Kapan Ore Reserves

Chaarat Gold Holdings Ltd

27 April 2023

 

27 April 2023

Chaarat Gold Holdings Limited

("Chaarat" or "the Company")

Kapan Ore Reserves

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 Ore Reserves Estimate ("ORE") for its Kapan polymetallic mine in the Republic of Armenia. The full ORE report will be published on Chaarat's website.

Highlights

·    AMC Consultants (UK) Limited ("AMC") were engaged by Chaarat Kapan CJSC ("Chaarat") to undertake a review of the Kapan Mine ("Kapan") Ore Reserves and to act as a competent person ("CP") as defined by the JORC (2012) reporting code.

·    Proven & Probable Ore Reserves effective 31 December 2022 were confirmed totalling 3.14 Mt at an AuEq grade of 3.28 g/t consisting of 1.65 g/t Au, 32.47 g/t Ag, 0.36 % Cu, 1.33 % Zn, resulting in a 5-year mine life.

·    This represents an increase of 25% in Ore Reserves, 2% in AuEq grade and an additional 2 years of mine life versus the previous ORE.

·    The 2022 resource definition drilling programme of over 60,000 metres replaced depletion and added additional years to the life of mine plan.

·    Ongoing resource definition drilling will continue to target the conversion of inferred and unclassified mineralisation to allow for further mine life extension.

·    The 2022 constrained Mineral Resource Estimate published in November 2022 contained 722 thousand gold equivalent ounces ("koz AuEq")¹ in Measured & Indicated ("M&I") compared to 583 koz AuEq M&I reported in June 2021, reflecting a 24% increase.

Michael Fraser, Chief Executive Officer, commented:
 

"We are pleased to report a 25% increase in reserves, and a corresponding 2-year increase in the mine life at Kapan. The MRE and ORE reports demonstrate that there remains a large amount of inferred and unclassified mineralisation at Kapan. The ongoing exploration programme at Kapan will continue to target the conversion of this material to M&I, P&P and ongoing mine life extensions over the coming years."

Updated ORE RESERVES STATEMENT 

The following table summarises the recent Kapan ORE (effective 31 December 2022):

		Grade						Metal
Classification	Tonnes (Mt)	Au (g/t)	Ag (g/t)	Cu (%)	Zn (%)	AuEq (g/t)	Au (Koz)		Ag (Koz)	Cu (Kt)	Zn (Kt)	AuEq (Koz)
Proven	0.21	2.40	42.07	0.51	1.85	4.64	16.2		284.5	1.1	3.9	31.4
Probable	2.93	1.59	31.78	0.35	1.29	3.18	150.0		2,991.1	10.1	37.8	299.0
Total Proven and Probable	3.14	1.65	32.47	0.36	1.33	3.28	166.3		3,275.6	11.2	41.7	330.4

Table 1 Kapan Mine, Ore reserves 2022

Notes:

·     Ore Reserves are reported in accordance with the JORC Code (2012).

·     Ore Reserves based on August 2022 consensus prices for LOM of USD1,750/oz Au, USD21.8/oz Ag, USD8,300/t Cu, and USD2,950 Zn.

·     Ore Reserves are based on a gold equivalent cut-off of 2.3g/t Au.

·     Mineral Resources which are not Ore Reserves do not have demonstrated economic viability.

·     Table is subject to rounding errors.

·     The average density of 2.64 t/m³ was used for unmodelled diluting waste material.

·     Tonnes reported are in situ, dry tonnes.

The 2021 Ore Reserves statement contained 2.55 Mt at a grade of 1.66 g/t Au, 33.17 g/t Ag, 0.34% Cu, and 1.25% Zn, and 263.7 Koz of AuEq.

As previously announced, the 2022 MRE reflected a 24% increase in contained ounces compared to 2021. As expected from historical conversion rates, this increase has flowed through from the MRE into the ORE resulting in a 25% increase in proven and probable AuEq ounces.

