TAVSAN RESOURCE UPDATE

RNS Number : 1898K

Ariana Resources PLC

09 April 2018

 

9 April 2018

AIM: AAU

TAVSAN RESOURCE UPDATE

Ariana Resources plc ("Ariana" or "the Company"), the exploration and development company with gold mining operations in Turkey, is pleased to announce a Joint Ore Reserves Committee ("JORC") Resource update for the Tavsan Project ("Tavsan" or "the Project").  Tavsan is part of the Red Rabbit Joint Venture ("JV") with Proccea Construction Co. and is 50% owned by Ariana through its shareholding in Zenit Madencilik San. ve Tic. A.S. ("Zenit").

Highlights:

·   Resource Estimate substantially de-risks the Project, following a material improvement in the resource classification; 71% of the resource now in Measured and Indicated. 

·    Global resource of 3.98Mt at 1.32 g/t Au and 4.46 g/t Ag for 168,900 oz Au and 571,700 oz Ag (all categories), contained largely within Scoping Study pit shapes*.

·    Additional JORC Exploration Target of up to a further 9.70Mt at 1.30 g/t Au (for c. 400,000 oz Au)*.

·   New classification enables JV to proceed with a Feasibility Study and Environmental Impact Assessment ("EIA") for Tavsan, without further resource drilling.

·     Potential resource extensions are represented by a number of drill holes including 11m @ 5.11 g/t Au + 6.83g/t Ag, 6m @ 3.37g/t Au + 3.67g/t Ag and 9m @ 1.30g/t Au + 4.32g/t Ag within c.20m from surface.

Dr. Kerim Sener, Managing Director, commented:

"This is an exceptionally pleasing and robust resource update for the Tavsan Project.  We are increasingly confident in the potential for Tavsan to be developed in the medium-term and that planned mine life can be increased beyond four years, as previously defined in the Scoping Study of 2016.  The JV is targeting the development of Tavsan as a semi-autonomous project with the Kiziltepe Mine, within the broader context of the Red Rabbit Joint Venture with Proccea Construction Co.  Further work will be required on a Feasibility Study and EIA, which the JV is aiming to complete largely in-house, along with associated permitting.  The JV is planning to commence these work programmes during 2018, which are expected to be funded through cash flow from the Kiziltepe Mine."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

* All Mineral Resource figures in the announcement are quoted gross with respect to the Red Rabbit Joint Venture, of which 50% is owned by Ariana.

Resource Estimate

Zenit Madencilik San. ve Tic. A.S. (Zenit) engaged Tetra Tech to complete a Joint Ore Reserves Committee ("JORC") compliant Mineral Resource estimate for the Tavsan Project.  The updated Mineral Resource estimate is based on an improved understanding of the spatial continuity between samples collected from drill holes, utilising a revised geological model and appropriate application of geostatistical methods.  Appendix 1 provides more detail on sampling techniques and data used in this estimation.

In compliance with the JORC code (2012), the Mineral Resource Estimate detailed here includes material scientific and technical information in respect of the Project.  The Mineral Resource is based on additional spatial continuity studies completed by Tetra Tech in May 2017, which determined that spatial continuity of samples is sufficient to support an upgrade of the resource to at least Indicated category. The Mineral Resource will inform an updated infill drilling programme to target those areas that remain in the Inferred category, thereby significantly reducing the drilling and sampling required for further improvements in the classification of resources.

This estimate supersedes the earlier published Mineral Resource estimate for Tavsan completed in 2008 by SRK Consulting (UK) Ltd, which was undertaken in accordance with the earlier JORC code (2004) and involved a different geological model that encompassed all drilling.  The 2008 resource was also undertaken using the conventional mathematical method of Inverse Distance Weighted Squared ("IDW2") rather than the geostatistical approach taken here.  Some areas included in the 2008 resource are specifically excluded in the current resource and instead have been assigned to an Exploration Target (see below), due to lower geological confidence.  The current estimate focused primarily on areas that are considered amenable to shallow open-pit mining (Figure 1) as defined in the Scoping Study (announced on 10 November 2016).  The Scoping Study determined that approximately 2.7Mt at 1.6 g/t Au and 3.0 g/t Ag (then in Inferred and Indicated categories) was contained within four Whittle pit shells at a strip ratio of 2:1 and the majority of the resource detailed here coincides specifically with these areas (Figure 1).

