Kapan Mineral Resource Update

RNS Number : 0683G

Chaarat Gold Holdings Ltd

11 November 2022

 

11 November 2022

Chaarat Gold Holdings Limited

("Chaarat" or "the Company")

Kapan Mineral Resource Update

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 the updated JORC Compliant Mineral Resource Estimate ("MRE") for its Kapan polymetallic mine in the Republic of Armenia. The full MRE report will be published on Chaarat`s website. 

Highlights

·   The 2022 constrained MRE contains 722 thousand gold equivalent ounces ("koz AuEq")¹ in the Measured & Indicated ("M&I") categories. This compares to 584 koz AuEq M&I MRE reported in June 2021, reflecting a 25% increase in MRE. 

· M&I tonnes increased by 30% from 1.955 Mt to 2.602 Mt while grade dropped by 5% from 9.1 g/t AuEq to 8.6 g/t AuEq.

· Mined Shape Optimization ("MSO") was performed on the mineral inventory to apply constraining factors to the Mineral Resource. 

The updated MRE will be used as the basis for the updated 2022 Ore Reserves Estimate ("ORE"). As in prior years, Chaarat will employ the services of AMC Consulting to review the 2022 MRE and develop a revised 2022 ORE. 

¹ Gold equivalent ounces for the 2022 MRE is defined in Note 1 of Table 1.

Michael Fraser, Chief Executive Officer, commented:  
  

"I am pleased to report the results of the 2022 Mineral Resource Estimate. The new MRE shows a 25% increase in Measured and Indicated ounces compared to 2021. New drilling converted mineralization to M&I to replace depletion during the period, and the improvements to the mining methods employed at Kapan have enabled an increase to the resource."  

UPDATED MRE STATEMENT  

The following table summarizes the latest constrained 2022 MRE:

Class	Mt	AuEq (g/t)	AuEq Metal (koz)
Measured	0.341	12.1	132
Indicated	2.261	8.1	590
M & I	2.602	8.6	722
Inferred	1.864	6.5	389

Table 1 Constrained Mineral Resources Estimate Sept 1,2022 

Note 1:   

· The effective date of the resource is 1st September 2022. The Mineral Resources that are not Mineral Reserve do not demonstrate economic viability.  Numbers may not sum due to rounding.  

· The gold equivalency (AuEq) formula is based on the following metal prices: Au 1750 USD/oz; Ag 21.8 USD/oz; Cu 8300 USD/t; Zn 2950 USD/t  

· The AuEq formula used is as follows: AuEq= Au+Ag*21.8/1750+Cu*8300/1750*31.1035*100+Zn*2950/1750*31.1035*100  

· Grade interpolation is done by Ordinary Kriging method.  

· The applied MSO assumes a COG = 2.1g/t AuEq and minimum mining widths of:  2.2m for the veins dipping < 70°; 1.8m for veins dipping 70° - 80° and 1.2m for veins dipping 80°-90°  

· Mineral Resources are with applied depletion and inclusive of Ore Reserves.  

· The resource estimate and classification are according the JORC Code (2012) reporting code.  

The previously reported June 2021 constrained MRE is shown below : 

Class	Mt	AuEq (g/t)	AuEq (koz)
Measured	0.238	12.3	94
Indicated	1.757	8.7	490
M & I	1.995	9.1	584
Inferred	3.497	6.9	775

Table 2 Constrained Mineral Resources Estimate June 1, 2021 

Notes:

· The effective date of the resource is 1st June 2021. The Mineral Resources that are not Mineral reserve do not demonstrate economic viability.  Numbers may not sum due to rounding. 

· The gold equivalency formula is Au Eq = Au + (Ag g/t * ($25 / $1,700) + (Cu % * ($8,000 * 31.1035 / $1,700) / 100) + (Zn % * ($2,500 * 31.1035 / $1,700) / 100 

· MSO applied assuming minimum width 2.2m; COG 2.0g/t Au Eq 

· Mineral Resources are with applied depletion and inclusive of Ore Reserves. 

· The resource estimate and classification are according the JORC Code (2012) reporting code. 

Mining depletion from June 1, 2021 to September 1, 2002, being the period between the 2021 MRE and the 2022 MRE, was 0.232Mt containing 81 koz AuEq. The results from the infill drilling program during 2021 and 2022 replaced depletion and added additional ounces to the MRE.

