "EZ-shot" electronic single-shot equipment. · A Total Station survey along roads, ridges, valleys and traverses has produced a contoured topography across the Tulkubash Resource area.  · Regional topography data is derived from satellite data.
Data spacing and distribution	· Data spacing for reporting of Exploration Results. · Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied. · Whether sample compositing has been applied.	· The current data spacing, nominally fans on 80m fences, with significant areas on strike at 40m or less, is sufficient to establish grade continuity and provides sufficient support for Measured and Indicated classifications.
Orientation of data in relation to geological structure	· Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type. · If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.	· Surface drilling is inclined, attempting to cut the mineralization at a close to normal angle to the strike orientation as possible. · Underground drilling (from previous years) was orientated normal to the strike of the structure. · The holes were designed to provide intercepts perpendicular to the mineralization as possible. · The drilling dip ranges from 35 to 90o, striking generally between 125 and 147o.
Sample security	· The measures taken to ensure sample security.	· Labelled samples are transported to and from the laboratory by company personal or contractors, employing a full chain of custody documentation procedure. · Reject pulps and coarse rejects are returned to Chaarat and stored along with drill core at their locked and secure core storage facility in Bishkek.
Audits or reviews	· The results of any audits or reviews of sampling techniques and data.	· Chaarat's competent person visited the project during the current drilling campaign and reviewed the protocols and procedures adopted by Chaarat's company geologists. · Chaarat has completed an analysis of the QA/QC data. The data is deemed appropriate for Resource estimation.

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

Criteria	JORC Code explanation	Commentary
Mineral tenement and land tenure status	· Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings. · The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.	· two licenses controlling the Property: a mining (or production) license of 700.03 ha covering the defined Mineral Resources, and an exploration license of 6,776 ha covering prospective ground along trend to the northeast Point No. X Y 1 126 77 600 46 55 400 2 126 79 000 46 56 900 3 126 79 264 46 56 711 4 126 82 604 46 60 152 5 126 83 150 46 59 556 6 126 82 728 46 59 261 7 126 82 757 46 58 554 8 126 79 776 46 55 887 9 126 79 487 46 56 116 10 126 78 500 46 54 800 · There are no known impediments to obtaining further necessary licences to operate
Exploration done by other parties	· Acknowledgment and appraisal of exploration by other parties.	· No other appraisal or exploration is being done by other parties
Geology	· Deposit type, geological setting and style of mineralisation.	· Tulkubash Formation consists of medium- to fine-grained quartzites and medium- to coarse-grained arkosic sandstones mineralized in fractures by crackle brecciation and is oxidized and can be processed by conventional heap-leach processes
Drill hole Information	· A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: o easting and northing of the drill hole collar o elevation or RL (Reduced Level - elevation above sea level in metres) of the drill hole collar o dip and azimuth of the hole o down hole length and interception depth o hole length. · If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.	· As reported in Press Release
Data aggregation methods	· In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cut-off grades are usually Material and should be stated. · Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail. · The assumptions used for any reporting of metal equivalent values should be clearly stated.	· Mineralised intercepts are defined as being above a cut-off grade for potentially economic mineralization of 0.35 g/t Au equivalent from Leapfrog Indicators · Samples are composited prior to mineral Resource estimate to 1.5m (mean sample length). The samples are assessed for a top-cap at this stage, and any outliers are reduced to the capping value of 15 g/t Au.
Relationship between mineralisation widths and intercept lengths	· These relationships are particularly important in the reporting of Exploration Results. · If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported. · If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg 'down hole length, true width not known').	· Intercepts are designed to be as close to normal to the mineralization as possible. · The drill hole angle in relation to the mineralization is not certain. · All mineralized intercepts reported as apparent thicknesses based on cross sectional interpretation.
Diagrams	· Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.	· As reported in Press Release
Balanced reporting	· Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.	· As reported in Press Release
Other substantive exploration data	· Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples - size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.	· No other substantive exploration data relevant to this Press Release has been completed
Further work	· The nature and scale of planned further work (eg tests for lateral extensions or depth extensions or large-scale step-out drilling). · Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.	· Further exploration focusing on strike extension and some infill of existing Resource is targeted is planned for the 2020 season.

 

Section 3 Estimation and Reporting of Mineral Resources

(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)

