2016 Maly Kurumkon/Flangovy Inaugural Drill Report

 

1 June 2016

 

AMUR MINERALS CORPORATION

(AIM: AMC)

 

2016 Maly Kurumkon / Flangovy Inaugural Drill Report

 

High Grade Zone Expanded to 2.2 Kilometres Total Length

Infill Intersections of 63 Metre Thickness Averaging 0.83% Ni

 

Amur Minerals Corporation ("Amur" or the "Company"), a nickel-copper sulphide mineral exploration and resource development company focused on the far east of Russia, is pleased to announce the first set of drill results from its Maly Kurumkon / Flangovy ("MKF") drill programme at Kun-Manie. 

 

Highlights:

 

·     Drilling was initiated on 5 May 2016, a month ahead of schedule.  As at 28 May 2016, the LF70 and newly purchased LF90 drill rigs have drilled a total of 2,457.3 metres averaging 102 metres per day. 

 

·     Infill drilling has identified that the 1,900 metre long high grade zone continues for an additional 300 metres to the west bringing its total length to 2,200 metres.

 

·     Infill drilling indicates the existing Inferred resource is conservative with regard to tonnage and grade.  Over the Inferred model area, the infill drill thicknesses are substantially greater (43.9 metres versus 19.9 metres) than the previously available drill results and the contained average nickel grade is also higher at 0.83%, up from 0.70%.  Copper is indicated to be 0.24%, up from 0.17%.  A resource update for this 300 metre long area should provide a substantial increase in the MKF resource.

 

·     The infill drilled area has now been completed on a drill grid which has historically been used to classify resources as Indicated.  The Company anticipates that future resource updates of this Inferred resource will be upgraded to the Indicated JORC category.  This category of resource can be utilised to define reserves.

 

·     The infill drilled area will likely add to the reserve totals.  Depending on availability and timing, any reserve derived from this area may be considered as a part of the reserve for use in the DFS.

 

·     Step out drilling (condemnation drilling) is underway.  Holes are being completed to identify the precise location of a fault at the western limit of MKF.  The fault is interpreted to truncate the mineralisation.  Drilling is now underway to establish the orientation of the fault allowing for the next resource update to fully and reasonably define the mineralisation up to the plane of the fault.

 

·     Metallurgical holes are being drilled to obtain a large bulk sample for detailed metallurgical test work leading to flowsheet and plant design, concentrate characterisation and the design of a furnace capable of smelting the concentrate to generate a Low Grade Matte ("LGM"). 

 

·     The current drill phase focused on the west end of MKF is nearing completion with an anticipated 7 holes remaining to be drilled.  The LF70 rig has already moved onto the second target area for the purpose of drilling metallurgical holes along the existing Indicated resource and to complete some infill holes where necessary. 

 

·     Analytical results are generated on site using the two Niton XL2 500 X-Ray Fluorescence units ("RFA").  The Company considers the results to be reasonably accurate and undertakes a daily calibration programme to ensure results are acceptable.  It is noted that the final analytical results will be obtained from Alex Stewart Laboratories ("ASL") located in Moscow.  From sample collection to final reporting can typically take up to 10 weeks. 

 

The 2016 drill programme of 15,000 metres is well underway (17% of the total planned metres have been drilled) and ahead of schedule due to the earlier than usual startup.  Three phases of drilling are planned with each phase related to the geographical distribution of the resources by category.  Indicated resources are targeted for metallurgical drilling and the Inferred drilling resources for infill drilling as well as metallurgical drilling.  The first phase of drilling is nearly complete with the second phase being initiated recently. 

 

Key results from the first phase of drilling within a zone identified as Area A have included the infill drilling of the Inferred resource target at the western end of the MKF deposit.  Drilling has identified that the pervasive 1,900 metre long high grade zone is present within the Inferred resource area bringing the total length of the zone to 2,200 metres.  Three of the five newly completed infill holes, spaced at 100 metre intervals along strike, confirm that the high grade zone is present which existing widely spaced holes had not identified.  The average drill intercept thickness from the three holes is indicated to be 63 metres with an average nickel grade of 0.83% and a copper grade of 0.24%.  The complete set of infill holes also indicates that the MKF Inferred resource may be substantially understated.  A significant upgrade to the 3.4 million tonne Inferred resource is expected as the resource model presently has a much thinner true thickness of 12 metres and lower average contained grades of 0.55% nickel and 0.16% copper than the drilling indicates.  In addition to the anticipated increase in tonnage and grade, the area is now drilled at a spacing which has previously been classified as Indicated resources.  Drilling is also progressing on the acquisition of the metallurgical sample for use in the compilation of the DFS. 