Modifying factors

Starting in 2021, Chaarat´s MRE is reported on a constrained basis by applying modifying factors. Each vein in the resource model is run through MSO software to determine the reasonable prospects for eventual economic extraction on a vein-by-vein basis.

Table 3 below shows the main modifying factors applied to the model via the use of the MSO software.

COG_AuEq_ppm  Metal prices	2.1 ppm  See Notes 1
Ore body dip	Minimum mining width (MSO)
80o-90o	1.2m
70o-80o	1.8m
< 70o	2.2m
Development overbreak	0%
Production Stope overbreak:
First mining sublevel	5%
Middle sublevel	10%
Bottom sublevel	15%

Table 3 MSO's COG, Minimal mining width and working over breaks percentage 

Resource Estimation Assumptions and Methods  

The MRE was constrained over the polymetallic veins of the deposit, using wireframe solid models. The resource depletion zones were also encoded into the resource model. Grade estimates are based on 1.0m composited assay data, with applied top capping for all elements of interest. The interpolation of the metal grades was undertaken via Datamine software using ordinary kriging at parent blocks of 4x4x4m and minimal sub blocking of 0.1m. MSO software was used to determine the reasonable prospects for eventual economic extraction. The elements of interest interpolated in the resource model include gold, silver, copper, zinc, lead and sulphur. Density estimation is based on a sulphur regression formula. Full details can be found in the 2022 MRE report which will be available on the Company's website.

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

Sampling comprises historical surface diamond and RC drilling, historical and recent underground diamond drilling, and channel sampling. Core drill holes were drilled along the full mineralization intersection, as normal to the mineralization strike and dip as possible, predominantly at NQ diameter. The maximum sampling interval was 1 metre, the minimum was 0.2 metres. In the recent drilling campaigns entire core was collected as regular core samples. Underground channel samples were chipped along the marked face with a pneumatic hammer.

The samples were pre-processed and analysed at the on-site mine laboratory. The laboratory conducts Fire Assay with atomic adsorption spectrometer ("AAS") for gold (0.2 g/t-1000g/t), and atomic AAS for Ag (0.2 g/t -20000g/t), Cu (0.005%-9.9%), Pb (0.005%-19.9%) and Zn (0.005%-29.9%). The laboratory is accredited according to GOST ISO/IEC 17025-2019 standard. GOST refers to a set of international technical standards maintained by the Euro-Asian Council for Standardization, Metrology and Certification ("EASC"), a regional standards organization operating under the auspices of the Commonwealth of Independent States ("CIS"). Internal quality assurance and quality control ("QA/QC") scheme includes certified reference materials ("CRM") and blank material. Approximately 5% of the samples were sent to an accredited laboratory as a part of mandatory Armenian state control. Kapan's on-site laboratory shows an acceptable level of sample precision and accuracy for both diamond drilling and channel sampling.

Geological Modelling Procedures  

Ore wireframing is done via LeapFrog™ software, using all available drill hole and channel data at 1.5 g/t AuEq as a base cut-off grade. The maximum width of barren intervals, included in ore solid, is 2.0m and the minimal interval width is 0.2m. Hard boundaries of the veins were used to outline the ore bodies. In case of available barren contouring hole, the wireframe was extrapolated on a half distance between the mineralized and barren holes, with reducing the width accordingly.

In case the closest barren intercept has reasonable zone of increased grades, these intercepts are used in the extrapolation process. In case of lack of contouring barren drill hole, the ore wireframe is extrapolated in a half distance between the last two holes, but not further than the half of the average exploration drilling grid (grade control drilling is within average grid of 20x20m).

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014 (which forms part of domestic UK law pursuant to the European Union (Withdrawal) Act 2018).

Enquiries
Chaarat Gold Holdings Limited	[phone]
Mike Fraser, Chief Executive Officer	[e-mail]
Canaccord Genuity Limited (NOMAD and Joint Broker)	[phone]
Henry Fitzgerald-O'Connor
James Asensio
finnCap Limited (Joint Broker)	[phone]
Christopher Raggett
Panmure Gordon (UK) Limited (Joint Broker)	[phone]
John Prior Hugh Rich

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 through organic growth and selective M&A.

