Tulkubash Resource Update

RNS Number : 4006D

Chaarat Gold Holdings Ltd

31 January 2018

 

Chaarat Gold Holdings Limited

("Chaarat" or the "Company")

TULKUBASH RESOURCE UPDATE

Road Town, Tortola, British Virgin Islands (31 January 2018)

Chaarat (AIM: CGH), the AIM quoted company developing the Chaarat Gold Project in the Kyrgyz Republic, announces a resource update at Tulkubash reported in compliance with JORC, following the successful 2017 drill programme.

Overview

·     The new management team has implemented a more appropriate reporting system compared to previous resource statements, including changes to the model to better reflect the proposed open pit mining method, which has resulted in a re-assessment of the 2016 resource estimate

·     The updated Tulkubash oxide resource, at a cut-off grade of 0.3 g/t, constrained and diluted within a US$1,500/oz open pit shell, identifies:

o  A combined Measured and Indicated resource of 35,244,000 tonnes at 0.86 g/t, containing 971,000 ounces of gold, a 42% increase when compared to the 2016 resource statement when re-stated so as to be consistent with this resource update

o  An Inferred resource of 3,782,000 tonnes at 0.68 g/t, containing 83,000 ounces of gold

·     Demonstrates the continuity of the ore body along strike, supporting the Company's business plan to further increase the oxide resource base through along strike exploration

·     Identified additional near surface mineralised zones parallel to the main Tulkubash zone, which are likely to have a beneficial impact on the ultimate stripping ratio

·     The new management team has implemented a more appropriate reporting system compared to previous resource statements, including changes to the model to better reflect the proposed open pit mining method

·     Capital is already in place for Chaarat to carry out an extensive drilling program this year, which aims to further identify the full potential of the Tulkubash oxide resource

·     Chaarat is continuing to work on a feasibility study for Tulkubash, which is expected to be completed in March 2018

·     Resources for the Kyzyltash Main and Contact Zones re-stated to a combined total of 46,127,000 tonnes at 3.75 g/t, containing 5,377,000 ounces of gold at a cut-off grade of 2.0g/t.  This cut-off grade is suitable for underground mining

Robert Benbow, CEO of Chaarat, commented: 

"This robust resource update, which significantly increases the tonnes and gold of the oxide resource, underpins our strategic plan to unlock value for our stakeholders, as well as highlighting the success of the 2017 drilling programme.  These results demonstrate that we are on track with our strategy to develop the Chaarat deposit in stages: initially targeting the Tulkubash oxides; followed by the very substantial higher-grade refractory Kyzyltash resource within our mine license area.

"Chaarat's new management team, which has significant experience in bringing mines into production, has made a number of changes to the reporting basis of this resource to ensure that it reflects the new information made available from the work on the feasibility study and the Company's proposed mining and processing methods in line with the updated strategy.  To this end the Company has re-assessed the 2016 resource estimate to ensure that all data lies within our new reporting basis, giving us a better understanding of the resource.

"Whilst we remain focused on the first stage of production, our exploration team is already planning the 2018 drilling programme, targeting the along strike continuity of the Tulkubash resources.  Our better understanding of the geometry of the ore bodies obtained as part of our resource update has further added to our confidence that the oxide resource can be significantly extended along strike.  I look forward to updating the market on this, and our feasibility study, in due course."

Enquiries:  

Chaarat Gold Holdings Limited	+ 44 20 7499 2612
c/o Central Asia Services Limited	[e-mail]
Robert Benbow, CEO
Pete Gardner, CFO
Numis Securities Limited	[phone]
John Prior, Paul Gillam (NOMAD)
James Black (Broker)
Blytheweigh (Financial PR)	[phone]
Tim Blythe
Camilla Horsfall

Summary of Updated Resources as at 31 January 2018

Tulkubash open pit heap leach COG 0.3 g/t Au	Tonnes (kt)	Au grade (g/t)	Content (koz)
Measured	22,915	0.88	647
Indicated	12,329	0.82	324
Measured & Indicated	35,244	0.86	971
Inferred	3,782	0.68	83
Total	39,026	0.84	1,054

1.     Chaarat has used a cut-off grade of 0.3g/t on the basis of the likely economic cut-off for open pit mining and heap leach processing

2.     Quantity and grade are estimates and are rounded to reflect the fact that the resource estimate is an approximation

3.     Mineral resources are not ore reserves and do not have demonstrated economic viability.  There is no certainty that all or any part of the mineral resource will be converted to reserves

4.     Inferred mineral resources have a high degree of uncertainty and have not been drilled enough to warrant their categorisation as Measured or Indicated mineral resources. There is no guarantee that any portion of the Inferred Resources will be upgraded to Indicated or Measured resources.