Geological Summary

Gold mineralisation at Tavsan is epithermal in style, with associated silver and antimony, broadly situated along the thrust contact between Jurassic massively bedded limestone and an overlying Cretaceous multi-lithic ophiolite sequence.  In addition, a karstic network within the limestone and fractures within the ophiolitic rocks may have acted as secondary conduits for the development of some jasperoidised-silicified ("jasperoid") rocks, several tens of meters, below and above of the thrust fault contact, respectively.

The mineralised jasperoid plane developed along the thrust contact is irregular on a ten meter-scale but broadly follows the gentle topography on a hundred meter-scale, and is largely exposed at surface (Figure 1). In the vicinity of a NE-SW trending fault zone, the thrust is steeper than the topographic gradient, resulting in a more steeply dipping zone of mineralisation.  The greatest thickness of gold-bearing jasperoid is observed in the vicinity of the NE-SW fault zone. However, gold concentration appears to have a dominant NW-SE control within the jasperoid as a whole, suggesting potential for steeply dipping conduit structures cross-cutting the limestone units in the footwall. 

http://www.rns-pdf.londonstockexchange.com/rns/1898K_-2018-4-8.pdf 

Figure 1: Map of the Tavsan Project, showing the main resource areas (in red) with pits designed as part of the Scoping Study (outlined in yellow).  Substantial areas exist outside of the planned pits which have not been sufficiently drill tested, yet show potential for resource extensions (in pale yellow).  These areas form part of the JORC Exploration Target.  Selected drill hole and trench results which support the Exploration Target are identified in these areas. 

Estimation Methodology

Wireframe models of the jasperoid were developed by linking sectional interpretations. The models were created based upon interval selections that referenced the gold grades, lithological descriptions and structural interpretation. Grades greater than 0.5 g/t gold were linked together between each drill-section. Where continuity was not established between sections, the strike extrapolation was limited. The continuity of the various structures is reflected in the Mineral Resource classification.

Compositing was completed in Datamine using a 1m best fit routine, applying hard domain boundaries, which forced all samples to be included in one of the composites by adjusting the composite length, while keeping it as close as possible to the selected interval of 1m.  Decile analysis of the composited data indicates that the data set did not have undue bias at higher-grades and therefore no top cut was applied.

Specific gravity was determined based on seven analyses for the Tavsan deposit. The average of the limestone units is 2.55 g/cm³ and the average of the jasperoid unit is 2.59 g/cm³. The density was interpolated into the block model by the IDW2 method based on a mean value of 2.57 g/cm³ for all mineralised blocks that did not receive an estimate grade, or where other lithologies appeared in the selected sample set.

Variography was attempted for the entire data set as a single population, but no suitable variograms could be established, probably due to the variation in geometry of the satellite areas.  However, good variogram model fit was achieved for the Main Zone where good directionality and range was observed. The Satellite zones have much lower sample numbers, resulting in poorer model fits.  Consequently, the Main Zone variogram model was applied to all zones on the basis that, although spatially separate, the zones are all genetically linked.  A good variogram model fit was achieved for downhole, major, semi-major directions, with a nugget effect of 0.19.

A non-rotated block model was established using block sizes determined to be optimal for the dataset and wireframe geometry of 10 x 20 x 5m.  Standardised sub-cell splitting to the minimum block size of 5 x 10 x 1m was employed to enable subsequent pit optimisation and mine design.  Sub-cells received parent cell grades during estimation and grades were estimated using Ordinary Kriging, adopting a multi-pass methodology.