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 Resource Estimate

The information in this announcement that relates to exploration results is based on and fairly represents information and supporting documentation prepared by Dimitar Dimitrov, P. Geo, AIG member and a Competent Person as defined in the 2012 edition of the JORC Code 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' and is a Qualified Person under the AIM Rules . Mr. Dimitar Dimitrov is a full-time employee of the company. Mr. Dimitrov consents to the publication of this new release dated November 11^th, 2022 by Chaarat. Mr. Dimitrov certified that this news release fairly and accurately represents the information for which he is responsible.

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"	troy ounce (= 31.103477 grammes) the chemical symbol for lead
"t" "Zn"	tonne (= 1 million grammes) the chemical symbol for zinc

12.0 JORC Code, 2012 Edition - Table 1 report

Section 1 Sampling Techniques and Data

Criteria	JORC Code explanation	Commentary
Sampling techniques	Nature and quality of sampling (e.g., cut channels, random chips, or specific specialized 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 representativity and the appropriate calibration of any measurement tools or systems used. Aspects of the determination of mineralization that are Material to the Public Report. In cases where 'industry standard' work has been done this would be relatively simple (e.g., 'reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverized 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 mineralization types (eg submarine nodules) may warrant disclosure of detailed information.	Sampling comprises historical surface drilling, historical and current underground drilling, and channel sampling. Predominantly diamond drilling, and channel cut from the face, with a chisel saw, according to a marked channel boundary. Core was drilled along the full mineralization intersection, as normal to the mineralization strike as possible. Channel rock chips are providing representative data collection of the sampled face. All sampling practices are meeting the industry standards.
Drilling techniques	Drill type (e.g., core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc.) and details (e.g., 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.)	DH sampling: approximately 717 000 samples (1024km). Channel sampling: approx. 122 000 samples (123.1 km). Total sampling: approx. 840 000 samples (1147km). Core is predominantly HQ and NQ diameter, singe barrel drilled. Channel samples are chipped along the marked face with a pneumatic hammer and collected by the sampler in one-meter intervals. All channel samples are taken from south to north, in a horizontal fashion, rather than perpendicular to the mineralized dip angle. The results from the channel sampling are used for grade control, modelling, mine design, resource estimation, and for mine reconciliation data. The samples are contoured along all major lithological breaks.
Drill sample recovery	Method of recording and assessing core and chip sample recoveries and results assessed. Measures taken to maximize 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.	The core recovery is assessed by regular measurements of each drill run and generally excess 95 %. Core recovery is based on recovered core length vs drill run length, and RC material is assessed by the recovered weights. There does not appear to be a relationship bias between grade and length, or sample weight or recovery. The average grade of the channel samples is higher compared to the drilling. This is primarily attributed to the frequency of channel samples in high grade open areas of the mine, compared to drilling