5.     Quantities may not add or multiply due to rounding

6.     The resource estimate is suitable for mining selectivity typical for an open pit mining environment

The Chaarat Project also includes the Kyzyltash zone, with a high grade Joint Ore Reserves Committee ("JORC") compliant mineral resource of 5.4 million ounces (46.1 Mt at 3.75 g/t) at a cut-off grade of 2.0g/t.  This cut-off grade is suitable for mining via underground methods.

JORC Reporting

Chaarat adopts the JORC Standards of reporting to ensure it is reporting to a known industry standard and to provide consistency in its reporting of mineral resources and ore reserves.  The Company strives to keep up with trends in reporting and changes in reporting guidelines and regulations and believes its stakeholders should be able to rely on reports on mineral resources and ore reserves being consistent with industry and worldwide standards.

The mineral resources reported in this release conform with the JORC requirement of "reasonable prospects for eventual economic extraction".  This has been accomplished by optimising all open pitable mineral resources in an open pit shell at a gold price of $1,500 per ounce and by using block sizes appropriate to the mining method being contemplated in the feasibility study.  Preliminary operating costs developed in the feasibility study work currently underway have been used in the open pit optimisation.  While not fully finalised, this data is currently the best available to the Company.

Mineral resources suitable for underground extraction have been constrained by an appropriate cut-off grade for underground mining.  Operating costs for underground mining and sulphide ore processing suitable for the Kyzyltash zone are from the NERIN Feasibility Study published in 2016.  This data represents the best currently available data to the Company for use in mineral resource reporting for underground mineable mineral resources.

Dilution is a result of mixing mineralised material with low grade or waste material.  The amount of dilution is dependent on the mining methods, geometry of the mineralisation and type of mining equipment used.  Mineral resources reported in this release are diluted for the appropriate mining methods (open pit or underground) and geometry of the mineralisation.  Dilution due to mining equipment selection is further considered in ore reserve calculations, which includes the selection of appropriate mining equipment.

Impact of 2017 Drilling Program

The resource update reflects the success of Chaarat's 2017 drilling programme as it has not only further established the continuation of the high-grade core at Tulkubash but it has also identified additional, low grade mineralisation within the proposed open pit, which could ultimately reduce the stripping ratio.

The following table provides a like for like comparison (diluted and constrained) between mineral resources reported in 2016 (as re-estimated) and mineral resources reported in 2018 for the Tulkubash zone:

Tulkubash Mineral Resource, Diluted and Constrained, at 0.3g/t Cut-Off Grade
	2016 (re-calculated)			2018			Increase in Resources
	Tonnes	Au grade	Gold	Tonnes	Au grade	Gold	Tonnes	Au grade	Gold
	(kt)	(g/t)	(koz)	(kt)	(g/t)	(koz)	(kt)	(g/t)	(koz)
Measured	18,435	0.83	489	22,915	0.88	647	4,480	1.10	158
Indicated	7,995	0.76	195	12,329	0.82	324	4,334	0.93	129
Total M&I	26,430	0.81	684	35,244	0.86	971	8,814	1.01	287
Inferred	2,340	0.67	50	3,782	0.68	83	1,442	0.71	33
Total MI&I	28,770	0.79	735	39,026	0.84	1,054	10,256	0.97	319

1.     The original 2016 resource update for Tulkubash was based on a block model developed for the November 2014 resource update with the following key attributes:

a.     All mineralisation constrained within a 0.3g/t wireframe

b.     Drill hole data composited to 1.5m intervals

c.     Gold grades in Tulkubash estimated via Indicator Modified Ordinary Kriging

d.     Block model constructed from sub-cells with a minimum size of 2m x 2m x 2m with a parent block size of 10m x 10m x 10m. 

e.     Grades were estimated into sub-cells.  The reported resource was based on the undiluted sub-celled grades assuming that it would be mined by selective underground mining methods

