TIDMCGH
RNS Number : 6552Z
Chaarat Gold Holdings Ltd
25 May 2021
25 May 2021
Chaarat Gold Holdings Limited
("Chaarat" or "the Company")
Tulkubash Feasibility Study Update
Chaarat (AIM:CGH), the AIM-quoted gold mining Company with an
operating mine in Armenia and assets at various stages of
development in the Kyrgyz Republic, is pleased to provide an
updated JORC compliant bankable feasibility study (the "2021 BFS")
for its Tulkubash Oxide Gold Project ("Tulkubash") independently
prepared by LogiProc (Pty) Ltd in South Africa. The 2021 BFS is
based on the 2019 BFS which was also prepared by LogiProc (Pty) Ltd
and includes updates on all sections.
The 2021 BFS confirms robust economics for the development of an
open-pit mining heap leach operation. A more conservative model was
used to develop the latest Mineral Resource estimate as part of
this update. Despite a 25% increase in the overall Mineral
Resource, the approach to the updated model has resulted in a
slight reduction in ounces contained in the Measured and Indicated
categories, with this mineralisation now classified as Inferred.
Infill drilling is planned, as part of the 2021 exploration
programme, to focus on converting Inferred resources into Measured
and Indicated. This conversion could also improve the current
5-year life of mine ("LOM").
Chaarat is in the process of commencing exploration works for
the 2021 season and is in continued discussions to complete the
financing package which the Company expects could be affected by
the current events in the mining sector in the country. Resumption
of full construction activity will be dependent on the timing to
complete project financing. Delays due to the longer than expected
COVID-19 movement restrictions and political situation during 2020
and early 2021 as well as the expected timeline on project
financing have resulted in expected first gold from Tulkubash being
now targeted for H2 2023.
A webcast and conference call to discuss the 2021 BFS update
results will be held tomorrow, 26 May 2021, at 9:00 am BST.
Participants can access the presentation by registering here:
https://us02web.zoom.us/webinar/register/WN_qUj1mwqbQAmRQmEda3eXmQ
.
The full 2021 BFS study will be available on the Chaarat website
and can be accessed here:
https://www.chaarat.com/kyrgyzstan/tulkubash/
Project Highlights
- Conventional open pit mining followed by standard heap leach processing
- Gold reserves of 571,100 ounces ("oz") and silver reserves of
845,700 oz mined over a current five-year Life of Mine ("LOM")
- Average annual gold production of 95,190 oz and average annual
silver production of 140,940 oz
- Heap leach facility processing an annual capacity of 5 million tonnes
- Average head grade of gold at 0.85 g/t and silver at 1.26 g/t
at a gold cut-off grade of 0.23 g/t based on $1,450 gold price
- Recovery of 73.4%
- LOM does not include the potential additional JORC compliant
Inferred material or any potential future exploration success.
Financial Highlights
In USD 2021 BFS Sensitivity
Au @ USD 1,450/oz Au @ USD
Ag @ USD 17.50/oz 1,800/oz
Ag @ USD
27.00/oz
Pre-Production
Capital Cost 115 million
---------------------------------
LOM All In Sustaining 866/oz produced
Cost ("AISC")
---------------------------------
LOM Operating
Cash Flow 266m 352m
------------------- ------------
Average Operating
Cash Flow p.a. 44m 59m
------------------- ------------
LOM Operating
Cash Flow margin 44% 47%
------------------- ------------
Post-tax NPV(5%) 85m 151m
------------------- ------------
IRR 25% 38%
------------------- ------------
Update from June 2019 BFS
- The 2019 BFS has been updated to account for the following
changes, including but not limited to:
o A more robust and reliable resource and reserve estimate
o Improved project cost estimate accuracy (from +/-15% certainty
to +/-10% certainty)
o Incorporation of latest engineering studies and assessment to
the heap leach design
o Additional work carried out regarding environmental
assessments, management controls and the latest social impact
studies
o Revised project economics based on the above points and to
reflect the latest long term commodity price expectations
- Chaarat has also undergone an independent third-party review
of the 2021 BFS and ESIA with SLR Consulting Ltd. (formerly RPA
Inc., "SLR"), a leading international mining, environmental and
social consultancy.
- The key changes are summarised in the table below and
explained in more detail later in this section.
2019 BFS 2021 BFS
Gold price $ 1,300/oz $ 1,450/oz +11%
----------- ----------- -----
Silver price $ 16.00/oz $ 17.50/oz +9%
----------- ----------- -----
Ore Reserves 658 koz 571 koz -13%
----------- ----------- -----
Strip ratio 2.64 2.59 -2%
----------- ----------- -----
Mine life 5.3 y 4.8 y -7%
----------- ----------- -----
Gold grade 0.92 0.85 -7%
----------- ----------- -----
Gold recovery 68.9% 73.6% +7%
----------- ----------- -----
Post-tax NPV(5%) $ 70m $ 85m +23%
----------- ----------- -----
IRR 20% 25% +25%
----------- ----------- -----
Resource and Reserves
The updated resource model was developed using tighter drill
spacing for classification purposes. This change reflects the
decisions by management to ensure a more robust and conservative
approach to resource modelling than had been previously applied.
These changes also incorporate recommendations based on previous
reviews by SLR, and WAI who assisted Chaarat with the updated
resource model.
The Mineral Resource estimate increased to 49.9Mt grading
0.73g/t gold containing 1,177koz of gold from 24.3Mt grading
1.21g/t gold containing 944 thousand ounces of gold ("koz"), an
increase of 24.7% in contained gold.
The Tulkubash Mineral Resource is not constrained to one single
pit area but comprises the main, mid and east pit areas as well as
some early exploration satellites along strike. In the previous
2019 BFS the reserve estimate included ore from main, mid and east
pits. Subsequently and in tandem with guidance received from SLR
and WAI the more conservative 2021 BFS reclassified the east pit
and some deeper mineralisation in the main pit from Indicated to
Inferred and Inferred to unclassified material. These have not been
converted to Mineral Reserves in the 2021 BFS.
As a result of the gold price change, cut-off grade was adjusted
to 0.23g/t in the latest resource. The decrease in Ore Reserves and
grade is partially offset by the increase in gold recoveries in the
updated mine model achieved through additional metallurgical
testing performed by ALS Steward in 2019.
The following table shows the changes from the Mineral Resources
defined in the 2019 BFS by category:
Tulkubash Constrained Resource table
Classification Quantity Grade Contained Change from Tonnes (%) Change from Metal (%)
(M/t) Au Au 2019 - Tonnes 2019 Metal
(g/t) (koz) (Mt) (koz)
================ ========= ======= ========== ============== ========== =========== =========
Measured (5.27) (100)% (216) (100)%
========= ======= ========== ============== ========== =========== =========
Indicated 28.5 0.86 789 10.4 +58% 87 +12%
========= ======= ========== ============== ========== =========== =========
Measured
and Indicated 28.5 0.86 789 5.2 +22% (129) (14)%
========= ======= ========== ============== ========== =========== =========
Inferred 21.4 0.56 388 20.5 +135% 362 +1,381%
================ ========= ======= ========== ============== ========== =========== =========
Total 49.9 0.73 1,177 25.7 +106% 233 +25%
================ ========= ======= ========== ============== ========== =========== =========
The impact of the reduction in Measured and Indicated Resources
has resulted in the Tulkubash Reserve decreasing from 22.2Mt of ore
at 0.92g/t Au in the previous estimate to 20.9Mt of ore at 0.85g/t
Au. Contained gold ounces dropped from 658koz to 571koz for the
2021 Reserve. Grade reduction is the result of lower cut off and
the reclassification of higher-grade materials from the Mid and
East pit areas.