Resource Classification

The Mineral Resource is classified according to the guidelines presented within the 2012 JORC code (Table 1), providing Measured, Indicated and Inferred resources.  Approximately 13% of the global resource is classified as Measured and 58% classified as Indicated. The style of mineralisation has been identified, the controls on mineralisation are well understood and measurements and sampling completed to a reasonable degree of confidence for the mineralisation present (Appendix 1). It is considered reasonable to expect that some of the Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration; however, due to the uncertainty of Inferred Mineral Resources it should not be assumed that such upgrading will always occur.  It is also reasonable to expect that portions of the Indicated Mineral Resources could be upgraded to Measured Mineral Resources with some additional infill data.

Confidence in the estimate of the Mineral Resources is sufficient to allow the results of the application of technical and economic parameters to be used for detailed planning in a Feasibility Study.  Some drilling will be planned to help support the Feasibility Study and EIA but this will be focused on limited infill drilling and geotechnical drilling, and is not likely to exceed 1,000m. In addition to supporting a Feasibility Study, this new Mineral Resource will assist the targeting of future exploratory and resource drilling in order to expand the resource further, particularly in areas comprising the Exploration Target.

Table 1:  Summary of JORC Mineral Resources for Tavsan, at a cut-off grade of 0.7 g/t Au. 

Classification	Zone	Tonnes	Au (g/t)	Ag (g/t)	Au (troy oz)	Ag (troy oz)
Measured	Main	537,000	1.80	3.98	30,900	68,600
Indicated	Main	1,758,000	1.23	3.61	69,400	203,600
	North	181,000	1.01	15.08	5,900	87,600
	West	361,000	1.19	4.93	13,800	57,100
Measured and Indicated Total		2,837,000	1.32	4.58	120,100	416,900
Inferred	Main & Satellites	1,142,000	1.33	4.22	48,800	154,800
Global Total		3,979,000	1.32	4.46	168,900	571,700

Notes:    Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. Environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues may materially affect the estimate of Mineral Resources.  Ariana and Tetra Tech are not aware of any material barrier to eventual economic extraction.  Numbers may not correctly sum due to rounding.  An inconsequential part of the Satellite zones is located outside of the current operating licences.

Exploration Target

The mineralised jasperoid units at Tavsan are extensive and have been mapped in detail. There are large areas of prospective mineralisation that have been mapped, and in some cases sampled either by drilling or surface methods, which have not been included in the Resource statement, as the data supporting these areas is not considered sufficient.  However, these mineralised areas do represent exploration potential for the project.

Assuming a mean thickness of 5m, derived from the thoroughly interpreted mineralised areas, an additional tonnage in the range of approximately 8 to 10Mt at a density of 2.57 g/cm³ is possible for the Exploration Target.   It is expected that the grade would range between 1.0 and 1.3 g/t Au.  The Exploration Target areas (Figure 1) have been labelled A - E and the ranges for each area, based on their volume and neighbouring Resource grades (Table 2).

Table 2: JORC Exploration Target defined by exploration area, showing a range of possible tonnages and gold grades.  Silver has not been included in these calculations as it is not as economically significant as gold and, hence, would not help inform exploration decision-making.

Exploration Area	Tonnage (Mt)	Grade (g/t Au)
A	0.7 - 0.8	1.0 - 1.3
B	3.0 - 3.6	1.2 - 1.4
C	2.8 - 3.5	1.2 - 1.4
D	1.0 - 1.3	1.2 - 1.5
E	0.4 - 0.5	1.0 - 1.1
Total	7.9 - 9.7	1.0 - 1.3

Contacts:

Ariana Resources plc	Tel: [phone]
Michael de Villiers, Chairman
Kerim Sener, Managing Director
Beaumont Cornish Limited	Tel: [phone]
Roland Cornish / Felicity Geidt
Panmure Gordon (UK) Limited	Tel: [phone]
Adam James / Tom Salvesen
Yellow Jersey PR Limited	Tel: [phone]
Tim Thompson / Harriet Jackson / Henry Wilkinson	[e-mail]

Editors' Note

The updated Mineral Resource estimate update was prepared by Tetra Tech, under the direction of Mr. Joe Hirst B.Sc., M.Sc. EurGeol (European Geologist) CGeol (Chartered Geologist). Mr. Hirst is a Resource Geologist at Tetra Tech, and an independent Competent Person as defined by the JORC Code, 2012 Edition. The results are reported in accordance with the JORC code.