2.     The 2016 resource as originally reported represented an in-situ resource above a 0.5g/t cut-off grade and was not constrained within a conceptual open pit shell

3.     The re-calculated 2016 resource has been prepared using all data available up to November 2014 on the same basis as the 2018 resource update with the following key attributes:

a.     Wireframes prepared on the basis of a 0.25g/t grade boundary

b.     Drill hole data composited to 3m intervals

c.     Gold grades in Tulkubash estimated via Ordinary Kriging

d.     Block model constructed with a parent block size of 10m x 10m x 5m, with sub-celling to the geological boundaries to increase the resolution of the contacts in the block model

e.     Grades reported on the basis of the diluted parent blocks suitable for mining in an open pit environment

4.     The re-calculated 2016 resource has been constrained within a US$1,500/oz pit shell on the same basis as the 2018 resource update and reported above a 0.3g/t cut-off grade

The 2017 drilling has resulted in 43% more contained gold within Tulkubash within an additional 36% more tonnes at a 25% higher grade than the original 2016 resource when reported on a like for like basis.  The majority of this increase is within the measured and indicated resource, suitable for conversion to a reserve.  Inferred resources remain a small amount of the total resource at Tulkubash.

Geology of the Tulkubash Zone

Gold mineralisation occurs within the Tulkubash Formation, a thickly bedded massive quartzite.  The gold occurs in quartzite breccias, quartz stockwork zones, and intensely silicified quartz flooded zones that form multiple parallel lodes that trend northeast and dip 60 to 80 degrees to the northwest.  The individual gold-bearing lodes combine to form a mineralized zone that varies from 110 to 250 metres wide that has been developed over a strike length of 2,160 metres.  Mineralisation is open to the northeast along strike and down dip below the limits of the current drilling (±150 metres).  The gold is very fine grained and is associated with minor pyrite and stibnite.  The Tulkubash Zone is strongly oxidised and contains free milling ore.

Kyzyltash Resources

Following the update to the 2016 resource for Tulkubash, the Kyzyltash resources have also been restated at a cut-off grade of 2.0 g/t.  This is based on a block model which had been prepared on a basis suitable for selective mining in an underground environment.

Underground COG 2.0 g/t Au	Tonnes (kt)	Au grade (g/t)	Content (koz)
Measured	6,722	3.26	681
Indicated	32,794	3.79	3,864
Measured & Indicated	39,516	3.70	4,545
Inferred	6,611	4.05	832
Total	46,127	3.75	5,377

1.     The Kyzyltash resource is based on the block model originally developed for the November 2014 resource update

2.     Resources have been stated on the basis of underground mining as this reflects the selectivity of mining consistent with the estimation parameters

3.     The potentially open pitable resources at Kyzyltash, previously announced in 2016, have not been re-estimated to understand the impact of dilution - all resources have been included within the underground mineable resource table

4.     A new block model would be required prior to reporting resources at Kyzyltash suitable for open pit mining

5.     The underground resources at Kyzyltash have been reported at a cut-off grade of 2.0g/t.  The previously reported underground mineable resources in 2016 were reported at a cut-off grade of 1.8g/t.

About Chaarat Gold

Chaarat Gold is an exploration and development company operating in the Kyrgyz Republic with a large, high grade resource - the Chaarat Gold Project.  The Company's key objective is to become a low-cost gold producer.

Chaarat aims to create value for its shareholders, employees and communities in the Kyrgyz Republic 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

The Competent Person with overall responsibility for this press release, and who has reviewed the information contained herein, is Mario Rossi (Fellow AusIMM, Member CIM, Member SME).  Mr Rossi is Principal Geostatistician of GeoSystems International, Inc. and has more than 25 years' experience in mining and environmental geostatistics, mineral resource and reserves estimation, audits, and reviews, and continued simulation studies of different scales and purposes.  He has worked in over 100 different mining projects at various stages of development and operations around the world.  Mr Rossi consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.