The following table shows the changes in reserves by category
and by pit area. Maps illustrating the various areas will be
presented in the Webcast presentation tomorrow and are shown in the
full 2021 BFS study in section 9 Exploration and section 16 Mining
Methods.
Tulkubash Reserve changes by Category and area
Category Quantity Grade Content Change from Tonnes Change from Metal (%)
(Mt) (g/t) (koz) 2019 - Tonnes (%) 2019 Metal
(Mt) (koz)
========== ========= ======= ======== ============== ====== =========== =========
Proven (6.8) (100)% (206) (100)%
========= ======= ======== ============== ====== =========== =========
Probable 20.9 0.85 571 5.5 +36% 120 27%
========= ======= ======== ============== ====== =========== =========
P&P 20.9 0.85 571 (1.3) (6)% (86) (13)%
========== ========= ======= ======== ============== ====== =========== =========
Mining Ore (%) Metal Metal
Area Ore (Mt) (koz) (%)
Main Zone 1.4 +8% 15.8 +3%
--------- -------- ------- -------
Mid Zone (1.6) (53)% (48.7) (59)%
--------- -------- ------- -------
East Zone (1.2) (100)% (53.0) (100)%
--------- -------- ------- -------
Total (1.3) (6)% (85.9) (13)%
--------- -------- ------- -------
Capex and Opex
Initial Capital Expenditures ("CAPEX") prior to first gold have
increased from USD 110 million to USD 115 million. The change is
mainly due to a change in the sequencing of the heap leach facility
("HLF") construction which has brought forward spending previously
allocated to deferred CAPEX (USD 3 million change). This is a shift
in timing of the costs and does not increase the overall LOM CAPEX
of the project. The additional USD 2 million increase is related to
upgrades identified to being necessary to the camp and mobile fleet
equipment workshop.
The site based OPEX has also undergone a review and as a result,
the unit cost for mining, processing and owners cost was optimised
and is about USD 0.55/t ore lower (-4%). This is mainly the result
of design work to optimize the mine haulage scheme.
Financials
The post-tax NPV based on a real discount rate of 5% has
increased from USD 70 million to USD 85 million based on 2021 BFS
adjustments and revised long term gold pricing. The IRR has
increased from 20% in the 2019 BFS to 25% in the 2021 BFS. The
increase in project economics is mainly driven by an increase in
the underlying commodity price assumptions which reflect the
long-term consensus estimate as at April 2021.
2021 Tulkubash Exploration programme
A key focus of the 2021 exploration and drill programme will be
to target the areas of the deposit recently reclassified in the
2020 resource model. Approximately 1,800 meters of infill drilling
are planned in 14 locations will target areas of known high
probability mineralization in the areas previously referred to as
mid and east pit.
In addition, the 2021 exploration programme also will focus on
areas to the north east of the current resources that indicate good
potential for further increasing the reserve base over the next few
years. Exploration will utilize a mix of drilling and trenching,
Exploration of the broader license area using drone based
geophysical techniques will be carried out to allow Chaarat to
enhance its understanding of the potential of the remaining license
area yet to be explored.
Construction Update
Delays due to the longer than expected COVID-19 movement
restrictions and political situation during 2020 and early 2021
together with delays on anticipated timing of the project financing
has resulted in the Company now expecting first gold production in
H2 2023.
The Tulkubash project requires two full construction seasons to
finalise all construction activities. This timing is impacted by
the winter weather conditions in the Chatkal region, affecting
concrete works and access to larger construction vehicles in the
winter months.
Work has started to clear snow and repair roads. Mobilisation of
personnel for exploration work will commence end of May. Full stage
construction activities will commence once project financing is
complete.
Project Financing Update
The Company completed an equity fundraise in February 2021
including USD 30m of new capital of which the majority will be
allocated to the construction of the Tulkubash project.
Chaarat is progressing to secure a project finance facility
that, together with the cash on hand, will fully fund the USD 115
million required for the construction of Tulkubash. It is
envisioned that the debt facility would comprise standard project
finance conditions, including the requirement that equity is spent
before debt drawdowns. This means that the first drawdown of the
debt is envisaged to be required in 2022 with the equity portion
used for the 2021 work.
While all workstreams on the debt financing have continued to
progress and the Company has been targeting completion in H1 2021,
the recent events in the mining sector in the Kyrgyz Republic may
defer the closing of such facility.
Chaarat is in advanced discussions with financing counterparties
who are completing their due diligence requirements and financing
documentation. While Chaarat is exploring traditional project
financing for a standalone project finance solution for Tulkubash,
the Company is also considering a comprehensive refinancing of its
current debt outstanding and financing of the Tulkubash project
through a fixed income debt instrument. This may result in Chaarat
initiating a series of fixed income investor meetings to explore
the viability of such an instrument. The proceeds from this
potential financing would be used for refinancing of existing debt
and to finance the project costs related to the Tulkubash gold
project.
Political situation in Kyrgyz Republic
The current disagreement between the government of the Kyrgyz
Republic and Centerra Gold Inc. has not affected the general
business climate in country. As advised by various government
spokespersons, the issue is specific to the details around the
long-standing agreement to operate the Kumtor mine and is in no way
reflective of the relationship of other businesses operating in the
country.
All such discussions have no impact on any of Chaarat's
operations or activities in country. Chaarat maintains strong
relations with its communities and government representatives and
has received positive feedback on its operations in country from
the new government during the latest visits and meetings.
However, the extensive media coverage of the discussions between
Centerra and the Kyrgyz Republic is expected to be negatively
perceived by potential future debt or equity investors and possibly
result in a delay in the project financing.
Artem Volynets, Chief Executive Officer, commented:
"The 2021 BFS provides a robust and conservative resource and
reserve estimate for Tulkubash and incorporates the latest updated
cost and macro estimates. In accordance with the study,
construction will require a further two seasons to complete,
meaning first gold is now expected in H2 2023. Our key milestone is
to secure the project debt financing for a fully funded project and
execute on the construction plan with full speed. Given the recent
events in the Kyrgyz Republic, we are cautious on closing the debt
financing within the next month as financiers will assess the
country situation further and may want to hold until the situation
is clearer.
I am proud of the team and the continuous work on the
environmental and social aspects of the project over the past
years. The baseline studies, thorough assessment of data and the
social engagements over the past years were well structured and
executed to international best practise standards.