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 .	Once the hole is finished, the core is transported to the core storage area for logging. The core trays are plastic, and are covered with a plastic cover as well, to prevent core losses or extra moving. The key procedures are including core recovery measuring; sample interval marking; geological and geotechnical logging; photo documentation; sampling and later destruction of non-mineralized part. Core logging is including lithology; alteration; mineralization; structures; obtaining geotechnical data for assess RMR and Q-index.  Sampling is primarily based on the visible mineralization, and minimum 2 meters are taken from either side of the sampled interval. The maximum sampling interval is 1 meter, the minimum is 0.2m Once the sampling intervals are outlined, currently a full core diameter is used for assaying. Areas with non-visible mineralization, outside of the expected mineralization zone are not sampled. In absence of visible mineralization, but in areas where mineralization interception is expected the material is sampled depending on the field geologist's decision, considering all the available information. The collection of geological data is meeting the industrial standards. The core logging protocol keeps a high standard, and the involved geologists have sufficient knowledge for Shahumyan mineralization system.
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 representativity 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.	Prior to July 2017 core was halved with a diamond saw and half was sent for analysis and the other half was retained. Since then, the whole core is processed and only the pulps are retained for future analysis. The laboratory prepares samples according to industry standard of drying crushing, pulverizing, splitting and analysis. All samples are analysed in the local Kapan's mine laboratory The laboratory is providing Fire Assay with AAS for gold ( 0.2 g/t-1000g/t) , and AAS for Ag ( 0.2 g/t -20000g/t ), Cu ( 0.005%-9.9% ), Pb ( 0.005%-19.9% ) and Zn ( 0.005%-29.9% ).
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.	The assaying is meeting the industry standards and it is suitable to support Mineral Resource estimate. The current QA/QC scheme is including blank samples and certified reference material (CRM). As core is no longer halved, no field duplicates are assessed, and historically these results were no good due to highly variable nature of mineralization. QA/QC achieves acceptable levels of accuracy and precision.
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.	Yearly, in each quarter, between 3 and 5 percent of the pulps are sent to Yerevan state laboratory for reference the results. A twin analysis has been conducted during 2017-2018 by local geology team for channel and diamond drilling (DD) holes and shows potential bias that could be attributed to highly variable nature of mineralization
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.	Grid system is Pulkovo 1942 / Gauss -Kruger zone 8 , ( with reduced first 2 digits in the BM and wireframes encoding). Survey is completed underground, with high precision tools which meets the industrial standards: Leica TS16 (3'' accuracy), Ranger Explorer II R2231, IMMN_32A. The available digital elevation model of the area topography is used in the Mineral Resource estimation process (surveyed via GPS by expatriate and local surveyors in 2013)
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.	Along the drive advancing, a channel sampling is taken every blast. Typically, the space between two blasts is 4 -6m The grade control drilling net is 20 X 20 m, adjusted to denser grid, where required The geostatistical analysis and trial blast unit drilling data have shown that thicker data spacing, and distribution do not add any sufficient value in accuracy of geological and grade continuity. As majority of samples have 1m in length, the 1m composite is being applied.
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.	Geometry is derived and interpreted from underground mapping and sampling. True thickness is calculated from apparent thickness, during the interpretation. No bias has been introduced through the geometry of the sampling and subsequent geological interpretation
Sample security	The measures taken to ensure sample security.	The mine process plant and laboratory are sufficiently secured, with security guards and entry, requiring personal ID cards
Audits or reviews	The results of any audits or reviews of sampling techniques and data.	Independent reviews have considered the sampling process to meet industry best practices: NI 43-101 Technical Report in 2014 (Galen White - QP, Julian Bennett- QP, Simon Meik - QP) and Global Report (Galen White - QP) in 2018 by CSA, report by AMC (Alan Turner, Bryan Pullman) in 2019. At 2021 AMC consulting completed a high-level review of MRE 21.