Glossary of Technical Terms

"Au"	chemical symbol for gold
"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"	troy ounce (= 31.103477 grammes)
"Reserve"	the economically mineable part of a Measured and/or Indicated Mineral Resource
"t"	tonne (= 1 million grammes)

TULKUBASH RESOURCE ESTIMATE

CHAARAT GOLD HOLDINGS

JORC Code, 2012 Edition - Table 1

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. 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.	·      Samples for geological logging, assay, geotechnical, metallurgical, and density test work are collected via a combination of HQ Diamond Drill Holes, underground adit sampling, trench channel sampling, and chips from exploration road cuts. ·      Drilling for collection of samples for assay is conducted on an East-West (rotated 42° degrees East) grid at 40 m × 40 m collar spacing. All intervals in bedrock are sampled. ·      Dry bulk density is measured using a paraffin-coated immersion method. ·      The presence of mineralisation is determined by a combination of geological logging (core observations) and assay results.
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).	·      Drilling is diamond core, predominantly HQ in diameter, down to NQ at depth; occasional use of triple-tube when required to improve recoveries. ·      The majority of drilling is inclined attempting to cut the mineralized structures at a closest to a normal angle to the strike orientation as possible. ·      Drilling from underground stations is orientated normal to the strike of the structure.
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.	·      Diamond core recovery is maximised via the use of triple-tube sampling and additive drilling muds. ·      Nominal down-the-hole sample length is 1.5m ·      Diamond core recovery is recorded as a percentage of total length drilled, estimated directly from core box observations. ·      Also rock quality designation (RQD) measurements are taken. ·      Overall recovery from diamond drill core showed acceptable levels of recovery (>90%) for all holes. ·      Sample recovery in some friable mineralisation may be reduced; however it is unlikely to have a material impact on the reported assays for these intervals. ·      Analysis of duplicate samples performance does not indicate any chemical bias as a result of inequalities in samples weights/core recovery.
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.	·      All drill samples are geologically described utilising logging codes. ·      Geological logging is performed on nominal 1.5 m intervals. ·      When required, logging is done on shorter intervals, as well as across the mineralized zone's boundaries. ·      All core to date has been photographed, logged, and stored in the database.
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.	·      Sample intervals are designated and marked by project geologists prior to sampling. Samples are typically 1.5 meter intervals, but can vary to log structural, alteration, or lithological contacts. ·      Core samples are split using a diamond saw, with highly fractured intervals being split manually. One half of the core is selected and bagged for assay. ·      Samples are packaged in individually labelled polyethylene bags, top rolled and stapled, weighed, and packaged with 5- 6 samples per rice sack. ·      Individual rice sacks are tied with wire, labelled, and set aside for pickup by Chaarat Logistics for transport to IRC Laboratories (IRC) in Kara Balta for sample preparation. ·     The second half of the core is retained in numbered and labelled wooden core boxes for future reference and possible check analysis. These core boxes are stored in a Chaarat storage facility in Bishkek. ·     Sample intervals are designated and marked by project geologists prior to cutting. ·     At IRC's sample preparation facility, samples are dried, crushed in a laboratory jaw crusher to 100% passing 2 mm mesh (10 mesh) and two 120 to 150 g manual splits are taken. ·     These subsamples are pulverized to minus 0.075 mm (200 mesh) in a ring and puck pulveriser and stored in numbered paper packets. One packet is sent to the IRC assay lab where a 2 g split is assayed for gold by Aqua regia digestion with AA finish. ·     Assay values from IRC are reported electronically to Chaarat. The second packet, along with coarse reject material, is shipped to Chaarat's core and sample storage facility in Bishkek. ·     For those samples over 0.3 gpt Au from IRC, the sample packets are transported to Stewart Assay and Environmental Laboratory (Stewart), also in Kara Balta. Stewart logs the samples into the LIMS system, re-labels the sample packets with ALS barcoded labels, and assays for gold by 30 g charge Fire Assay, Aqua regia digestion, and AA finish, and reported electronically to Chaarat. ·      Starting in 2017, the core samples were sent directly to Stewart.  The entire sample is crushed to 90% passing 2mm.  Two pulps are made by pulverizing to 85% passing 0.075mm. One pulp is returned to the Chaarat Bishkek core yard.  The second was analysed by fire assay per the procedure above. ·     The Competent Person with responsibility for this resource estimate visited the IRC sample prep facility, as well as both the IRC and Stewart laboratories. ·     Selected pulps were submitted for referee assay by SGS (Chita, Russia). Review of duplicate samples shows good agreement between different assay labs.