Despite the adjustment in reserves and the unfortunate delay in
the project schedule, the Tulkubash project shows strong project
economics, with further upside at current price levels, and
confirms that there is significant upside potential in LOM
extensions. We will be targeting high potential areas classified as
Inferred Resources early in the 2021 exploration programme. "
Tulkubash Mineral Resource Statement
Classification Quantity Grade Au Contained
(M/t) (g/t) Metal Au
(koz)
======================== ========= ========= ==========
Measured
========= ========= ==========
Indicated 28.51 0.86 789
========= ========= ==========
Measured and Indicated 28.51 0.86 789
========= ========= ==========
Inferred 21.41 0.56 388
======================== ========= ========= ==========
Notes:
1. Numbers are rounded in accordance with disclosure guidelines
and may not sum accurately;
2. The Mineral Resource has been estimated using 5.0 m x 5.0 m x
5.0 m (x, y, z) blocks;
3. The estimate was constrained to the mineralised zone using
wireframe solid models;
4. The wireframes were sub-domained to isolate the strongly
mineralised main zone from the gold mineralisation in the main
structural corridor;
5. Grade estimates were based on 1.5 m composited assay
data;
6. The Mineral Resource estimate has been reported to 0.21 g/t
cut-off grade; and
7. The Mineral Resource estimate is based on 100% of the
Project. Çiftay, the Company's construction and equity partner, may
earn into the project over time.
Tulkubash Ore Reserve Estimate
Category Quantity Grade Content
(Mt) (g/t) (koz)
====================== ========= ======= ========
Proven Ore Reserve
========= ======= ========
Probable Ore Reserve 20.9 0.85 571
========= ======= ========
Combined Ore Reserve 20.9 0.85 571
====================== ========= ======= ========
Notes
1. Any apparent computational errors are due to rounding and are
not considered significant.
2. Ore Reserves are reported with appropriate modifying factors
of mining dilution (8%) and mining recovery (97.5%);
3. The Ore Reserve is defined using a 0.17 g/t recovered Au
cutoff, the equivalent of a 0.23 g/t marginal cutoff.
4. Ore Reserves are reported at the head grade delivered to the
leach pad;
5. The Ore Reserves are stated at a price of USD1,450/tr oz as
at 2020 EOY;
6. Although stated separately, the Mineral Resources are
inclusive of Ore Reserves;
7. No Inferred Mineral Resources have been included in the Ore
Reserve estimate; and
8. The Mineral Resource estimate is based on 100% of the
Project. Çiftay, the Company's construction and equity partner, may
earn into the project over time.
Enquiries
+44 (0)20 7499
Chaarat Gold Holdings Limited 2612
Artem Volynets (CEO) info@chaarat.com
Canaccord Genuity Limited (NOMAD and + 44 (0)20 7523
Joint Broker) 8000
Henry Fitzgerald-O'Connor
James Asensio
+44 (0)20 7220
finnCap Limited (Joint Broker) 0500
Christopher Raggett
Panmure Gordon (UK) Limited (Joint +44 (0)20 7886
Broker) 2500
John Prior
Hugh Rich
Competent Person Statement
Company Responsibility
LogiProc Overall project management;
mineral processing and metallurgical
testing; recovery methods;
project infrastructure; capital
cost estimate, economic analysis,
operating cost estimate, project
execution plan.
Viktor Usenko Geological block model and
Evgeny Fomichev associated data integrity.
Peter Carter Mining method review; and
ore reserve statement. Competent
person for ore reserves and
Mining Engineering.
WAI Environmental studies, permitting,
and social or community impact;
geochemistry; hydrology; hydrogeology.
Ausenco Heap leach facility design.
The 2020 Mineral Resource Estimate was produced by Victor
Usenko, Principal Geologist, MAIG, Director of the Department of
Solid Metals at the Institute of Geotechnologies Moscow ("IGT") who
has more than 13 years of experience in resource geology and Evgeny
Fomichev, Principal Geologist, MAIG, head of the geological
department at IGT who has more than 10 years of experience in
resource geology. Both are competent persons as defined by the JORC
code.
The statement of Ore Reserves has been reported in accordance
with the classification criteria of the JORC Code, 2012 and is 100%
attributable to Chaarat and prepared by Mr Peter C Carter, an
independent consulting mining engineer, based on a review of work
performed by Chaarat Gold technical staff. Mr Carter is a member of
the Association of Professional Engineers and Geoscientists of
British Columbia and is qualified as a Competent Person under the
JORC Code, 2012. Mr. Carter has over 30 years' experience in mine
engineering, operations, and management. He has completed
assignments in North America, Asia, and Africa with a focus on open
pit mining and significant exposure to heap leach operations.
The competent persons consent to the inclusion in this
announcement of the matters based on this information in the form
and context in which it appears.
About Chaarat
Chaarat is a gold mining company which owns the Kapan operating
mine in Armenia as well as the Tulkubash and Kyzyltash Gold
Projects in the Kyrgyz Republic. The Company has a clear strategy
to build a leading emerging markets gold company with an initial
focus on the former Soviet Union through organic growth and
selective M&A.
Chaarat is engaged in active community engagement programmes to
optimise the value of the Chaarat investment proposition.
Chaarat aims to create value for its shareholders, employees and
communities from its high-quality gold and mineral deposits by
building relationships based on trust and operating to the best
environmental, social and employment standards. Further information
is available at www.chaarat.com/ .
Appendix - JORC Table
Section 3. Estimation and Reporting of Mineral Resources
Criteria JORC Code explanation Commentary
=============== ============================================================ ================================================================
Database
integrity * Measures taken to ensure that data has not been * Databases are compiled directly by the operator on
corrupted by, for example, transcription or keying site. All drilling data is securely stored in Excel
errors, between its initial collection and its use spreadsheets. The database is backed up by Chaarat
for Mineral Resource estimation purposes. off- and on site.
* Data validation procedures used. * Assay data was cut and pasted into the database from
electronic versions of the laboratory reports.
* The drill hole database used for Mineral Resource
estimation has been internally validated and
externally audited, by Gustavson and Associates
(2014), by GeoSystems International (GSI, 2018) and
by Sound Mining (2019).
* The databases have been additional checked for logic
errors using Micromine inbuilt routines.
* All drilling data is securely stored in Excel
spreadsheets. The database is backed up by Chaarat
off- and on site.
------------------------------------------------------------ ----------------------------------------------------------------
Site visits
* Comment on any site visits undertaken by the * The Competent Person visited Chaarat from August 25th
Competent Person and the outcome of those visits. through August 28th, 2014, again from August 30th
through September 3rd, 2017, and again from August
7th through August 13th, 2018.
* If no site visits have been undertaken indicate why
this is the case.
=============== ============================================================ ================================================================
Geological
interpretation * Confidence in (or conversely, the uncertainty of) the * Mineralization and associated hydrothermal alteration
geological interpretation of the mineral deposit. at Chaarat are genetically associated with igneous
intrusive rocks along a system of regional-scale,
dextral, oblique-slip faults.