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.	Data is logged and digitized by trained geologists. The used software is providing several stages of cross validation, initial through the logging process, second when the logging data is imported to main database platform (acQuire) and one more time prior the Mineral Resource estimation.
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 last site visit of competent person (Dimitar Dimitrov) for the Mineral Resource was from 17th to 28th of May 2022 Mr.Dimitar Dimitrov P. Geo, AIG member and a Competent Person as defined in the 2012 edition of the JORC Code 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves',  is a SVP -Exploration of Chaarat Gold Holdings, and full-time employee of the company.
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.	Based on lithological evidence (drill core logging and underground mapping data) the veins and veinlets are being interpreted. The Mineral Resource is controlled by hard boundaries of the interpreted geological structures, including faults and post mineralization barren dykes. The geological continuity is reasonable, but grade variability is high, often within the mineralized structure.
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 Resource includes a series of E-W striking orebodies (veins), dipping from 45o to 90o (mainly in South direction). Vein strike lengths reach up to 0.5km, and the true thickness ranges from several cm to 2m. The Resources goes near the surface (~950masl) to average of 500 - 600 m asl deep. Further mineralization potential exists below 600msal, and to the flanks of current Resource, explored historically.
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 Resource estimation was completed in Datamine Studio by Kapan's geological department The wireframes were prepared in Leapfrog Geo The grades were interpolated by Ordinary Kriging Top-cuts were applied for each vein (based on statistical analysis). The search radii were defined by variogram modelling of veins The estimate was constrained into the hard boundary of the mineralization interpretation Parent cell dimensions are 4m*4m*4m, with minimum sub-celling dimensions 0.1m*0.1m*0.1m The composite length is 1m The validation methods currently show high level of correspondence between resource model and the actual data, and are done via visual inspection, preparation of Q-Q and swath plots. Comparison with previous Mineral Resource estimates Reconciliation that includes comparing forecasted data and measurements in different phases of mining process Mineral Inventory (depleted) up to 09-2022 : Class Mt SG (g/cm3 ) AuEq (g/t) AuEq (koz) Meas 0.646 2.75 8.9 185 Ind 5.627 2.76 5.3 958 M & I 6.273 2.76 5.7 1 143 Inf 6.790 2.78 4.5 975 Total 13.063 2.77 5.0 2 118 AuEq=AU+AG*21.8/1750+CU*8300*31.1035/175000+ZN*2950*31.1035/17500
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 reported on dry basis
Cut-off parameters	The basis of the adopted cut-off grade(s) or quality parameters applied.	The Reasonable Prospects for Eventual Economic Extraction of the Mineral Inventory was conducted via Mine Shape Optimization (MSO) run. Cut-off grade of 2.1 g/t AuEq was 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.	The Resource model is based on geology. The reasonable prospects for eventual economic extraction were achieved by running Mineable Stope Optimization (MSO) and reported is Resource is constrained by the MSO. The MSO parameters are in accordance with the selective mining method planned to be implemented. COG_AuEq_ppm 2.1 ppm Used AuEq_formula AUEQV=AU+AG/80+CU/0.6779+ZN/1.9072 Ore body dip MMU (MSO) 80o-90o 1.2m 70o-80o 1.8m   < 70o 2.2m Development overbreak 0% Production Stope overbreak: First mining sublevel 5% Middle sublevel 10% Bottom sublevel 15% Kapan's 2022 Mineral Resource is: Class Mt SG (g/cm3 ) AuEq (g/t) AuEq (koz) Meas 0.341 2.76 12.1 132 Ind 2.261 2.77 8.1 590 M & I 2.602 2.77 8.6 722 Inf 1.864 2.77 6.5 389 AuEq=AU+AG*21.8/1750+CU*8300*31.1035/175000+ZN*2950*31.1035/17500
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.	The metal recovery data is as follows: Process recovery Units 2017 2018 2019 2020 2021 Au recovery (all con) % 83.6 76.2 79.7 73.1 75.5 Ag  recovery (all con) % 83 80.9 82.4 82.2 82.5 Cu  recovery (Cu  con) % 86.4 83.6 86.4 87 85.2 Zn  recovery (Zn  con) % 81.9 77.4 80.2 76.4 71.1 Extraction of Au  at refining % 91 Extraction of Ag  at refining % 84 Extraction of Cu at refining % 94   Extraction of Zn at refining % 85 Metal recovery is not directly applied in the reported Resource.
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.	There are no known factors which may inhibit the extraction of the Resource
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.	Currently the density estimation is using polynomial regression model based on modelled sulphur grade: If S >= 19.8 %, Density == exp [0.2587x + 0.4835], for x = ln (S grades) If S > 1 and S <19.8%, Density == exp [0.0114169x6 - 0.0891652x5 + 0.26951043x4 + 0.38060004x3 + 0.23832052x2 + 0.0052027x + 0.9070334], for x = ln (S grades) If S<1, Density = 2.65 g/cm3 In dykes Density = 2.65 g/cm3 This approach is considered as slightly conservative scenario for density assessment.
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 model is classified according to the quantity and quality of the data. The Measured Mineral Resource category was assigned to portions of the ore bodies in the following cases: In the areas of current mine development workings, informed by both channel sampling data and drilling data and where the data spacing is less than 20x20 m. The Indicated category was assigned to the portions of the ore bodies in the following cases: -  In the areas with the exploration grid spacing up to 20×20 m, provided there was enough confidence in the continuity of the ore body mineralization between the drill holes. -  In the areas of extrapolation to up to 30 m distance from the last sublevel drift in down-dip/up-dip direction of the ore body, provided there was enough confidence in the continuity of its mineralization. The intersections of extrapolation areas by exploration drill holes are not required in this case. -  In the areas of extrapolation to up to 30 m distance from the last sublevel drift in the downdip /up-dip direction of the ore body. In case of any doubts in continuity of this ore body mineralization, the exploration grid spacing of not more than 20-30 m is required to classify the mineralization as an Indicated Mineral Resource. The Inferred category was assigned to the portions of the ore bodies if they could not be classified as an Indicated Mineral Resource.
Audits or reviews	The results of any audits or reviews of Mineral Resource estimates.	No external audits or reviews were conducted for MRE 2022
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 effective date of the Resource is 01.09.2022 Model estimates were checked by QQ plots, swath plots, and by comparing the volumes of the wireframes and the block model, statistically and visually.

 

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