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.	·      Five assay labs have been used during the life of the project. Labs currently used are the Information Research Centre (IRC) in Kara Balta, a Kyrgyz Lab which is ISO 9001:2008 certified by Bureau Veritas; Stewart Assay and Environmental Laboratories (Stewart) in Kara Balta, a subsidiary of ALS, which is also ISO 9001:2008 certified; and Genalysis Laboratory Services Pty Ltd (Genalysis) of Perth, Western Australia, a subsidiary of Intertek, which is ISO/IEC 17025 Certified by NATA. A fourth lab, not used since 2007, was Central Scientific Research Laboratory (CSRL) in Kara Balta. And in this 2017 season, a fifth laboratory was used as a check laboratory, SGS in Chita, Russia which is ISO/IEC 17025 Certified. ·     Samples are dried, crushed in a laboratory jaw crusher to 100% passing 2 mm mesh (10 mesh) and two 120 to 150 g manual splits are taken. These subsamples are pulverized to minus 0.075 mm (200 mesh) in a ring and puck pulveriser and stored in numbered paper packets. One packet is sent to the IRC assay lab where a 2 g split is assayed for gold by Aqua regia digestion with AA finish. ·     Assay values from IRC are reported electronically to Chaarat. For those samples over 0.3 gpt Au from IRC, the sample packets are transported to Stewart Assay and Environmental Laboratory (Stewart), also in Kara Balta. Stewart logs the samples into the LIMS system, re-labels the sample packets with ALS barcoded labels, and assays for gold by 30 g charge Fire Assay, Aqua regia digestion, and AA finish. ALS Stewart assay values are reported electronically to Chaarat. ·     The Competent Person with responsibility for this resource estimate visited the IRC sample prep facility, as well as both the IRC and Stewart laboratories. ·     Previously, mineralized intervals were selected by Chaarat personnel and pulps transported to Genalysis for referee analysis. At the end of the 2017 drilling campaign, SGS (Chita, Russia) was used as a further check laboratory.
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.	·      No twinned drilling has been conducted at Tulkubash. ·      There is a quality assurance-quality control process in place that has to be followed prior to accepting a batch of assay results from the laboratory. ·      Significant intercepts are routinely re-assayed to confirm higher grade intercepts. ·      Sample blanks are inserted into the sample stream at site at a rate of 1 blank per 18 samples. Blank material is un-mineralized limestone. However, it is preferable that blanks have the same matrix as the regular mineralised samples. ·      Standards are inserted into the sample stream upon transport from IRC to Stewart at a rate of 1 standard per 18 samples. Pulps used by Chaarat are commercially certified reference material from Geostats Pty Ltd, Malcolm Smith Reference Materials, and Rocklabs. ·      Review of the available blanks, duplicates, and standards data for the entire Chaarat project reveals very good results. ·      Inter-laboratory duplicate samples show excellent agreement between different assay labs. ·      The laboratories send the information back to Chaarat Gold electronically, which is stored in secured Excel spreadsheets.
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.	·      Project surveys use the Pulkovo 1942 datum, and a Gauss Krueger projection, which is standard for Kyrgyzstan for consistency with government geologic and infrastructure databases. ·      All surface drill holes have been surveyed by total station. Underground drill collars have likewise been surveyed by total station. Collar locations are assumed to be accurate to within centimetres. ·      All of the surface drill holes and underground drill holes have downhole surveys, typically taken at 15 meters and then every 50 meters using Reflex EzShot electronic single-shot downhole survey equipment. Equipment is serviced and factory set for declination annually. ·      The resource area has been resurveyed by total station along roads, ridges, valleys, and additional traverses and the resulting surface elevation points have been contoured. Surface elevations from the resulting topographic surface correspond well to surveyed drill collar, trench sample, and drill road locations and are assumed to be accurate to within less than 5 meters.
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.	·      Drill spacing is typically 30-40 meter spacing, but can vary depending on road construction and access. ·      Not all the data available is used in Resource estimation. Only assays from surface core drillhole data; trenched; and underground drilling are used to estimate resources. ·      Drill sampling is typically done on 1.5 m intervals, except where interval length is adjusted to accommodate changes in lithology, alteration, or mineralization. ·      The drill spacing is deemed appropriate by the Competent Person to estimate resources to the level of confidence provided by Mineral Resource classification applied. ·     The mineralised domains (structures) at Tulkubash have demonstrated sufficient continuity in both geology and grade to support the definition of Mineral Resources and the classifications applied under the 2012 JORC Code guidelines.
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.	·      Drill lines are oriented East-West on a 42°rotated grid to the East, and perpendicular to the deposit strike. ·     Drilling is predominantly inclined at multiple angles, including underground drill stations. ·     Considering the multiple orientations of drill holes at Tulkubash, there is no sampling bias due to drilling orientation.
Sample security	The measures taken to ensure sample security.	·      Samples are bagged in labelled polyethylene bags on site and consolidated in rice sacks for transport. Samples are transported by Chaarat personnel directly to the prep lab in Kara Balta. Core boxes are collected on site by Chaarat personnel and transported to a core storage facility in Bishkek. ·      Samples are transported between IRC and Stewart labs by laboratory personnel. Samples are picked up from IRC and/or ALS Stewart for transport to Bishkek by Chaarat Personnel. A Sample Dispatch Form listing the samples and sample weight is signed by the Chaarat driver on receiving the samples and by the driver and the Stewart representative on the transfer of the samples to the lab. A copy of the Sample Dispatch Form is then signed by the Chaarat driver at the pickup at the assay lab and the samples are signed in to the Bishkek core and sample storage facility.
Audits or reviews	The results of any audits or reviews of sampling techniques and data.	·      No external audits have been performed. ·      Resource estimation work and report developed by an independent third party. ·     Internal Chaarat Gold peer review processes have been completed. These reviews concluded that the fundamental data collection, geological modelling, and grade estimation are appropriate.