* Nature of the data used and of any assumptions made.
* At this stage of knowledge, the geological
* The effect, if any, of alternative interpretations on interpretation of the mineralized zones is deemed to
Mineral Resource estimation. be reliable.
* The use of geology in guiding and controlling Mineral * The interpretation was based only on the actual data
Resource estimation. for drill holes, underground adits, trenches and
roads.
* The factors affecting continuity both of grade and
geology. * Conclusions on geological/structural environment of
the deposit based on previous works carried out
within Tulkubash and observations made in 2018 by IGT
Chief Geologist Andrey Chitalin. Structural control
of mineralization is the main factor for the
Tulkubash deposit. All other factors were checked
(lithology, alteration etc.) in an initial IGT report
(2018). Pre- or syn-mineralization stage predefined
the shape of the deposit within the right strike-slip
fault conditions with extension (transtension).
Sinistral strike-slip fault is the
post-mineralization stage. This structural assumption
predefined the style of interpretation of the deposit
as linear extended mineralized zones.
* Overall, there is good level of confidence in the
geological continuity although small scale variation
in grade means that high confidence in grade
continuity is limited to those areas drilled at a
closer spacing ( .APPROX. 20m).
* Based on visual and statistical analysis of gold
grade distribution, high-grade and low-grade domains
were identified. Mineralized zones (high grade
domains) were interpreted on cross-section using 0.7
g/t cut-off grade. Interpretation was carrying out as
mineralized zones so internal dilution included where
appropriate to get better thickness variability.
Low-grade domain was interpreted using 0.2 g/t gold
grade which is close to tailings grades. Low-grade
domain interpretation was carrying out according to
the high-grade domain interpretation and in a view of
structural model of the deposit.
* No alternative interpretation is considered or
assumed at this stage.
------------------------------------------------------------ ----------------------------------------------------------------
Dimensions
* The extent and variability of the Mineral Resource * The Mineral Resource extends 4,800 m along strike,
expressed as length (along strike or otherwise), plan maximum plan width of 500 m and a maximum depth below
width, and depth below surface to the upper and lower surface of 300 m.
limits of the Mineral Resource.
=============== ============================================================ ================================================================
Estimation and
modelling * The nature and appropriateness of the estimation * The Mineral Resource was estimated into a block model
techniques technique(s) applied and key assumptions, including using ordinary kriging for Au. Ag were also estimated
treatment of extreme grade values, domaining, but not reported as Resource.
interpolation parameters and maximum distance of
extrapolation from data points. If a computer
assisted estimation method was chosen include a * The block model is prepared in Micromine software.
description of computer software and parameters used.
* Block model with parent block size of 5 x 5 x 5 m
* The availability of check estimates, previous were generated within the wireframe domains models as
estimates and/or mine production records and whether it is considered to best reflect gold distribution
the Mineral Resource estimate takes appropriate and similar to the considered SMU. Minimum subcelling
account of such data. was 1m. IGT subsequently checked how block size
affects resource estimation including comparison with
a 10 m SMU block model.
* The assumptions made regarding recovery of
by-products.
* Grade estimates were based on 1.5 m composited assay
data.
* Estimation of deleterious elements or other non-grade
variables of economic significance (e.g., sulphur for
acid mine drainage characterisation). * Ellipse based on geostatistics initially. Meanwhile,
dynamic anisotropy was used during the interpolation.
Some subdomains were determined, and different
* In the case of block model interpolation, the block ellipse orientation applied. Constant parameters for
size in relation to the average sample spacing and Ellipse were 40.6 x 18.5 x 27.1 m, 4 sectors.
the search employed.
* The block model was generated in 6 runs using the
* Any assumptions behind modelling of selective mining different interpolation parameters (min drill holes,
units. min points, max points/sector, radius factor).
* Any assumptions about correlation between variables. * Block model was checked visually from section to
section, on plan and grade distribution in block
model match assays results.
* Description of how the geological interpretation was
used to control the resource estimates.
* No assumptions have been made regarding the recovery
of any by-products.
* Discussion of basis for using or not using grade
cutting or capping.
* No estimation of deleterious components was carried
out.
* The process of validation, the checking process used,
the comparison of model data to drill hole data, and
use of reconciliation data if available. * Domains were generated following visual and
statistical analysis of gold
mineralisation/distribution. Consequently, a low- and
high-grade domain was generated based on a 0.2 and
0.7 g/t Au cut-off.
* Log probability plots were analysed for each domain
(and sub-domain) to review and support the
requirement of top cuts. Top cuts were then applied
on a domain basis.
* Comparison to previous estimates is not considered
relevant due to an increase in the available data and
amendments to the interpretation and mineralised
domains, as well as technical and economic parameters
applied. The previous mineral resource is summarised
in the main body of the report. The current mineral
resource is considered to be more robust and better
reflect the mineral resources of the Tulkubash
deposit.
------------------------------------------------------------ ----------------------------------------------------------------
Moisture
* Whether the tonnages are estimated on a dry basis or * All Mineral Resource tonnages are estimated and
with natural moisture, and the method of reported on a dry basis.
determination of the moisture content.
=============== ============================================================ ================================================================
Cut-off
parameters * The basis of the adopted cut-off grade(s) or quality * Mineral Resources have been reported at cut-off grade
parameters applied. of 0.21 g/t Au . Cut-off grade determined using
appropriate economic and technical parameters for
open pit mining operations.
------------------------------------------------------------ ----------------------------------------------------------------
Mining factors
or assumptions * Assumptions made regarding possible mining methods, * Mining would be through conventional open pit
minimum mining dimensions and internal (or, if methods.
applicable, external) mining dilution. It is always
necessary as part of the process of determining
reasonable prospects for eventual economic extraction * The Company believes there are no mining factors
to consider potential mining methods, but the which affect the assumption that deposit has
assumptions made regarding mining methods and reasonable prospects for eventual economic mining.
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 * In order to adhere to the guidelines of the JORC Code
of the mining assumptions made. (2012) that a Mineral Resource should display
reasonable prospects for eventual economic assessment
IGT has constrained the Mineral Resource to that
portion of the deposit which falls within a
conceptual open pit which is based on reasonably
assumed economic and mining parameters.
* The key parameters used in the pit optimisation are
shown in the below:
Au price of US$ 1,800/oz
Au recovery of 73.3%
Mining of US$ 1.89/t mined
Extra Ore Mining of US$ 0.84/t ore
Processing of US$ 4.25/t ore
Stacking of US$ 0.54/t ore
Owner's Mining Cost of US$ 0.34/t ore
G&A cost of US$ 1.27/t ore
Discount Rate of 5.0%
=============== ============================================================ ================================================================
Metallurgical
factors or * The basis for assumptions or predictions regarding * Metallurgical parameters have been taken from the
assumptions metallurgical amenability. It is always necessary as metallurgical tests and metallurgical test work
part of the process of determining reasonable results support the recovery.
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.