Mr. Hirst has reviewed the technical and scientific information in this press release relating to the Mineral Resource estimates and has approved the use of the information contained herein.

About Ariana Resources:

Ariana is an exploration and development company with mining operations focused on epithermal gold-silver and porphyry copper-gold deposits in Turkey, the largest gold producing country in Europe.  The Company is developing a portfolio of prospective licences originally selected on the basis of its in-house geological and remote-sensing database, which now contain a total of 1.6 million ounces of gold and other metals.  Ariana's objective is to cost-effectively add value to its projects through focused exploration and to develop its operations, primarily through well-financed joint ventures. 

The Company's flagship assets are its Kiziltepe and Tavsan gold projects which form the Red Rabbit Gold Project.  Both contain a series of prospects, within two prolific mineralised districts in the Western Anatolian Volcanic and Extensional (WAVE) Province in western Turkey.  This Province hosts the largest operating gold mines in Turkey and remains highly prospective for new porphyry and epithermal deposits.  These core projects, which are separated by a distance of 75km, form part of a 50:50 Joint Venture with Proccea Construction Co.  The Kiziltepe Sector of the Red Rabbit Project is fully-permitted and is currently in production.  The total resource inventory at the Red Rabbit Project and wider project area stands at c. 605,000 ounces of gold equivalent.  At Kiziltepe a Net Smelter Return ("NSR") royalty of up to 2.5% on production is payable to Franco-Nevada Corporation.  At Tavsan an NSR royalty of up to 2% on future production is payable to Sandstorm Gold.

In north-eastern Turkey, Ariana owns 100% of the Salinbas Gold Project, comprising the Salinbas gold-silver deposit and the Ardala copper-gold-molybdenum porphyry among other prospects.  The total resource inventory of the Salinbas project area is c. 1 million ounces of gold equivalent.  A NSR royalty of up to 2% on future production is payable to Eldorado Gold Corporation.

Panmure Gordon (UK) Limited are broker to the Company and Beaumont Cornish Limited is the Company's Nominated Adviser.

For further information on Ariana you are invited to visit the Company's website at www.arianaresources.com.

Glossary of Technical Terms:

"Ag" the chemical symbol for silver;

"Au" the chemical symbol for gold;

"cut-off grade" The lowest grade, or quality, of mineralised material that qualifies as economically mineable and available in a given deposit. May be defined on the basis of economic evaluation, or on physical or chemical attributes that define an acceptable product specification;

"g/t" grams per tonne;

"Indicated resource" a 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;

"Inferred resource" a 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 has 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 that may be limited or of uncertain quality and reliability;

"Inverse Distance Weighted Squared" a conventional mathematical method used to calculate the attributes of mineral resources.  Near sample points provide a greater weighting than samples further away for any given resource block;

"m" Metres;

"Mt" million tonnes;

"JORC" the Joint Ore Reserves Committee;

"JORC 2004" is the previous edition of the JORC Code, which was published in 2004.  It has been superseded by JORC 2012;

"JORC 2012" is the current edition of the JORC Code, which was published in 2012.  After a transition period, the 2012 Edition came into mandatory operation in Australasia from 1 December 2013;

"m" Metres;

"Measured resource" a 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 drillholes. The locations are spaced closely enough to confirm geological and grade continuity.

"oz" Troy Ounces.  One Troy Ounce is equal to 31.1035 grams;

"Whittle" computer software that uses the Lerch-Grossman algorithm, which is a 3-D algorithm that can be applied to the optimisation of open-pit mine designs.  The purpose of optimisation is to produce the most cost effective and most profitable open-pit design from a resource block model.

Ends.