Section 2 Reporting of Exploration Results

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.	·      Chaarat Zaav (the Kyrgyzstan subsidiary of Chaarat) received its initial exploration license (No. Au-174-02) for the property on 10th December 2002. The current exploration license number 3319 AP was issued on 7th October 2013 and is valid through 7th October 2023. The Chaarat Project consists of the 10 kilometres of strike length in the centre of the 15,425 hectare license area. ·      An additional developmental license number 3117AE was issued 22nd January 2014 covering the core 700 hectares of the Chaarat Project. This license is valid through 25th June 2032. ·      The Competent Person (CP) for this report relies on the client's assertion that all relevant permits, tax payments, and filings are current and correct.
Exploration done by other parties	Acknowledgment and appraisal of exploration by other parties.	·      Initial exploration work conducted at the Project was carried out during the 1970s under the Soviet regime. The initial work involved construction of three exploration adits (two of which remain open). The primary mineral target at the time was antimony and there was no sampling carried out for precious metals as part of this exploration program. ·      The first modern exploration was carried out in the 1990s by a joint venture between Apex Asia and Newmont. This program included 7 drill holes, 5634 surface trench samples, and geophysical surveys. The results of this work are included in the current project database. ·      Chaarat acquired the project in 2002 and began exploration work in 2004. Chaarat exploration has included the construction of Adit 4 in the Contact zone, surface and underground drilling, and surface and underground sampling. ·      All work since 2002 has been carried out by Chaarat and its contractors.
Geology	Deposit type, geological setting and style of mineralisation.	·      There are three main mineralised zones: Contact, Main, and Tulkubash; these zones present different geologic characteristics, but share the overall continuity of the mineralized zones. ·      The current Resource Estimate and Report refer only to Tulkubash. ·      Tulkubash is a mineralised shear zone that is continuous along strike; all mineralized zones share in having similar geometries, strikes, and dips; and are traceable for more than a kilometre with diamond drill holes. They have been traced for several kilometres along strike through mapping and trenching. ·      Tulkubash is lower grade, generally free-milling mineralisation and wider in general, compared to the other zones within Chaarat; some cross-cutting high grade stibnite veins have been observed, which are sub-parallel to the section lines. ·     There are clear visual clues to detect the mineralised shear zone, such as quartz-carbonate veining, shearing, and veining.
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: easting and northing of the drill hole collar elevation or RL (Reduced Level - elevation above sea level in metres) of the drill hole collar dip and azimuth of the hole down hole length and interception depth 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.	·      All drilling data has been used for geological interpretation and Mineral Resource estimation. ·      The following is the summary of the database for Chaarat, and includes Tulkubash: Zone Surface Drillholes Total Length No of samples Underground Drillholes Total Length No of Samples Tulkubash 427 56928.94 37029 11 1091.70 324
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.	·      The Tulkubash assay database was prepared in MineSight using the desurveying process which assigns to each drill hole interval with Au grades a X/Y/Z coordinate. The assay database was coded with the geologic information and the interpreted mineralized zones. ·      Sampling procedures at Tulkubash are such that most of the samples are 1.5m long, although there are exceptions to this. Three-meter composites were obtained to maintain or achieve mostly uniform support; to introduce some down the hole dilution to better reflect the grade mixing expected at the time of mining; and to reduce the variability of gold grades in the samples. ·     Spatial restrictions for outlier Au grades were used during the estimation of the Tulkubash resources. The definition of "outlier Au grades" changed according to the grade estimation domain defined.
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').	·      Drill holes, surface trenches, and underground sampling channels intersect mineralized zones at a number of different angles, ranging from perpendicular to oblique to the mineralization. ·     Since the work is performed in cross sections, and also because of the large amount of drill data, it is not expected that the drill hole orientations have a material impact on the estimation of grade.
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.	·      See main body and other appendices of the Report
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.	·      Not applicable in the context of a Resource Estimate Report.
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.	·      Chaarat Gold has carried out extensive geologic mapping and surface sampling along extensions of the drilled structures within the project area, and for some 5km of strike length to the northeast of the main project area. ·      There are several additional areas of mineralization which have been identified, and which are slated for further exploration as time and funding permit.
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.	·      Additional drilling targeted at extending Tulkubash zone mineralization would be beneficial to the project. Tulkubash is also open at depth. Drilling to date has been focused on the upper, oxidized portion of Tulkubash because it is amenable to cyanide leaching, and there has been limited drilling at depth.