------------------------------------------------------------ ----------------------------------------------------------------
Environmental
factors or * Assumptions made regarding possible waste and process * There are not considered to be any environmental
assumptions residue disposal options. It is always necessary as factors likely to affect the assumption that the
part of the process of determining reasonable deposit has reasonable prospects for eventual
prospects for eventual economic extraction to economic extraction.
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.
=============== ============================================================ ================================================================
Bulk density
* Whether assumed or determined. If assumed, the basis * Dry bulk density is measured using a paraffin-coated
for the assumptions. If determined, the method used, immersion (Archimedes) method to evaluate the
whether wet or dry, the frequency of the measurements specific gravity (SG).
,
the nature, size, and representativeness of the
samples. * Density (SG) values have been estimated and included
in the block model.
* The bulk density for bulk material must have been
measured by methods that adequately account for void * The density estimate was based upon 1,420 dry
spaces (vugs, porosity, etc), moisture and specific gravity determinations, completed by
differences between rock and alteration zones within Chaarat.
the deposit.
* Discuss assumptions for bulk density estimates used
in the evaluation process of the different materials.
------------------------------------------------------------ ----------------------------------------------------------------
Classification
* The basis for the classification of the Mineral * Classification of Mineral Resources is based upon a
Resources into varying confidence categories. review of geological continuity and complexity,
quality of supporting data, spatial grade continuity
and quality of block model.
* Whether appropriate account has been taken of all
relevant factors (i.e., relative confidence in
tonnage/grade estimations, reliability of input data, * Mineral resource classification was made manually
confidence in continuity of geology and metal values, from section to section.
quality, quantity, and distribution of the data).
* Following criteria have been took in account during
* Whether the result appropriately reflects the resource classification:
Competent Person's view of the deposit.
* Variography results (40m is the regular distance
along strike for Indicated resources).
* Grade/thickness variability and continuity.
* Drill hole spacing.
* Confirmation of grades on surface (trenches/roads).
* Total depth of mineral resource classification was
defined (for Inferred resources up to 80m along
strike and along dip).
* The model has been classified into the categories of
Indicated and Inferred. IGT assumes that measured
mineral resources could not be classified for
Tulkubash deposit due to a lot of exploration issues
within the main zone of the deposit.
* The results of the validation of the block model
shows acceptable correlation of the input data to the
estimated grades.
* The Competent Person is confident that all relevant
factors have been considered and the results reflect
his views.
=============== ============================================================ ================================================================
Audits or
reviews * The results of any audits or reviews of Mineral * External reviews of Mineral Resource were performed
Resource estimates. by Wardell Armstrong International (WAI) and by
Roscoe Postle Associates Inc. (RPA).
* An external peer reviews by independent third parties
revealed no material concerns.
------------------------------------------------------------ ----------------------------------------------------------------
Discussion of
relative * Where appropriate a statement of the relative * The Mineral Resource estimate is appropriate for the
accuracy/ accuracy and confidence level in the Mineral Resource style of mineralization and available data. IGT
confidence estimate using an approach or procedure deemed considers that the current drill hole spacing is
appropriate by the Competent Person. For example, the sufficient to demonstrate geological continuity of
application of statistical or geostatistical the main geological structures hosting the
procedures to quantify the relative accuracy of the mineralization.
resource within stated confidence limits, or, if such
an approach is not deemed appropriate, a qualitative
discussion of the factors that could affect the * Accuracy of the Mineral Resource estimate is
relative accuracy and confidence of the estimate. represented in the model classification.
* The statement should specify whether it relates to * The Mineral Resource relates to global estimates.
global or local estimates, and, if local, state the
relevant tonnages, which should be relevant to
technical and economic evaluation. Documentation * The application of top-cuts and compositing in the
should include assumptions made and the procedures Mineral Resource estimation are considered
used. appropriate at this stage of development. Any
additional sampling works, however, may necessitate a
revision of the top-cuts used.
* These statements of relative accuracy and confidence
of the estimate should be compared with production
data, where available. * The Mineral Resource estimation methodology used is
deemed appropriate based upon validation of the model
using visual, statistical, and graphical checks. The
use of alternative methods is likely to yield only
minor changes to the global Mineral Resource
estimate.
* The mineralization domains have been adhered to
through the geostatistical and grade estimation works,
and the spatial distribution of grade in the final
Mineral Resource model is representative of the
sample data.
------------------------------------------------------------ ----------------------------------------------------------------
Section 4
Criteria JORC Code explanation Commentary
Site Visits
* Comment on any site visit undertaken by the Competent * Peter C. Carter is qualified as a CP under JORC code
Person and the outcome of those visits (2012)
* As a previous member of Chaarat staff, Mr. Carter has
visited the site on numerous occasions in 2018 and
2019
* There have been no material changes to the project
site with respect to Ore Reserves since Mr. Carter's
last site visit
------------------------------------------------------------- ---------------------------------------------------------------
Study Status
* The type and level of study undertaken to enable the * The basis for the conversion of the Mineral Resource
Mineral Resource to be converted to Ore Reserves to an Ore Reserve is the 2019 Updated Feasibility
Study completed by LogiProc PLC and Sound Mining Inc.
of Johannesburg.
* The code requires that a study, at least to
Pre-feasibility Study level has been undertaken to
convert Mineral Resources to Ore Reserves. Such * The study represents a Class 3 estimate of the
studies will have been carried out and will have project value with an accuracy of -10% to +15%.
determined a mine plan that is technically achievable
and economically viable, and that material Modifying
Factors have been considered. * The study determined the project to be both
technically and economically viable.
* Modifying Factors have been considered in the
conversion of the Mineral Resource to an Ore Reserve
------------------------------------------------------------- ---------------------------------------------------------------
Cutoff Grade
* Nature of cutoff grade * A cutoff grade for recovered Au was employed due to
the variable recovery in the geo-metallurgical model.