The increase in ORE replaces depletion and adds an additional 2 years of mine life. The 5 years identified in the life of mine plan is consistent with the stated reserve for the history of the Kapan mine. Given the deep dipping nature of the ore body, M&I levels of certainty can only be obtained by underground drilling, which limits how much of the inferred and unclassified mineralisation is converted ahead of mining.

The 2022 MRE shows that there is still significant mineralisation within the Shahyuman ore body. The ongoing exploration definition drilling program will continue to target the conversion of inferred and unclassified mineralisation into M&I. This conversion is expected to flow through into future ORE updates as proven and probable to replace mining depletion and provide additional mine life beyond that indicated in the current reserve.

The full report is available on Chaarat's website at this link.

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 Gordon Hamilton
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 the mineral resource estimate 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 part-time employee of the company. Mr. Dimitrov consents to the publication of this new release dated 27 April 2023 by Chaarat. Mr. Dimitrov certified that this news release fairly and accurately represents the information for which he is responsible.

Competent Person- Ore Reserves

The CP for the Ore Reserves declared under the JORC Code (2012) in this report is James Town, Chartered Engineer (CEng), Member of the Institute of Materials, Minerals & Mining (MIMMM). IOM3 membership number: 0478326. Mr Town is 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 Town has reviewed this news release and has consented to its publication with the inclusion of the information for which he is responsible in the form and context in which it appears.

Glossary of Technical Terms

"Ag"	chemical symbol for silver
"Au"	chemical symbol for gold
"AuEq"	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
"Cu"	the chemical symbol for copper
"Cut-off-grade"	the lowest grade value that is included in a Resource or Reserves 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 each 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
"Indicated Mineral 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 Mineral Resource'	A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. A 'Measured Mineral Resource' is that part of a Mineral Resource for which quantity, grade (or quality), densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit
"Mineral Resource"	concentration or occurrence of solid material of economic interest in or on the Earth's crust in such form, grade (or quality), and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade (or quality), continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories
"Mt"	million tonnes
"Ore Reserves"	represents the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at Pre-Feasibility or Feasibility level as appropriate that include application of Modifying Factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified
"oz"	troy ounce (= 31.103477 grammes)
"Pb"	the chemical symbol for lead
"Probable Ore   Reserve"	represents the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Ore Reserve is lower than that applying to a Proved Ore Reserve
"Proved Ore Reserve"	represents the highest confidence category of reserve estimate and implies a high degree of confidence in geological and grade continuity, and the consideration of the Modifying Factors
"t"	tonne (= 1 million grammes)
"Zn"	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 part-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.