 

Robin Young, CEO of Amur Minerals, commented:

 

"The 2016 drill programme focused on the Maly Kurumkon / Flangovy deposit is already providing substantial and positive results well ahead of schedule.  Starting nearly four weeks ahead of schedule, we have almost completed our first phase of drilling before our typical drill start date.  As for the results, infill drilling has certainly provided us with a bonus.  Drilling within the current Inferred resource area indicates that the future resource update in this area will be substantially larger with regard to the contained tonnage of ore and at higher nickel and copper grades.  We intend to complete drilling in this area with about another seven holes at which time, we will have drilled out the western extent of the Maly Kurumkon / Flangovy at its western limits.  Our focus is now shifting to metallurgical drilling to obtain the large bulk sample for flowsheet, plant and furnace design to generate a Low Grade Matte."

 

 

Company Amur Minerals Corp.	Nomad and Broker S.P. Angel Corporate Finance LLP	Public Relations Yellow Jersey
Robin Young CEO	Ewan Leggat Laura Harrison	Dominic Barretto Harriet Jackson
+74212755615	+44(0)2034700470	+44(0)7544275882

 

For additional information, visit the Company's website, www.amurminerals.com.

 

Please follow the link at the end of this RNS to view figures showing MKF drill hole locations. 

 

Notes to Editors

 

The information contained in this announcement has been reviewed and approved by the CEO of Amur, Mr. Robin Young.  Mr. Young is a Geological Engineer (cum laude), a Professional Geologist licensed by the Utah Division of Occupational and Professional Licensing, and is a Qualified Professional Geologist, as defined by the Toronto and Vancouver Stock Exchanges.  An employee of Amur for 12 years, previously Mr. Young was employed as an exploration and mine geologist, mining engineer, construction manager of a mine startup as well as independent consultant with Fluor Engineers, Fluor Australia and Western Services Engineering, Inc. during which time his responsibilities included the independent compilation of resources and reserves in accordance with JORC standards.  In addition, he has been the lead engineer and project manager in the compilation of numerous studies and projects requiring the compilation of independent Bankable Studies utilised to finance small to large scale projects located worldwide.  Mr. Young is responsible for the content of this announcement which includes information derived by SRK.

 

For further information, see the Company website at www.amurminerals.com.  Note the addition of a video depicting the historical drill results and the related resource model for Maly Kurumkon / Flangovy.

 

 

2016 Drill Programme -Maly Kurumkon / Flangovy - Global Objectives

 

A 15,000 metre drill programme is planned for completion during the 2016 field season.  It is focused on the Maly Kurumkon / Flangovy ("MKF") deposit.  For drilling purposes, the deposit has been geographically divided into three areas, each of which requires specific drill programme considerations.  Drilling will generally advance from west to east in the areas identified as Area A, Area B and Area C. 

 

Globally, the 2016 programme is intended to accomplish the following;

 

·     The most important objective of the 2016 drill programme is to generate a large bulk sample for detailed metallurgical test work.  Over the course of the drill season, metallurgical ("MET") holes will be drilled along the entire length of the MKF deposit and will be located immediately adjacent to existing holes.  This will allow the Company to obtain a representative metallurgical bulk sample.  Test work on the bulk sample will allow for the determination of the final process flow sheet, plant design, determination of the composition of the concentrate and ultimately establish the parameters and design of a furnace to smelt the concentrate into a Low Grade Matte ("LGM") for sale of nickel, copper, cobalt and Platinum Group Metals ("PGMs") on the international market.  The bulk sample derived from this portion of the drill programme is key to the completion of the Definitive Feasibility Study ("DFS"). 

 

·     Independently, the Company plans to drill a series of holes to verify the mineral thickness, the grade and dip limits of the mineralisation from within a selected area in Area A.  Using only the 2016 drill results, a new interpretation of an existing drill section should replicate earlier results by the generation of similar thicknesses and grades.  Though not required, this is intended to provide further confirmation and comfort that the resource models are DFS compatible.