* The cutoff grade parameters are based on those from
the 2019 FS with mining and refining costs updated
* Recovered Au cutoff = 0.17 g/t Au
* True marginal cutoff = 0.24 g/t Au at 74% recovery
------------------------------------------------------------- ---------------------------------------------------------------
* Parameters used to calculate cutoff grade * Owner's Mining = 0.34 $/t ore
* Ore Haul = 0.72 $/t ore
* Process = 4.80 $/t ore
* G&A = 1.25 $/t ore
* Refining = 9.78 $/oz
* Gold Price = 1,450 $/oz Au
* Royalty = 12%
------------------------------------------------------------- ---------------------------------------------------------------
Mining Factors
or Assumptions * The methods and assumptions used as reported in the * Mineral Resource model used a parent block size of 5
PFS or FS to convert the Mineral Resource to an Ore m x 5 m x 5 m which respects the selective mining
Reserve. unit
* Pit optimization conducted with Whittle 4X
* Mining costs were $2.55/t ore and $1.83/t waste
* Other parameters as per cutoff grade calculation and
recommended pit slopes
* Shells optimized for $1,000-$1800/oz Au
* $1,450/oz shell selected as basis for pit design
* Manual design process using GEMS software used to
generate minable pit design
* Ore Reserve inside manual design within 5% of the
minable resource within optimized shell
------------------------------------------------------------- ---------------------------------------------------------------
* Use of Inferred Mineral Resources * Inferred Mineral Resources were not permitted to
influence the pit optimization and were treated as
waste during mine design and reserve calculation
------------------------------------------------------------- ---------------------------------------------------------------
* Dilution and Mining Recovery * 0.5 m "dilution skin" modelled around ore
* Average dilution 8.6% at
* Dilution grade high due to presence of Inferred
resources adjacent to ore zones
* Mining losses estimated at 2.5% resulting in 97.5%
ore recovery
------------------------------------------------------------- ---------------------------------------------------------------
* Geotechnical * Pit slopes based on slope design study by WAI in 2017
* IRAs of 51o and 58o
* Overall slopes of 40-50o
* 5 m benches; 8 m berms; 20 m highwalls
* Design criteria extrapolated to Mid Zone as those
areas host only 8% of the reserve
------------------------------------------------------------- ---------------------------------------------------------------
* Adjusted Reserve * 19.7 Mt ore grading 0.86 g/t Au containing 546 Koz Au
* 52.7 Mt associated waste
* 2.7:1 strip ratio
* 72.4 Mt total material
------------------------------------------------------------- ---------------------------------------------------------------
* Open Pit Description * 3 pits arranged along 2 km of strike
* Main Zone (MZ) Pit; 1 large pit; contains 94% of the
reserve
* Mid Zone; 2 small pits; 6% of reserve
------------------------------------------------------------- ---------------------------------------------------------------
Mining Plan
* Mining Approach * Contract mining
* Contracting reduces capital costs and training burden
* Contractor experienced in western-style open pit gold
mining
* Contractor has similar culture and language as local
workforce
------------------------------------------------------------- ---------------------------------------------------------------
* Mining Method * Conventional drill-blast, truck-shovel open pit
mining method
* Small equipment able to provide production capacity,
selectivity, and flexibility in restricted working
areas
------------------------------------------------------------- ---------------------------------------------------------------
* Mine Production Plan * 5.4 years of mining including 1.1 years of
pre-stripping
* 350 days of operation per year
* Average mining rate, 40,000 tpd over LOM
* Peak mining rate, 55,000 tpd, 2023-2024
* Average strip ratio during operating period, 2.2:1
------------------------------------------------------------- ---------------------------------------------------------------
* Ore Control * Blasthole cuttings tested for g/t Au, % Total Sulphur,
CN solubility
* Geologists log cuttings for degree of oxidation
* Ore and waste blocks flagged by surveyors for
excavation
------------------------------------------------------------- ---------------------------------------------------------------
* Mine Water Management * Groundwater inflows of 4-6 m3/hr anticipated
* Inflows to be collected in sumps and pumped to a
holding pond
* Runoff will be diverted around the open pits by
ditches
* Collected water used for dust suppression or treated
and released
------------------------------------------------------------- ---------------------------------------------------------------
* Slope Stability * Pre-shear and buffer blasting to protect pit walls
* Walls to be cleaned with by excavators with hydraulic
hammers
* Visual inspections and survey employed to monitor
movement
* Mapping of structural features to optimize design
safety
------------------------------------------------------------- ---------------------------------------------------------------
* Mining Equipment * 5 x 5 m3 excavator + 1 x 5 m3 FEL
* 6 x crawler-type, 125 mm, blasthole drills
* 55 x highway-type, 30t haul trucks
* Peak truck requirements, 80 units in 2023
* 40-50 t bulldozers and 200 HP graders in support
------------------------------------------------------------- ---------------------------------------------------------------
Mine
Infrastructure * Dumps & Stockpiles * Main waste dump
* 4 Mt of waste used to backfill pits in 2026
* Ore SP 500 kt capacity located near Sandalash River
bridge
* All stockpiled ore processed by end of LOM
------------------------------------------------------------- ---------------------------------------------------------------
* Mine Roads * Dual access to MZ Pit
* 6.5 Km Ore Haul Road from Sandalash River bridge to
ROM Pad
* All haul roads 15 m wide for 2-way traffic; maximum
grade 10%
------------------------------------------------------------- ---------------------------------------------------------------
* Mine Facilities * Maintenance Workshop
* Magazine
* AN Storage
* Fuel Farm
* Offices & communications
------------------------------------------------------------- ---------------------------------------------------------------
Metallurgical
Factors or * Proposed metallurgical process and flowsheet * Heap leach (HL) processing selected
assumptions
* 3-stage crushing of ore to P100 12 mm
* Crushed ore stacked by trucks in 7 m lifts on
valley-fill leach pad
* Au adsorbed onto activated carbon from PLS in CIC
circuit
* Loaded carbon stripped in AARL-type elution circuit
* Electrowinning and smelting on site produce dore for
shipment
------------------------------------------------------------- ---------------------------------------------------------------
* Appropriateness of process to the style of * About 70% of the Au is readily CN soluble
mineralization
* Host rock fractures easily to produce 12 mm crush
* No agglomeration at crush sizes > 6 mm
* Lowest capital and operating costs for treating low
grade, oxidized ore
------------------------------------------------------------- ---------------------------------------------------------------
* Is the metallurgical process well-tested or novel in * Process is robust and widely used
nature?
* Practical for cold-weather conditions
* Heap leaching proven globally over last 40 years
------------------------------------------------------------- ---------------------------------------------------------------
* Nature of metallurgical test work * Process scoping test work conducted by Mintek, SGS,
RDI, BGRIMM, and Hazen
* HL test programs by WAI (2017), MLI (2018), SAEL
(2019)
* HL testing included bottle roll (BR), column leach
(CL), load-permeability, and agglomeration test work
------------------------------------------------------------- ---------------------------------------------------------------
* Amount and representativeness of metallurgical test * 93 composite samples tested in all three programs
work
* 78 BR and 11 CL tests produced results representing
potential leach feed
* 75% of samples from Main Zone, 25% from Mid Zone and
potential East Zone
* Results indicate BR good proxy HL recovery
------------------------------------------------------------- ---------------------------------------------------------------
* Nature of metallurgical domaining * Sulphide and oxide domains defined
* Three oxidation states established
* BR and CL results matched to each ox state
* IDW2 used to estimate recovery for individual blocks
in oxide domain
------------------------------------------------------------- ---------------------------------------------------------------
* Metallurgical recovery factors applied * Recoveries derived from geo-metallurgical model
* Overall recovery for the Ore Reserve 74%
* Average recovery in Main Zone 73%, Mid Zone 78%
------------------------------------------------------------- ---------------------------------------------------------------
* Assumptions or allowances for deleterious elements * Ore is associated with arsenic and antimony
* Neither element is present in amounts which affect
the selected process or create environmental issues
------------------------------------------------------------- ---------------------------------------------------------------
* Existence of bulk sample or pilot scale test work and * No bulk samples or pilot scale test work has been
the degree to which such samples are considered conducted
representative
* The samples tested are representative of the
variability of leach feed across the entire known
deposit
------------------------------------------------------------- ---------------------------------------------------------------
* For minerals that are defined by specification, has * The Ore Reserve is not defined by a specification
the ore reserve estimate been based on the
appropriate mineralogy to meet the specification?