Appendix 1: 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 (e.g. cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc.).  These examples should not be taken as limiting the broad meaning of sampling. ·    Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used. ·    Aspects of the determination of mineralisation that are Material to the Public Report. ·    In cases where 'industry standard' work has been done this would be relatively simple (e.g. '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 (e.g. submarine nodules) may warrant disclosure of detailed information.	·    Geological mapping in conjunction with trenching and drilling was used to delineate areas of mineralisation. Mineralisation is identified in the jasperoid unit. ·    All drilling was undertaken by Diamond Core Drilling (DD) and Reverse Circulation (RC) with all sampling in accordance with industry standard techniques. ·    Diamond core is cut in half to provide half core samples in lithologically appropriate intervals, with sampling extending before and after mineralisation. ·    For duplicate sample analysis the half core sample was cut into two quarter core samples, one as the primary sample and the other for duplicate analysis. ·    DD core void of mineralisation was not a priority for the company and therefore not all core has been sampled once mineralisation controls were established. ·    RC samples were split using a riffle splitter with a representative 1kg split sent for sample analysis, with remaining material stored for follow-up analysis.
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.).	·    In total, 4,989 m of drilling across 156 drill holes has been completed across the Tavsan deposit. ·    Diamond drillholes comprise a combination of HQ and NQ diameter (standard tube). ·    RC drillholes comprised drilling with a 5.5 inch diameter hammer. ·    All holes were drilled by Odyssey or earlier owners and their contractors prior to Ariana's acquisition.
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.	·    All drilling was supervised by a company geologist.  The length of core recovered was measured by an assistant after removal from the core barrel.  All core was put into core boxes and transported to the core shed where the core length was checked by a geologist. ·    The length of core was recorded on paper logs, as well as the length of the core run.  These recordings were later transferred into a database.  The recovery is calculated by dividing the core length by the drill run length, which provides the percentage of core recovered per drill run.
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.	·    Core was logged geotechnically and geologically by company geologists using a company standard logging protocol. ·    Logging intervals are based on lithologies. ·    The core is photographed before logging to provide a record of all DD core. ·    RC drill chips were logged from sample chip trays. ·    Logging is to a standard suitable for the support of a Mineral Resource Estimate.
Sub-sampling techniques and sample preparation	·    If core, whether cut or sawn and whether quarter, half or all core taken. ·    If non-core, whether riffled, tube sampled, rotary split, etc. and whether sampled wet or dry. ·    For all sample types, the nature, quality and appropriateness of the sample preparation technique. ·    Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples. ·    Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/ second-half sampling. ·    Whether sample sizes are appropriate to the grain size of the material being sampled.	·    Core samples were cut using a circular saw with water supply for dust suppression. ·    Sampling was taken across all mineralised zones and extended into un-mineralised rock. ·    Some core and RC samples with no mineralisation were not sampled once mineralisation controls were established. ·    All samples were submitted to ALS Chemex (Izmir) for sample preparation and analysis, where crushing, milling, homogenization and sample splitting was completed in accordance with company standards. ·    All suitable measures were taken to ensure sample representivity.
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 (e.g. standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (i.e. lack of bias) and precision have been established.	·    Standard and duplicate samples for QA/QC were taken by ALS and performance was noted as good. ·    Odyssey's own QA/QC programme has significant shortcomings, but the lab performance is adequate to support a mineral Resource estimation.
Verification of sampling and assaying	·    The verification of significant intersections by either independent or alternative company personnel. ·    The use of twinned holes. ·    Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols. ·    Discuss any adjustment to assay data.	·    Significant intercepts were inspected by various Ariana competent persons and SRK Consulting during site inspections. ·    Logging and sampling procedures are to recognised international standards. ·    10% of the data has been independently verified. ·    Data input has been completed in accordance with company procedures, which have been reviewed by Tetra Tech. ·    Prior to resource estimation, below detection limit assay results have been replaced with values of half detection limit.
Location of data points	·    Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation. ·    Specification of the grid system used. ·    Quality and adequacy of topographic control.	·    All collar locations are reported in UTM (WGS84) with their locations recorded using a handheld GPS. UTM Grid 35 N. ·    Down-hole surveys were recorded with Gyro Shot-type equipment. Drill holes were re-surveyed, in some cases, by open hole methods at 20m intervals from surface, during a project review in 2015, using the Ariana-owned Flexit down hole multi-shot survey device. ·    A topographic survey was completed for the Resource area using a DGPS system in certain areas. 5m and 25m contours were also generated from ortho-rectified WorldView satellite imagery for the project area as a whole.
Data spacing and distribution	·    Data spacing for reporting of Exploration Results. ·    Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied. ·    Whether sample compositing has been applied.	·    The Resource area has been drilled as access allows, resulting in irregular data spacing, typically between 25m and 100m between collars. ·    Samples were composite to 1m prior to estimation. ·    The current data spacing is sufficient to establish geological continuity and grade continuity has been established and tested by semi-variograms and post-estimation assessment, as such the Resource has been classified accordingly in the Measured, Indicated and Inferred categories depending on the local confidence of estimate.
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.	·    The mineralisation is primarily outcropping at surface and has been drilled primarily vertically, with full intersections. Some inclined holes have been drilled between -80 and -40 degrees of dip, primarily stepped off from the mineralisation to delineate the edges of the mineralisation at depth. ·    No sampling bias is observed from the orientation of drilling with regards to the mineralised structures. ·    True thickness with respect to apparent thickness is well understood as most intersections are normal to the mineralisation.
Sample security	·    The measures taken to ensure sample security.	·    Samples are stored in a secure location. Full chain of custody documentation is used when transferring the samples to the laboratory and has been overseen by the responsible company geologist.
Audits or reviews	·    The results of any audits or reviews of sampling techniques and data.	·                  Tetra Tech's Competent Person has reviewed the protocols and procedures adopted and finds the various aspects sufficient to support mineral Resource estimation. ·    Tetra Tech has completed an independent analysis of the QA/QC data completed by Odyssey, and whilst there are shortcomings the ALS lab QAQC programme was robust.  The data is deemed appropriate or Resource estimation.