Section 3 Estimation and Reporting of Mineral Resources

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 drilling data is securely stored in Excel spreadsheets. The database is backed up by Chaarat off- and on site, as well as GSI keeping multiple secure copies of the database. ·      The drill hole database used for Mineral Resource estimation has been internally validated and externally audited, by Gustavson and Associates (2014), and by GeoSystems International (GSI, 2017), in the context of preparing the current Resource Model update. ·      Drill hole data is validated visually by domain and compared to the geological model. ·     Multiple checks have been completed on the database, such as: checks of grades against original laboratory certificates; checks by grade ranges; checks of hole locations; checks of duplicate and overlapping intervals; checks of geological coding; checks by zone coding; checks for intervals with poor recoveries; higher grade interval checks; etc.
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 visited Chaarat from August 25th through August 28th, 2014. And again from August 30th through September 3rd, 2017.
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.	·      Overall the Competent Person's confidence in the geological interpretation of the area is good, based on the quantity and quality of data available, and the continuity and nature of the mineralisation. ·      Geological modelling was performed by Chaarat geologists, and checked by GSI's contractors. The method involves interpretation on cross sections of the 0.25 gpt Au grade envelope which defines the mineralisation boundaries. Three-dimensional wireframes of the sectional interpretations are created to produce the geological model. ·      There are also geologic interpretations of several logged attributes: oxidation level; lithology; type of alteration; intensity of alteration; and silicification; these interpretations were also modelled in three-dimensions (wireframe), and for the basis for the grade estimation domains used within the grade shells. ·      Mineralisation is continuous. It is affected by structures, but the drill hole spacing is sufficient to capture grade and geology changes at the scale of observation. ·     The geological model is sub-divided into 7 grade domains, in addition to the mineralized zones, and both the composites and model blocks are coded with these domains. The grade domains are used to constrain further the estimation, and are used in addition to the wireframes that represent the mineralized zones.
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.	·      Mineralisation extends for several kilometres along strike in an SW-NE. The Tulkubash zone extends for several hundred metres along strike. ·      The mineralised structures are between a few metres and up to 20-40 metres across strike, and to a depth of no less than 250m below current topographical surface.
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.	·      Tulkubash was estimated using ordinary kriging for Au, Ag, As, and Sb. ·      Inverse Distance Squared was used to estimate in situ bulk dry density in the vicinity where data has been collected; other regions of the model with sparse information were assigned in situ bulk dry density averages by lithology. ·      Correlogram models as required by the estimation method chosen were obtained for all variables and grade domains. ·      These methods are appropriate for estimating the tonnes and grade of the reported Mineral Resources. ·      A block size of 10 m (X) × 10 m (Y) × 5 m (Z) was used for parent blocks. Parent blocks are sub-celled to the geological boundaries to increase the resolution of the contacts in the block model. ·      The Tulkubash mineralized zones were estimated using only composites within the 0.25 gpt Au grade wireframe that describes the zone. An additional estimation of spotty mineralization outside the mineralized zones was also performed using the 3m composites lying outside of the mineralized zones. This external estimation was constrained by the same grade domains defined inside the grade shells, in addition to an external envelope that limits extrapolation to less than 40m. This material adds a small percentage of the total resource. ·      Detailed statistical analysis was performed on the assay and the composite data. ·      High yield limit were applied to all grades to restrict higher grade samples' to a 10m radii range of influence. In the case of Au, these limits varied by grade estimation domain. ·      The grade estimation process was completed using MineSight software. ·      Grades are mostly interpolated, and only extrapolated at depth down to approximately 30m below the deepest composites. Some lateral extrapolation is also present outside the mineralized zones, up to a maximum of 40m. ·      The block model was validated using a combination of visual and statistical techniques.