------------------------------------------------------------- ---------------------------------------------------------------
Environmental
* The status of studies of potential environmental * ESIA completed by WAI in 2018
impacts of the mining and processing operations.
* Kyrgyz EIA (OVOS) completed in 2015
* OVOS being updated in support of project permitting
------------------------------------------------------------- ---------------------------------------------------------------
* Details of waste rock characterization * NAG testing in 2020 on 110 samples distributed
throughout deposit
* Average NAG pH 5-6 indicating little or no acid
generating potential
* Complimentary ABA testing underway
------------------------------------------------------------- ---------------------------------------------------------------
* Consideration of potential sites and status of design * Project site terrain is extremely rugged and
options considered constrained
* Only location able to accommodate the heap leach pad
and process facility was the selected Dry Valley site
* Dry Valley enables a valley-fill leach pad design
suited for cold weather operation
* Detailed engineering is in progress
------------------------------------------------------------- ---------------------------------------------------------------
* Status of approvals for process residue storage and * Dry Valley location for the heap leach pad is
waste dumps approved
* MZ waste dump in the Irisai Valley is approved
* Permitting process for various aspects of the process
facility is ongoing
------------------------------------------------------------- ---------------------------------------------------------------
Infrastructure
* Existence of appropriate infrastructure * New site access road completed
* Exploration/Pioneer camps established
* Permanent camp under construction
* All other infrastructure to be provided during
construction
------------------------------------------------------------- ---------------------------------------------------------------
* Availability of land for development * Chaarat has been granted surface rights for the land
required to develop the project
------------------------------------------------------------- ---------------------------------------------------------------
* Power * A 4.5 MW diesel-fired power plant will supply the
site with electricity
------------------------------------------------------------- ---------------------------------------------------------------
* Water * Process water and raw water will be sourced from
boreholes located near the plant and camp
respectively
* Raw water at the camp and ADR plant will be treated
to generate potable water
------------------------------------------------------------- ---------------------------------------------------------------
* Transportation * All personnel, goods, and materials will be
transported to and from site via road
* Bulk materials and equipment will arrive by rail in
Bishkek, 750 km from site, finishing the journey by
truck
------------------------------------------------------------- ---------------------------------------------------------------
* Labour * The project workforce is estimated at 720
* On a 15-15 continuous shift schedule, half the
workforce will be on site at any given time
* 80% of the workforce is expected to be national with
a target of 30% coming from local villages
------------------------------------------------------------- ---------------------------------------------------------------
* Accommodation * The workforce will be housed on site in a 360-man
permanent camp
------------------------------------------------------------- ---------------------------------------------------------------
* Ease with which infrastructure can be provided * All infrastructure will be installed during the
construction period
* The construction period 18-months but some works are
seasonally dependent
------------------------------------------------------------- ---------------------------------------------------------------
Costs
* Derivation and assumptions regarding capital costs * Capital costs adjusted from 2019 FS Update LOM
estimate to $125 M
* Initial capital = $109 M
* Deferred and Closure costs = $16 M
* Contingency was applied at 10%
* The estimate has an accuracy of -10% to +15% under
the AACE cost classification system
------------------------------------------------------------- ---------------------------------------------------------------
* Methodology used to estimate operating costs * Mining cost from quote by the Contractor based on the
detailed mine plan
* Process, Owner Mining, and G&A were developed from
first principles based on detailed operating plans
* All other are based on the 2019 FS Update
------------------------------------------------------------- ---------------------------------------------------------------
* Allowances made for deleterious elements * Project does not incur any added cost due to
deleterious elements
------------------------------------------------------------- ---------------------------------------------------------------
* Source of exchange rates used in the study * Exchange rates for Roubles, Som, and Euros to USD
were as per prevailing rates in H1 2019
------------------------------------------------------------- ---------------------------------------------------------------
* Derivation of transportation charges * Transportation costs were included in the price of
all goods and materials
* Cost of shipping was based on estimates a specialist
logistics service provider in the region
------------------------------------------------------------- ---------------------------------------------------------------
* Basis for forecasting refining charges * Refining charges were based on advice from the Kyrgyz
gold refinery at Kara-Balta
------------------------------------------------------------- ---------------------------------------------------------------
* Allowances for royalties, both government and private * Kyrgyzstan has a sliding scale royalty system pegged
to gold price
* At a gold price of $1,450/oz Au the royalty payable
is 12%
* No private royalty payable on the project
* Royalties are applied in lieu of corporate tax in
Kyrgyzstan
------------------------------------------------------------- ---------------------------------------------------------------
Revenue
Factors * Head grade and recovery * Average head grade 0.86 g/t Au from the block model
* Average Au recovery 74% from geo-metallurgical model
------------------------------------------------------------- ---------------------------------------------------------------
* Metal price * Average gold price $1,450/oz Au over LOM
* Forecast from BoA/Merrill Lynch
* Conservative compared to World Bank Q2 2020 forecast
* By-product silver priced at $17.50/oz
------------------------------------------------------------- ---------------------------------------------------------------
* Exchange rates * Exchange rates are based on actuals from H1 2019
------------------------------------------------------------- ---------------------------------------------------------------
* Transportation and treatment charges * Refining and transport costs from Kyrgyz national
gold refinery at Kara-Balta and a bonded carrier
respectively
------------------------------------------------------------- ---------------------------------------------------------------
* Refining penalties * No penalties payable on Tulkubash dore
------------------------------------------------------------- ---------------------------------------------------------------
* Net Smelter Returns * Dore, 45% Au and 55% Ag, payable 99.5% and 85%
respectively
------------------------------------------------------------- ---------------------------------------------------------------
Market
Assessment * The demand, supply, and stock situation for the * All producers of precious metals in Kyrgyzstan are
commodity, consumption trends and factors likely to obliged to offer their output for sale to the
affect supply and demand in the future National Bank of the Kyrgyz Republic (NBKR) at world
spot prices
* If NBKR declines to purchase metals offered, the
producer is free to directly sell on world markets
------------------------------------------------------------- ---------------------------------------------------------------
* Not applicable
* A customer/competitor analysis along with
identification of likely market windows for the
product
------------------------------------------------------------- ---------------------------------------------------------------
* Price and volume forecasts and the basis of these * The forecast gold price averages $1,450/oz over LOM
forecasts
* The project will produce approximately 96 Koz
annually over 4 years of full operation
------------------------------------------------------------- ---------------------------------------------------------------
* Not applicable
* For industrial minerals, the customer specification,