 

·     Infill drilling in Areas A and C will be conducted for the purpose of converting existing Inferred resources to that of Indicated.  Indicated resources can be utilised in the determination of reserves and provides valuable additional information for the DFS.  Currently, reserves for the DFS will be based on the existing SRK defined Measured and Indicated resources as of the Q1 and Q2 2016 updates.  Any successfully upgraded resources derived from this year's drilling will be added to the resource inventory and possibly considered in the DFS mine production schedule if they have a substantial positive impact on the production schedule.  The existing Measured and Indicated resources is likely to provide sufficient reserves for the evaluation of Kun-Manie as well as cover the critical period where any construction loan is being repaid (typically a five year loan period).

 

·     Step out drilling will be conducted.  In Area A, the objective is to more precisely identify the location of a fault which is interpreted to terminate the mineralisation at the western limit of Area A.  Within Area C the limits of the resource have not yet been defined.  This area includes a 500 metre long target for resource expansion and is located to the east of existing mineralised drill holes. Any newly identified resources in Area C will likely be classified as Inferred.

 

Selection of MKF for the 2016 Drill Programme

 

The Company is presently focusing its efforts on developing a comprehensive understanding of the MKF deposit.  MKF contains 60% of the total Measured and Indicated resource identified at Kun-Manie.  As Measured and Indicated resources are suitable for the definition of reserves, the size and grade of the deposit most likely represents the start up production source of ore covering the critical operational start up period during which debt financing is repaid.  MKF also hosts nearly half of the project wide Inferred resource which offers substantial potential to be upgraded to Indicated resources with the completion of successful infill drilling allowing.  Successful completion would add expansion potential to the reserves.  Due to the combination of these factors at MKF, the Company has focused this year's drill efforts on MKF which also includes the acquisition of a large metallurgical sample for process design from the crusher to the generation of a Low Grade Matte ("LGM").  The currently defined resource at MKF is set out in the table below.

 

April 2016 Maly Kurumkon / Flangovy JORC Resource

Zero Cutoff Grade (Includes Internal Waste)

 

Resource	Tonnes	Ni	Ni	Cu	Cu	Pt	Pt	Pd	Pd
Category	(millions)	(%)	Tonnes	(%)	Tonnes	g/t	Kg	g/t	Kg
Indicated High Grade	24.9	0.86	214,300	0.23	57,200	0.1	3,700	0.1	3,900
Indicated Low Grade	43.5	0.16	70,800	0.06	27,000	0.1	2,900	0.1	3,000
Total Indicated	68.4	0.42	285,200	0.12	84,200	0.1	6,600	0.1	6,900
Inferred High Grade	7.1	0.76	54,400	0.20	14,100	0.1	1,000	0.1	1,000
Inferred Low Grade	15.0	0.18	27,000	0.08	11,500	0.1	900	0.1	1,000
Total Inferred	22.2	0.37	81,400	0.12	25,600	0.1	2,000	0.1	2,000
Total High Grade	32.0	0.84	268,700	0.22	71,300	0.1	4,700	0.1	4,900
Total Low Grade	58.5	0.17	97,800	0.07	38,500	0.1	3,800	0.1	4,000
Total	90.6	0.40	366,600	0.12	109,800	0.1	8,500	0.1	8,900

 

As the Company progresses the DFS with the focus on MKF, the deposits of Vodorazdelny and Ikenskoe / Sobolevsky, which contain substantial amounts of Measured and Indicated resources, will also be examined to determine the reserve potential of these deposits to be included in the later stages of production.  Kubuk, a predominantly Inferred resource also provides additional production potential and resource expansion.  It also represents an important drill target for the future adding further potential to increase the mine life.  The global resource for all deposits within the Company's production licence area is as follows.