Section 2: Reporting of Exploration Results

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

Criteria	JORC Code explanation	Commentary
Mineral tenement and land tenure status	·    Type, reference name/ number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings. ·    The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.	·    Zenit holds the mineral rights to the Tavsan property in Joint Venture with Ariana Resources plc. ·    In 2008, Ariana acquired the Project for US$500,000 in cash and 3 million shares in the Company at 5 pence per share from Odyssey Resources Limited and a retained royalty of up to 2% on future gold production payable to Teck Resources Limited. This royalty has since been transferred to Sandstorm Gold Ltd
Exploration done by other parties	·    Acknowledgment and appraisal of exploration by other parties.	·    No other companies have completed exploration on the licence since Ariana's acquisition of the property from Odyssey.
Geology	·    Deposit type, geological setting and style of mineralisation.	·    The property is located in the Izmir-Ankara suture zone in north-western Anatolia. The formations present span from Jurassic to Tertiary and typically comprise metamorphosed sedimentary sequences, displaying intense compressional tectonic features. ·    The Property includes an upper thrust plate of Late Cretaceous ophiolitic rocks (Dagardi Melange), jasperoid gold-bearing silicification along the thrust surface and a footwall of Jurassic Budagan Formation massive, a massive micritic limestone. ·    Mineralisation of the contact zone was observed to consist of jasperoidisation of limestone and intense silicification of the ophiolite sequence.
Drill hole Information	·    A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: o easting and northing of the drill hole collar o elevation or RL (Reduced Level - elevation above sea level in metres) of the drill hole collar o dip and azimuth of the hole o down hole length and interception depth o hole length. ·    If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.	Drill hole collar, survey lithology assay and significant intercept tables have been prepared are disclosed within section 10.0 of the technical report.
Data aggregation methods	·    In reporting Exploration Results, weighting averaging techniques, maximum and/ or minimum grade truncations (e.g. 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.	·    No upper or lower cut-offs have been applied when disclosing the exploration data. ·    No aggregation has been applied beyond the standard 1m sampling interval honouring lithological changes down to 20cm. ·    No metal equivalent has been applied. Metals are reported per metal.
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 (e.g. 'down hole length, true width not known').	·    The majority of the drillholes were advanced vertically. Some holes were advanced at between -80 and -40 degrees from horizontal to intersect dipping structures, or to delineate at depth. The mineralised formations are commonly flat lying. As such, the true width is generally represented by the intersection length. However, recorded intercept widths should not be regarded as true widths. ·    Three dimensional wireframe models have been generated for sample selection to constrain the resource estimate.  This process eliminates any bias imparted by oblique intercepts.
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.	·    A set of maps, sections and tabulations have been prepared and will be disclosed within the Technical 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.	·    Full balanced reporting of exploration results has been undertaken and is disclosed within the Technical 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.	·    Other substantive exploration data such as geochemical sampling and geophysical exploration was previously undertaken to identify the drill targets. This Resource estimation considers samples contained within a 3d interpretation to inform the estimate. No other exploration data informs the estimate.
Further work	·    The nature and scale of planned further work (e.g. 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.	·    A programme of additional drilling will be planned subsequent to this phase of work to infill areas of known mineralisation, and to further explore potential for mineralisation along strike and down dip of the known mineralisation.