JORC CODE, 2012 EDITION - TABLE 1 REPORT

Section 4 Estimation and Reporting of Ore Reserves

Criteria	JORC Code explanation	Commentary
Mineral Resource estimate for conversion to Ore Reserves	·        Description of the Mineral Resource estimate used as a basis for the conversion to an Ore Reserve. ·        Clear statement as to whether the Mineral Resources are reported additional to, or inclusive of, the Ore Reserves.	·        The Mineral Resource Estimate was produced by Mr Dimitar Dimitrov, Senior VP Exploration of Chaarat, with an effective date of 1 September 2022 as described in Section 3. ·        The Mineral Resources are reported inclusive of the Ore Reserves.
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.	·        A site visit, of four days, was undertaken by the Ore Reserves Competent Person (CP), Mr James Town of AMC Consultants (UK) Limited, in July 2019. ·        No recent site visits have been undertaken due to security-related travel restrictions.
Study status	·        The type and level of study undertaken to enable Mineral Resources to be converted to Ore Reserves. ·        The Code requires that a study to at least Pre-Feasibility Study level has been undertaken to convert Mineral Resources to Ore Reserves. Such studies will have been carried out and will have determined a mine plan that is technically achievable and economically viable, and that material Modifying Factors have been considered.	·        Kapan Mine has been operating since 1994 and at full production for more than 15 years. Information gathered during the production period has been used to update and inform the current Ore Reserve. Production, sales, and other data from the previous five years were used as a basis for assessing the ore reserve calculation. ·        The Ore Reserve is based on the life-of-mine design generated by the Mine Technical Services Department (effective date of 1 January 2023), which has been reviewed by AMC. ·        AMC produced a schedule and cost model based on the data provided by Chaarat.
Cut-off parameters	·        The basis of the cut-off grade(s) or quality parameters applied.	·        Cut-off grades are calculated using a gold equivalent (AuEq) calculation using the revenue contributions of the four payable metals Au, Ag, Cu, and Zn. ·        The AuEq calculation includes all site operating costs associated with the mine, process plant, and G&A along with royalties, transport and concentrate treatment, and refining charges and penalties. ·        Mining areas are considered for inclusion in the Ore Reserve if the diluted AuEq is greater than, or equal to, 2.3 g/t AuEq.
Mining factors or assumptions	·        The method and assumptions used as reported in the Pre-Feasibility or Feasibility Study to convert the Mineral Resource to an Ore Reserve (i.e. either by application of appropriate factors by optimisation or by preliminary or detailed design). ·        The choice, nature and appropriateness of the selected mining method(s) and other mining parameters including associated design issues such as pre-strip, access, etc. ·        The assumptions made regarding geotechnical parameters (eg pit slopes, stope sizes, etc), grade control and pre-production drilling. ·        The major assumptions made and Mineral Resource model used for pit and stope optimisation (if appropriate). ·        The mining dilution factors used. ·        The mining recovery factors used. ·        Any minimum mining widths used. ·        The manner in which Inferred Mineral Resources are utilised in mining studies and the sensitivity of the outcome to their inclusion. ·        The infrastructure requirements of the selected mining methods.	·        Ore Reserves are based on an operating mine design generated by the on-site technical staff, which has been reviewed by AMC. ·        The mining method used is long-hole open-stoping, which is an appropriate method for the narrow-vein deposit. The mining method has been refined with operational experience. ·        Grade control consists of pre-development diamond drilling at approximately 20 m spacing followed by mapping and face channel sampling at approximately 4 m spacing during vein drive development. All samples are processed at the on-site laboratory with 5% control samples sent to external international laboratories. ·        SRK completed a geotechnical study in 2013, from which site geotechnical personnel have developed procedures with operational experience. All development headings and stopes are assessed before and during development by the Geotechnical Engineer and have geotechnical specifications detailing support requirements. ·        Individual stopes have a maximum length of 80 m and maximum height of 18 m, with a maximum of three stopes forming a panel between a crown pillar, with surface and sill pillars between levels. ·        A minimum mining width of 2.2 m has been applied to the Ore Reserve using Mineable Shape Optimizer™ (MSO). ·        Current mining areas are accessed via portals located at the south of the deposit and multiple declines located across the deposit. ·        Dilution is accounted for in the Ore Reserve on a vein-by-vein basis, based on geometry and historic production statistics. The average dilution factors in the Ore Reserve are: ―  Primary mining dilution (minimum mining width): 54%. ― Secondary mining dilution (unplanned in stope): 9%. ·        Mining losses are estimated to be 2% of the Ore Reserve. ·        Inferred and Unclassified Mineral Resources were treated as waste dilution.