Global Total Resource - All Deposits
Measured	18.3	0.51	93,300	0.14	25,600	0.19	3,400	0.20	3,700
Indicated	88.7	0.44	390,900	0.12	111,100	0.11	9,600	0.11	10,200
Sub-total	107.0	0.45	484,100	0.13	136,600	0.12	13,000	0.13	13,900
Inferred	57.7	0.44	255,900	0.13	76,200	0.13	7,700	0.14	7,800
Grand Total	164.7	0.45	740,100	0.13	212,900	0.12	20,600	0.13	21,700

 

2016 MKF Drill Schedule and Objectives by Area

 

Using the LF70 and newly purchased LF90, a total of 15,000 metres of drilling are budgeted for 2016.  The budget is based on a monthly completion rate of 3,000 metres over the five month drill season from June through October.  A mild winter has allowed the Company to begin drilling a month earlier than the normal start which was typically during the first week of June.

 

Drilling is being implemented in a west to east (from Area A to Area C) direction.  The primary Area A drill plan covers an area approximately 500 metres in length and is located at the western end of the MKF deposit.  This first drill area includes Indicated and Inferred resources and has limited potential for resource expansion to the west although potential at depth remains prospective.  Moving eastward, drilling has now advanced to Area B which contains Indicated resources and is the area from which the majority of the metallurgical bulk sample will be derived.  Lastly, the easternmost one kilometre long Area C will be drilled which contains Indicated and Inferred resources with additional potential to increase resources at the eastern end of the area by step out drilling.

 

As previously reported, both drill rigs commenced drilling within Area A in early May.  A limited verification drill effort has been implemented along a section of the existing Indicated resource.  By drilling an already drilled section using holes oriented at a different angle, it is possible to generate two separate interpretations which should be highly similar in the mineralisation location, thickness and grade which provides additional support information for the DFS.  The second category of drilling will be the completion of a first phase of infill holes in the existing Inferred resource to confirm the continuity of the mineralisation over the 300 metre long area.  Successful drilling of the Inferred resource may trigger a second phase of drilling to establish the full limits of the mineralisation.  The third category is related to a step out phase.  In the past, step out drilling was conducted as an integral part of resource expansion.  The step out phase in Area A is being undertaken to identify the maximal western limit of the MKF orebody.  A major fault is present and truncates the mineralisation.  Step out drilling is intended to more precisely identify the subsurface location of the fault.  The last component of the Area A programme is the completion of two MET holes from within the Indicated resource area.  More MET holes may be required should the infill drilling be successful and MET holes will be added as necessary.  The Area A drill effort was initially conducted using both drill rigs. The Area A programme is now well advanced and rig LF70 has been reassigned to drilling MET and infill holes within Area B.  Once Area A is completely drilled, the second rig will move to Area B to more rapidly advance the MET drill component.

 

Drilling in Area B was originally planned to begin in early July 2016, but has already been initiated due to the drill season commencing a month ahead of schedule.  The majority of the drilling in Area B will be focused on the acquisition of the bulk metallurgical sample for the DFS.  However, a limited number of infill holes are planned to define down dip mineralised limits where appropriate.  Drilling in Area B has been initiated by rig LF70.  Approximately 15 to 25 holes are planned ranging from 80 to 400 metres in length totaling from 6,000 to 7,000 metres. 

 

Drilling at Area C will begin once Area B drilling has been completed.  Advancing in an eastward direction, infill drilling of an area of Inferred resources identified by the 2015 drill programme will be conducted first.  Based on the infill drill results, additional MET holes will be identified for drilling.  Once the 400 metre long Inferred resource has been infill drilled, step out holes will be drilled for resource expansion purposes.

 

Area A Detailed Objectives and Progress

 

Four specific objectives are planned for the Area A drill programme.

 

·     The Company planned and has completed five drill holes to verify the mineral thickness, the grade and the dip limits of the mineralisation along a section of the Indicated resource defined in Area A.  Using only the 2016 drill results, a new interpretation was generated and compared to original interpreted section.  A comparison of the two sections confirmed that results were mutually supportive thereby providing further support and confidence in the Company's acquisition of the data and its subsequent use in developing mineral outlines for resource definition.  Though not required in a DFS, the Company has undertaken this verification process as further confirmation and verification of quality of its work. 