testing, and acceptance requirements prior to a
supply contract
------------------------------------------------------------- ---------------------------------------------------------------
Economic
* Production Plan * Operations will mine 19.7 Mt ore grading 0.86 g/t Au
and 52.7 Mt associated waste over 5.4-year period
* Project will recover 401 Koz primary Au and 515 Koz
by-product Ag over a 4.9-year LOM
* LOM includes 6 months of residual production while
rinsing the heap
------------------------------------------------------------- ---------------------------------------------------------------
* Capital Costs * 2019 FS LOM capital of $127 M adjusted to $125 M
* Initial CAPEX decreased $2 M for 2019 sunk costs
------------------------------------------------------------- ---------------------------------------------------------------
* Operating Costs * Mining, Contract = $2.07/t mined
* Mining, Owner = $0.34/t ore
* Process = $4.77/t ore
* G&A = $1.25/t ore
* All costs applicable to the 4.3-year full production
period
* Some LOM production costs occur prior to First Gold
and therefore are accounted for in CAPEX
------------------------------------------------------------- ---------------------------------------------------------------
* Financial Considerations * Royalty applied at 12% in lieu of tax
* Base Case discount rate = 5%
* Project value calculated from Jan 1, 2020
* Model is unleveraged, assumes 100% equity
------------------------------------------------------------- ---------------------------------------------------------------
* Cost Exclusions * Inflation
* Engineering
* Permitting
* Exploration
* Interest and financing charges
------------------------------------------------------------- ---------------------------------------------------------------
* Economic Performance * After-tax NPV discounted at 5% = $85 M
* After-tax IRR = 27%
* Simple Payback = 2.6 years
------------------------------------------------------------- ---------------------------------------------------------------
* Comparison to 2019 FS * 21% increase in NPV at $1,450/oz Au
* 13% decrease in NPV at $1,300/oz Au
------------------------------------------------------------- ---------------------------------------------------------------
* Sensitivity Analysis * Project NPV declines to $69 M and $55 M at discount
rates of 7.5% and 10% respectively
* Changes of 1% in CAPEX and OPEX result in $1 M and $2
M changes in NPV, respectively
* 1% changes in gold price result in $3-$4 M changes in
NPV
* Project is breakeven is at a gold price of about
$1,090/oz Au
------------------------------------------------------------- ---------------------------------------------------------------
Social
* Status of agreements with key stakeholders and * Chaarat has a standing agreement to fund annual
matters leading to social license to operate "social package" for Chatkal as per Kyrgyz
legislation
* Chaarat has committed to hiring quotas from local
villages
* Chaarat has promoted the development of local
business, education, and social events
* Chaarat maintains a program of engagement with the
local government and population
------------------------------------------------------------- ---------------------------------------------------------------
Other
* Naturally Occurring Risks * The project is subject to risks from geohazards,
seismicity, and extreme weather
* The project design has been developed to mitigate,
control, or manage these risks
------------------------------------------------------------- ---------------------------------------------------------------
* Legal Agreements * Chaarat has partnered with its Mining Contractor,
Ç iftay Insaat
* Ç iftay has taken a 12% stake in the project
worth $31 M
* Ç iftay will perform construction earthworks,
mining, ore stacking, and operate the Permanent Camp
under a variety of separate contracts
* Chaarat has identified Aggreko to potentially supply
power under a rental agreement
* Aggreko will install and operate the power plant at
an estimated cost of $0.197/kwHr
* Chaarat will conclude long-term contracts to ensure
an adequate supply of fuel and sodium cyanide
------------------------------------------------------------- ---------------------------------------------------------------
* Permitting * Chaarat holds a mining license for the operating area,
700 ha, and an exploration license for the
surrounding 6,770 ha
* Surface rights have been secured for all land
required to develop the project
* Permitting process is actively working to acquire all
permits and approvals required for construction and
operation
* Resolution of the dispute regarding the Besh-Aral
protected area is in progress
------------------------------------------------------------- ---------------------------------------------------------------
Ore Reserve
Classification * Basis for classifying the ore reserve into various * Drillhole data density
confidence categories
* Search for Probable reserves 40 m
* Grade/thickness variability
* Continuity along strike
------------------------------------------------------------- ---------------------------------------------------------------
* Do the results reflect the CP's view of the deposit? * Yes. The absence of Measured resources precludes
declaring Proven reserves
* The Probable reserves are based on accepted standards
for similar deposits and appropriately reflect the
quality of the geologic, technical, and economic
factors used to define them
------------------------------------------------------------- ---------------------------------------------------------------
* What proportion of Probable Ore Reserves have been * None, there are no Measured resources
derived from Measured Mineral Resources?
------------------------------------------------------------- ---------------------------------------------------------------
Audits or
Reviews * Results of any audits or reviews of the Ore Reserve * No external audits or reviews have been completed on
estimate the new Ore Reserve
* External reviews of the underlying resource have been
conducted by SLR Consulting and WAI
------------------------------------------------------------- ---------------------------------------------------------------
Discussion
of relative * Qualitative discussion of the factors that would * Mineral Resource Estimate based on an additional
accuracy affect the accuracy and confidence of the estimate 20,000 m of drilling
/confidence
* State whether the accuracy/confidence refers to the * More rigorous resource classification criteria make
global or a local Ore Reserve estimate the Ore Reserve estimate more conservative than
previous estimates
* Mineral Resource Estimate reviewed by external
parties with no fatal flaws found
* Accuracy and confidence refer to the global Ore
Reserve estimate
* Project design is flexible enough to accommodate
local variations in presentation of tonnage and grade
------------------------------------------------------------- ---------------------------------------------------------------
* Modifying Factors which may affect the * The mining plan employs a conventional approach with
accuracy/confidence of the Ore Reserve estimate reasonable mining rates.
* Some geotechnical and hydrogeological factors need
further definition, however, this will not affect the
accuracy of the Ore Reserve estimate
* The process technology is proven based on a
comprehensive recovery estimate
* CAPEX and OPEX estimates are FS-level
* The project can manage variations in metal and
commodity prices of 10-20%
* The project is subject to political and regulatory
risks whose management is consistent with the
accuracy of the Ore Reserve estimate
* Natural risks such as geohazards and seismicity have
been considered in the project design
------------------------------------------------------------- ---------------------------------------------------------------
Glossary of Technical Terms
"Ag" chemical symbol for silver
"Au" chemical symbol for gold
"AuEq" the value of a tonne of mineralised material
calculated by summing the value of each contained
payable metal and expressing it as an equivalent
gold content at a given set of metals prices
"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
ESIA Environmental & Social Impact Assessment
"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)
"Probable Reserve" the part of Indicated and in some cases Measured
Resource that can be mined at a profit. It includes
diluting materials and allowances for losses
"Proven Reserve" that may occur during mining.
the part of Indicated Measured Resource that
can be mined at a profit. It includes diluting
materials and allowances for losses that may
occur during mining.
"Reserve" the part of a Measured and/or Indicated Mineral
Resource that can be mined at a profit. Reserves
are subdivided in order of increasing confidence
into Probable and Proven categories when reporting
under JORC.
"t" tonne (= 1 million grammes)
WAI Wardell Armstrong International
ENDS
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