Section 3: Estimation and Reporting of Mineral Resources

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

Criteria	JORC Code explanation	Commentary
Database integrity	·    Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resource estimation purposes. ·    Data validation procedures used.	·    All data used in the Resource was provided by Zenit as separate Excel drill hole files.  The separate files have been transposed into a desurveyed drillhole file for verification prior to Mineral Resource estimation. ·    Reports were generated to highlight potential transcription errors.
Site visits	·    Comment on any site visits undertaken by the Competent Person and the outcome of those visits. ·    If no site visits have been undertaken indicate why this is the case.	·    The Competent Person for this project is Mr. Joe Hirst B.Sc., M.Sc., European Geologist (EurGeol) and Chartered Geologist (CGeol).  Mr. Hirst is a Senior Resource Geologist and Competent Person as defined by the JORC code.  Mr. Hirst will make a single visit to the project in April 2018 and to verify aspects of the data collection and handling for the project.
Geological interpretation	·    Confidence in (or conversely, the uncertainty of) the geological interpretation of the mineral deposit. ·    Nature of the data used and of any assumptions made. ·    The effect, if any, of alternative interpretations on Mineral Resource estimation. ·    The use of geology in guiding and controlling Mineral Resource estimation. ·    The factors affecting continuity both of grade and geology.	·    Geological interpretation used a combination of surface mapping data, geophysics and geological and geochemical boundaries from the drill holes across the Tavsan deposit. ·    Interpretation was completed by Ariana geologists and consultants, creating 3D wireframe models according to geology and mineralisation above a 0.5 g/t Au cut-off. ·    Geological Domains were interpreted for the deposit according to geology, grade and geotechnical structures.  Six main mineralised lodes have been identified. ·    The mineralisation is well understood, typically to a single identifiable unit, and geologically constrained.  ·    Grade continuity analysis within the interpreted mineralised zones has been robust. ·    The confidence in geological interpretation is appropriately reflected in the classification of the Resources.
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 mineralisation follows a SW-NE trend where outcrop occurs along the jasperoid unit contact. The mineralisation is generally present at surface. The mineralised zone is approximately 3.6km wide across the SW-NE trend, and covers an area of approximately 7.70km2. ·    The mineralisation has an approximate true thickness of 6.7m, ranging between 1 and 30m thick.
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 (e.g. sulphur for acid mine drainage characterisation). ·    In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed. ·    Any assumptions behind modelling of selective mining units. ·    Any assumptions about correlation between variables. ·    Description of how the geological interpretation was used to control the resource estimates. ·    Discussion of basis for using or not using grade cutting or capping. ·    The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation data if available.	·      The Mineral Resources have been estimated into a block model prepared in Datamine Studio 3.  The block model comprises the following parameters: o  Parent cell dimension of 10 m x 20 m x 5 m (x, y, z) ·      A set of geological and Au grade based wireframe models were provided and prepared in Datamine to select the samples used in the estimation and to constrain the interpolation. ·      The Mineral Resources were compared to a previous estimate completed by SRK Consulting (UK) Ltd in 2008.  Differences in the geological model, with emphasis placed on modelling within areas of the resource identified as having potential to be mined via open pit (as per 2016 Scoping Study), result in differences in the estimation. ·      Grade estimates were based 1 m composited assay data. ·      The interpolation of the element concentration was undertaken using Ordinary Kriging. ·      The resource estimation techniques are appropriate for the style of mineralisation. ·      Only Au and Ag were estimated, no potentially deleterious elements or compounds were estimated. ·      Density was estimated using Inverse Distance Weighting (IDW) to second power. ·      Top cut requirements were assessed, but deemed unnecessary. ·      Block model validation was completed using a full set of statistical measures and plots, along with visual inspection on plan and section.