Metallurgical factors or assumptions	·        The metallurgical process proposed and the appropriateness of that process to the style of mineralisation. ·        Whether the metallurgical process is well-tested technology or novel in nature. ·        The nature, amount and representativeness of metallurgical test work undertaken, the nature of the metallurgical domaining applied and the corresponding metallurgical recovery factors applied. ·        Any assumptions or allowances made for deleterious elements. ·        The existence of any bulk sample or pilot scale test work and the degree to which such samples are considered representative of the orebody as a whole. ·        For minerals that are defined by a specification, has the ore reserve estimation been based on the appropriate mineralogy to meet the specifications?	·        Gold and zinc concentrates are produced through conventional crushing, grinding, flotation, thickening, and filtration. ·        The process is well-tested and has been in operation at Kapan for more than 15 years. ·        The process plant has two primary jaw crushers capable of crushing 2 Mtpa. The grinding and flotation circuits have a maximum capacity of approximately 900 ktpa. ·        Metallurgical recoveries are based on historical plant performance data. ·        The Ore Reserve is based on the Mineral Resource Estimate which includes individual estimation parameters for the payable metals Au, Ag, Cu, and Zn; and as such, is appropriate to the mineralogy being processed. ·        Operational metallurgical testwork is carried out daily at the plant metallurgical test laboratory. ·        Deleterious elements Pb and S are also modelled in the Mineral resource model; however, with the current mining locations and for the remainder of the mine plan, the grades are not high enough to warrant corrective measures in the process plant.
Environmental	·        The status of studies of potential environmental impacts of the mining and processing operation. Details of waste rock characterisation and the consideration of potential sites, status of design options considered and, where applicable, the status of approvals for process residue storage and waste dumps should be reported.	·        Chaarat possesses the required permits and planning permissions to effectively operate the Kapan Mine, in accordance with Armenian environmental regulations. ·        To the best of the CP's knowledge, all sites for waste rock and process tailings and their design and construction have complied with all environmental regulations, permits, and recommendations.
Infrastructure	·        The existence of appropriate infrastructure: availability of land for plant development, power, water, transportation (particularly for bulk commodities), labour, accommodation; or the ease with which the infrastructure can be provided, or accessed.	·        All infrastructure required for the processing and mining of ore is in place and has been in place since exploration of the deposit in Soviet times (1980s). The mine is located adjacent to the town of Kapan on the main trunk-road connecting southern Armenia to the capital city, Yerevan.
Costs	·        The derivation of, or assumptions made, regarding projected capital costs in the study. ·        The methodology used to estimate operating costs. ·        Allowances made for the content of deleterious elements. ·        The source of exchange rates used in the study. ·        Derivation of transportation charges. ·        The basis for forecasting or source of treatment and refining charges, penalties for failure to meet specification, etc. ·        The allowances made for royalties payable, both Government and private.	·        Operating costs are based on site operating costs. AMC has reviewed historical cost reports including copies of major contractor invoices.  ·        Treatment and refining costs are based on current concentrate sales terms. AMC has reviewed historical gold and zinc concentrate sales invoices to confirm the inputs used in the calculations. ·        Penalty elements are accounted for in the concentrate treatment charges. ·        Government royalties are included at 6% of NSR.
Revenue factors	·        The derivation of, or assumptions made regarding revenue factors including head grade, metal or commodity price(s) exchange rates, transportation and treatment charges, penalties, net smelter returns, etc. ·        The derivation of assumptions made of metal or commodity price(s), for the principal metals, minerals and co-products.	·        Head grades are based on the block model generated by Chaarat in September 2022. ·        Revenue has been based on metal prices of USD1,850/oz Au, USD21.8/oz Ag, USD8,500/t Cu and USD3,000/t Zn applied to the concentrate sales terms. These figures are representative of economic forecasts for the period. ·        Transportation, treatment charges and penalties for both gold and zinc concentrates are accounted for in the AuEq cut-off grade calculation.
Market assessment	·        The demand, supply and stock situation for the particular commodity, consumption trends and factors likely to affect supply and demand into the future. ·        A customer and competitor analysis along with the identification of likely market windows for the product. ·        Price and volume forecasts and the basis for these forecasts. ·        For industrial minerals the customer specification, testing and acceptance requirements prior to a supply contract.	·        Chaarat has agreements with long-term established customers for concentrate sales. ·        Gold concentrate is sold to Industrial Minerals in Montreal, Canada. Gold concentrate is bagged on-site, loaded into containers and transported by road to Poti, Georgia. From Poti, the containers are sea-freighted to Montreal, Canada. ·        Zinc concentrate is sold to Trafigura in Antwerp, Belgium. Zinc concentrate is bagged on-site, loaded into containers and transported by road to Poti, Georgia. From Poti, the containers are sea-freighted to Antwerp.