Moisture	Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.	·      All Mineral Resource tonnages are estimated and reported on a dry basis.
Cut-off parameters	The basis of the adopted cut-off grade(s) or quality parameters applied.	·      Cutoff of interest begin at approximately 0.2 gpt Au. ·      The Resources reported are within a "resource pit" which has been optimized using a Lerchs-Grossman-type algorithm. The economic parameters for obtaining the pit are the same as those used by Chaarat Gold on the upcoming Feasibility Study, except that the gold price was set at USD 1,500/oz. The breakeven economic cutoff using these parameters is approximately 0.22 gpt. ·      The final economic cutoff will be determined with further engineering studies, which will include variable cutoff optimization, and will likely result in a cutoff higher than the reserves breakeven cutoff.
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.	·      Development of this Mineral Resource assumes mining using standard open pit methods, including conventional truck and shovel at an appropriate bench height. ·      Mining practices will include grade control, likely utilising blast hole data.
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.	·      Current metallurgical testing shows that free milling (heap leaching) of the Tulkubash ore is possible, and that a standard beneficiation method will be applied. ·      The Resource has been defined with a "resource pit", which, among other economic parameters, assumes a 72% metallurgical recovery for Au, and a 48% metallurgical recovery for Ag. These metallurgical recovery factors have been obtained as averages of the metallurgical sampling of Tulkubash ore reported to date.
Environmen-tal 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 environmental issues or assumptions made that would impact on the Mineral Resource estimate.
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.	·      Dry core densities are generated by first covering the 15 to 20 cm long piece of core with paraffin; and then using the immersion method to obtain the density value, and taking into account the paraffin weight. ·      Dry bulk density was estimated using the Inverse Distance Squared 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 model has been classified into the categories of Measured, Indicated and Inferred. ·      Resources were classified with consideration to the following criteria: 1) The quality of the data gathering, data management, assays and geologic information; 2) Confidence in the geological conceptual model, mapping and interpretation, and limitations of the geological model related to drill hole spacing and the characteristics of the wireframes modelled; 3) Drill hole spacing and orientation within the mineralized zone; and 4) Gold grade's spatial distribution and continuity, as observed from statistical and geostatistical analyses. Ag, Sb, and As continuity was not a resource classification criteria. ·      The determination of the applicable Mineral Resource category has considered the average data density for the respective domains, the interpreted geological continuity and the estimation strategy. ·      The Competent Person is satisfied that the stated Mineral Resource classification reflects the data spacing, data quality, level of geological continuity and the estimation constraints of the deposits.
Audits or reviews	The results of any audits or reviews of Mineral Resource estimates.	·      All stages of Mineral Resource estimation have undergone a documented internal peer review process, which has documented all phases of the process.
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 Mineral Resource data collection and estimation techniques used for the Tulkubash deposit are consistent with those applied at other deposits of similar characteristics. ·      No production reconciliation is currently possible. Further infill drilling has been recommended to test possible extensions to the current resource, as well as further reduce uncertainties in the Resource Estimate.

 

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