Moisture	·    Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.	·    Tonnage is estimated on a dry basis in accordance with the specific gravity determination.
Cut-off parameters	·    The basis of the adopted cut-off grade(s) or quality parameters applied.	·      Au cut-off grades were applied based upon costs and recoveries established from the company's other operations.
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.	·    No assumptions were made regarding possible mining methods as the mineralisation is at or near surface, there should be no constraint on open-pit potential.
Metallurgical factors or assumptions	·    The basis for assumptions or predictions regarding metallurgical amenability.  It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential metallurgical methods, but the assumptions regarding metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical assumptions made.	·    Basic metallurgical assumptions were made with regards to expected processing methods, recoveries from test work completed by SGS and expected throughputs.
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.	·    No environmental studies have been completed as part of this assignment.  It is understood that there will be no environmental impediments to production.
Bulk density	·    Whether assumed or determined.  If assumed, the basis for the assumptions.  If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size and representativeness of the samples. ·    The bulk density for bulk material must have been measured by methods that adequately account for void spaces (vugs, porosity, etc.), moisture and differences between rock and alteration zones within the deposit. ·    Discuss assumptions for bulk density estimates used in the evaluation process of the different materials.	·    Bulk density values have been estimated into the block model using an inverse distance weighting interpolation.  The density estimate was based upon 7 dry density determinations.
Classification	·    The basis for the classification of the Mineral Resources into varying confidence categories. ·    Whether appropriate account has been taken of all relevant factors (i.e. relative confidence in tonnage/ grade estimations, reliability of input data, confidence in continuity of geology and metal values, quality, quantity and distribution of the data). ·    Whether the result appropriately reflects the Competent Person's view of the deposit.	·      The resource classification at the project considers the following criteria: o  Confidence in the sampling data and geological interpretation. o  The data distribution (based upon graphical analysis and average distance to informing composites). o  Grade continuity analysis. ·      The model was classified according to Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy (JORC) guidelines (JORC, 2012 Edition). ·     The classification appropriately reflects the status of the resource development.
Audits or reviews	·    The results of any audits or reviews of Mineral Resource estimates.	·    An internal peer review was conducted for this study.  No external reviews or audits have been completed.
Discussion of relative accuracy/ confidence	·    Where appropriate a statement of the relative accuracy and confidence level in the Mineral Resource estimate using an approach or procedure deemed appropriate by the Competent Person.  For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate. ·    The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation.  Documentation should include assumptions made and the procedures used. ·    These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.	·    The resource estimate is deemed appropriately accurate globally, based upon the informing data.  The accuracy and global/ local basis of the resource estimate is suitably accounted for in the resource classification.   ·    The composition of the mineralisation, and the grade of the block model accurately reflects bulk samples taken at the property for testwork.

 

 

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