Criteria	JORC Code explanation	Commentary
Database integrity	· Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resource estimation purposes. · Data validation procedures used.	· All data used in the Resource was provided by Chaarat a single Excel database, combined into a central Excel database for verification prior to Mineral Resource estimation. · Leapfrog was used to validate the database with any errors in interval overlap and surveys reported to Chaarat for correction.
Site visits	· Comment on any site visits undertaken by the Competent Person and the outcome of those visits. · If no site visits have been undertaken indicate why this is the case.	· The Competent Person for this project is Mr. Joe Hirst B.Sc (Hons)., M.Sc., European Geologist (EurGeol) and Chartered Geologist (CGeol). Mr. Hirst is a Resource Geologist and Competent Person as defined by the JORC code. Mr. Hirst visited the project between the 7th and 13th of August 2018 and between the 27th July and 6th August 2019.
Geological interpretation	· Confidence in (or conversely, the uncertainty of ) the geological interpretation of the mineral deposit. · Nature of the data used and of any assumptions made. · The effect, if any, of alternative interpretations on Mineral Resource estimation. · The use of geology in guiding and controlling Mineral Resource estimation. · The factors affecting continuity both of grade and geology.	· Geological interpretation was based on correlating mineralized intersections in sampling. Outcrop is visible in a number of roadcuts, which were inspected, to support the interpretation · Interpretation was completed in Leapfrog creating wireframe models using indicator shells.
Dimensions	· The extent and variability of the Mineral Resource expressed as length (along strike or otherwise), plan width, and depth below surface to the upper and lower limits of the Mineral Resource.	· The Mineral Resource extends 4.4 km along strike, maximum plan width of 500 m and a maximum depth of 700m.
Estimation and modelling techniques	· The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters and maximum distance of extrapolation from data points. If a computer assisted estimation method was chosen include a description of computer software and parameters used. · The availability of check estimates, previous estimates and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data. · The assumptions made regarding recovery of by-products. · Estimation of deleterious elements or other non-grade variables of economic significance (eg sulphur for acid mine drainage characterisation). · In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed. · Any assumptions behind modelling of selective mining units. · Any assumptions about correlation between variables. · Description of how the geological interpretation was used to control the resource estimates. · Discussion of basis for using or not using grade cutting or capping. · The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation data if available.	· The Mineral Resources have been estimated into a block model prepared in Datamine Studio RM (version 1.3). The block model comprises the following parameters: o  Parent cell dimensions of 10 m x 20 m x 5 m (x, y, z) o  Sub-cell dimensions of 1 m x 5 m x 2.5 m (x, y, z) · Wireframe models were created using Indicator shells in Leapfrog, producing a potentially economic mineralised domain · The model is typically estimated to a depth of 450 m. · Grade estimates were based on 1.5 m composited assay data. · The interpolation of grade concentration was undertaken using Ordinary Kriging. · Au was estimated as part of this interim estimate, as the primary metal of interest. Ag, Sb, and As were also estimated but not reported as Resource · Top cut requirements were assessed using the Parrish method, a top-cut of 15 g/t Au was applied. · Block model validation was completed using a full set of statistical measures and plots, along with visual inspection on plan and section.
Moisture	· Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.	· Tonnage is estimated on a dry basis in accordance with the specific gravity determination.
Cut-off parameters	· The basis of the adopted cut-off grade(s) or quality parameters applied.	· Au g/t cut-off grade was applied based upon grade tonnage sensitivity analysis and the Chaarat 2018 Feasibility Study assumptions: o  Au price of US$ 1,600/troy oz o  Au recovery of 64% o  Mining cost of US$ 1.89/t o  Processing and G&A cost of US$ 6.40/t o  No discount rate applied
Mining factors or assumptions	· Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential mining methods, but the assumptions made regarding mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the mining assumptions made.	· Mining assumptions were made in accordance with the Chaarat 2018 Feasibility Study utilizing conventional hard rock open pit excavation.
Metallurgical factors or assumptions	· The basis for assumptions or predictions regarding metallurgical amenability. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential metallurgical methods, but the assumptions regarding metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical assumptions made.	· Basic metallurgical assumptions were drawn from the Chaarat 2018 Feasibility Study and multiple metallurgical test work to date. · Metallurgical test work indicates the oxide ore is amenable to conventional cyanide heap leaching. · The life-of-mine gold recovery was estimated to be 64 %.
Environmental factors or assumptions	· Assumptions made regarding possible waste and process residue disposal options. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider the potential environmental impacts of the mining and processing operation. While at this stage the determination of potential environmental impacts, particularly for a greenfields project, may not always be well advanced, the status of early consideration of these potential environmental impacts should be reported. Where these aspects have not been considered this should be reported with an explanation of the environmental assumptions made.	· An Environmental and Social Impact Assessment (ESIA) is currently being prepared by Wardell Armstrong for the Tulkubash project. · It is assumed there will be no environmental impediments to advancing the Tulkubash project. · Upon completion of the ESIA further information will be available on the full environmental and social impacts of the Tulkubash deposit.
Bulk density	· Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size and representativeness of the samples. · The bulk density for bulk material must have been measured by methods that adequately account for void spaces (vugs, porosity, etc), moisture and differences between rock and alteration zones within the deposit. · Discuss assumptions for bulk density estimates used in the evaluation process of the different materials.	· Bulk density values have been estimated into the block model using an inverse distance weighting interpolation. · The density estimate was based upon 1,608 dry specific gravity determinations, completed by Chaarat personnel using Archimedes method.
Classification	· The basis for the classification of the Mineral Resources into varying confidence categories. · Whether appropriate account has been taken of all relevant factors (ie relative confidence in tonnage/grade estimations, reliability of input data, confidence in continuity of geology and metal values, quality, quantity and distribution of the data). · Whether the result appropriately reflects the Competent Person's view of the deposit.	· The Resource classification at the project considers the following criteria: o  confidence in the sampling data and geological interpretation o  analysis of variogram parameters o  data distribution (based upon graphical analysis and average distance to informing composites) o  analysis of the quantitative measures of kriging performance. · The model was classified according to the JORC (2012) guidelines. · The classification appropriately reflects the status of the Resource development.
Audits or reviews	· The results of any audits or reviews of Mineral Resource estimates.	· An external peer review was conducted for this study by independent third parties. No material concerns were raised.
Discussion of relative accuracy/ confidence	· Where appropriate a statement of the relative accuracy and confidence level in the Mineral Resource estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate. · The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used. · These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.	· The Resource estimate is deemed appropriately accurate globally, based upon the informing data and is suitably accounted for in the Resource classification.

 

END

 

 

DRLSFWEFAESSEEE