Economic	·        The inputs to the economic analysis to produce the net present value (NPV) in the study, the source and confidence of these economic inputs including estimated inflation, discount rate, etc. ·        NPV ranges and sensitivity to variations in the significant assumptions and inputs.	•    No separate NPVs have been generated as part of the Ore Reserves determination; however, all material contained within the reserve is deemed to generate positive cashflow based on the economic input parameters. •    A life of mine plan (LOMP) has been generated from the December 2021 mine design. Analysis of the LOMP physicals within the current Chaarat financial model has been shown to yield a net positive cashflow and NPV.
Social	·        The status of agreements with key stakeholders and matters leading to social licence to operate.	·        To the best of the CP's knowledge, all agreements with the local authorities are in place and are current with all key stakeholders.
Other	·        To the extent relevant, the impact of the following on the project and/or on the estimation and classification of the Ore Reserves: ·        Any identified material naturally occurring risks. ·        The status of material legal agreements and marketing arrangements. ·        The status of governmental agreements and approvals critical to the viability of the project, such as mineral tenement status, and government and statutory approvals. There must be reasonable grounds to expect that all necessary Government approvals will be received within the timeframes anticipated in the Pre-Feasibility or Feasibility study. Highlight and discuss the materiality of any unresolved matter that is dependent on a third party on which extraction of the reserve is contingent.	·        To the best of the CP's knowledge, Chaarat is currently compliant with all legal and regulatory requirements and there is no reason to assume any further government or local council permits, licences, or statutory approvals will not be granted, if required.
Classification	·        The basis for the classification of the Ore Reserves into varying confidence categories. ·        Whether the result appropriately reflects the Competent Person's view of the deposit. ·        The proportion of Probable Ore Reserves that have been derived from Measured Mineral Resources (if any).	·        The Ore Reserves have been broken down into Proved and Probable categories as per JORC Code (2012) guidelines.  ·        It is the CP's opinion that the Ore Reserves reflect the deposit accurately given the current level of geological and geotechnical knowledge. ·        No Probable Ore Reserves have been derived from Measured Mineral Resources. ·        Inferred resources have not been included in the Ore Reserve.
Audits or reviews	·        The results of any audits or reviews of Ore Reserve estimates.	·        The Competent Person completed a "best practices" review of the mine planning as part of the Ore Reserves. ·        The Ore Reserve has been peer-reviewed internally and is in line with current industry standards.
Discussion of relative accuracy/ confidence	·        Where appropriate a statement of the relative accuracy and confidence level in the Ore Reserve 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 reserve within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors which 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. ·        Accuracy and confidence discussions should extend to specific discussions of any applied Modifying Factors that may have a material impact on Ore Reserve viability, or for which there are remaining areas of uncertainty at the current study stage. ·        It is recognised that this may not be possible or appropriate in all circumstances. These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.	•    Kapan Mine is in production and has more than 15 years of historic process production data and costs. •    The deposit is well-understood by the on-site technical team which consists of locals with long-term experience of the deposit. •    Owner and contractor costs are based on current actual costs. •    All modifying factors have been applied to the Ore Reserves with updated dilution parameters for each individual vein based on widths and geotechnical assessments. •    Work is ongoing on-site to reconcile and better-account for unplanned mining dilution. •    Geological mapping and survey of vein drives is supporting the validity of the resource model to a level of confidence consistent with Ore Reserve reporting. •    Historical mine-to-mill reconciliation on an annual and quarterly basis supports the validity of the resource model to a level of confidence consistent with Ore Reserve reporting. •    Current AuEq cut-off grade practice at the mine might have an impact on mining areas where grade variations in different metals are encountered. AMC recommends development of a net smelter return (NSR) based valuation and cut-off grade calculation for use in future Ore Reserves.

 

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