 

·     Infill drilling within the Inferred resource area (approximately 300 metres in length) was planned to convert the resource to an Indicated resource for use in reserve estimation.  A first phase of drilling has been completed on a 100 metre spaced grid.  Five holes have been completed within the Inferred target bringing the total number of holes to nine.  The 100 metre grid spacing has been used by SRK to define Indicated resources elsewhere in MKF, it is therefore anticipated that the next resource update should now contain Indicated resources for use in the definition of reserves.  More importantly, the four historical holes used to estimate the Inferred resource estimate likely and substantially understate the tonnage and grade of the Inferred resource.  The gridded infill holes indicate that the mineralisation averages 43.9 metres in true thickness while the available holes to resource estimation only averaged 22.8 metres using a 0.2% cutoff grade ("COG").  Likewise the infill holes average nickel and copper grades were 0.83% and 0.24%, respectively.  The previous holes contained an average grade of 0.70% nickel and 0.17% copper.  The major reason for such a large and significant increase is that a large and high grade structure had not been identified by the historical drilling but the infill gridded holes (3) had intersected the structure along the entire 300 metre length.  The high grade structure averages more than 60 metres in thickness and has a 0.83% nickel grade with copper being 0.25%.  A second phase of infill drilling is under consideration.

 

·     Step out drilling to the west is planned.  Approximately 100 metres to the west, there is a fault that likely truncates the mineralisation and defining the western boundary of the mineralisation of MKF.  Step out holes are planned to identify the subsurface orientation of the structure allowing for definitive demarcation of the mineralisation during resource estimation.  Up to four holes are planned, of which two have been completed.  Minor subeconomic mineralisation has been identified. 

 

·     A minimum of two MET holes were planned and have been completed within the area of Indicated resource.  As infill drilling has been successful, three more MET holes are required and will be drilled adjacent to the newly completed infill holes. 

 

·     On 24 May 2016, drill objectives in Area A were well advanced and the LF70 was moved to Area B to initiate the programme planned for that area.  One hole has been completed in Area B, which is an infill hole.

 

Drill Progress Summary Report

28 May 2016

 

Hole	Total Depth (m)	Area	Drill Target Component	Status of Analytical Results
C400	47.0	A	Verification -Subcrop Mineral	RFA
C401	301.0	A	Verification - Deep Mineral	RFA
C402	61.0	A	Verification - Subcrop Mineral	RFA
C403	207.0	A	Verification - Model Check	RFA
C404	138.6	A	Infill	RFA
C405	171.0	A	Infill	RFA
C406	86.5	A	Verification - Model Check	RFA
C407	153.2	A	Infill	RFA
C408	193.0	A	Infill	RFA
C409	204.0	A	Infill	RFA
C410	240.0	A	Step Out	RFA
C411	187.0	A	Step Out	RFA
C412	121.0	A	Step Out	Drilling
C105T1	82.5	A	Metallurgical	NA
C149T	115.5	A	Metallurgical	NA
C324	270.0	B	Infill	In Sample Prep
Total	2,578.3

 

Verification of Historical Drill Results - Resource Verification

 

The Company has completed a verification drill effort.  Completed along an existing drill section within the existing Indicated resource of Area A, holes were drilled using a different orientation to verify the grades and thickness of the mineralisation.  A second section was compiled using only 2016 drill results.  The following was accomplished and established; 

 

·     All five planned holes have been completed containing 794.1 total drill metres.

 

·     Two condemnation holes totaling 108.0 metres were drilled to establish the subcrop limits of the mineralisation at surface limits of the mineralisation which is covered by soils and gravels.  Anticipated to be barren holes, results confirmed the absence of mineralisation and that the up dip limits have been reasonably defined. 

 

·     Deep drilling down dip mineralisation was completed using within a single hole totaling 301.0 metres.  Drilled to intersect the mineralisation approximately 50 metres down dip from the C150a intercept, the 2016 hole  contained a total mineralised thickness of 7.7 metres and averaged 1.22% nickel and 0.25% copper.  Hole C150a contained a total of 13.6 metres of mineralisation averaging 0.80% nickel and 0.26% copper.  It is noted that the 2016 hole contained a reduced mineralised thickness as well as less total metal (grade x thickness).  This corresponds with observations that the mineralisation tends to thin with increasing depth and that total metal tends to also decreases with depth.

 

·     The Indicated resource within Area A is based on drilling completed prior to 2016.  It is this information from which the location of the mineralisation, its thickness and contained grade have been interpreted.  The mineralisation in this area has been established based on vertically drilled holes.  To test the "stability" of the mineralisation, the Company drilled two holes (293.5 total metres) oriented perpendicular to the mineralised zone and across the older vertical holes.  Separate sections were compiled to compare the vertical versus angled hole results in order to establish that the true thickness of the zone and its contained metal grades were mutually supportive.  The vertical drill holes indicated the true thickness was in the order of 27.7 metres whilst that of the 2016 holes indicated a true thickness of 28.6 metres.  The average nickel and copper grades within the vertical holes were 0.69% nickel and 0.17% copper.  The 2016 drill results contained an average nickel grade of 0.65% and for copper it was 0.17%. 

 

Verification Drill Exercise

 

Hole	Total Depth (m)	Drill Target	0.2% Nickel Cutoff Grade
			From (m)	To (m)	Length (m)	Ni (%)	Cu (%)
C400	47.0	Outcrop	No Ore
C401	301.0	Deep Mineral	199.5	204.0	5.8	0.91	0.21
			214.4	219.0	4.6	1.05	0.21
C402	61.0	Outcrop	No Ore
C403	207.0	Interpretation Verification	129.0	143.5	14.5	0.51	0.14
			154.5	159.0	4.5	0.44	0.17
C406	86.5	Interpretation Verification	23.5	61.7	38.2	0.72	0.18

 

Infill Drill Results - Resource Conversion

 

Infill drilling within Area A is designed to test the continuity of the mineralisation within the Inferred resource block and to ultimately convert the resource to an Indicated category for reserve derivation.  At a COG of 0.2% nickel, 3.4 million tonnes of ore are defined having an average projected resource grade of 0.55% nickel and 0.16% copper.  The average true thickness of the Inferred resource is approximately 14.9 metres.  Using a higher COG of 0.5% nickel, the Area A Inferred resource is defined to consist of 2.1 million ore tonnes averaging 0.74% nickel and 0.21% copper having a true thickness in the order of 9.6 metres.  These resources are based on four widely spaced drill holes located at the extreme eastern and western limits of the Inferred block.  The four holes have a length weighted grade of 0.71% nickel and 0.18% copper including internal waste defined as  all sub 0.2% nickel intervals less than three metres in thickness.  The average true thickness indicated by the four drill holes was 16.3 metres (COG 0.2% nickel).  The drill information used to define the Inferred resource follows:

 

Hole	0.2% Cutoff Grade					0.5% Cutoff Grade
	From (m)	To (m)	Length (m)	Ni (%)	Cu (%)	From (m)	To (m)	Length (m)	Ni (%)	Cu (%)
Easternmost Drill Section
C105	26.1	57.5	31.4	0.78	0.20	26.1	56.0	29.9	0.80	0.21
	61.6	78.8	17.2	0.71	0.17	61.6	78.8	17.2	0.75	0.19
C103	129.6	147.5	17.9	0.52	0.12	129.9	134.5	4.6	0.91	0.20
						143.6	146.0	2.4	0.95	0.19
C106	174.7	186.1	11.4	0.73	0.19	174.7	179.7	5.0	0.92	0.23
						182.5	186.1	3.6	0.78	0.28
Westernmost Drill Section
C151	124.3	137.5	13.2	0.71	0.18	125.4	136	10.6	0.83	0.19
Area Wide Average			19.6	0.70	0.17			15.8	0.81	0.21
Avg. True Thickness (m)			16.3	0.70	0.17			13.1	0.81	0.21

 

A total of five infill holes were planned for the first phase of drilling in the Inferred resource area located in Area A.  Drilled on a 100 by 100 metre grid, all five holes have been completed and range in depth from 138.6 metres to 204.0 metres containing a total of 859.9 metres.  The infill configuration allowed for the compilation of two drill sections located between existing drill sections and have been drilled with two holes each.  The fifth hole was drilled on the westernmost section where a previous single hole (C151) was available.  Substantial mineralisation was intersected in all five of the infill holes averaging 0.83% nickel and 0.24% copper.  The average true cumulative thickness per infill hole is approximately 43.9 metres at a COG of 0.2% nickel.  Using a COG of 0.5% nickel, the average nickel grade is 0.92% with copper being 0.26% and having a true cumulative thickness of 37.1 meters per hole.  Drill interval results are summarised in the table below.

 

2016 Infill Drill Holes

 

Hole	Total Depth	0.2% Cutoff Grade					0.5% Cutoff Grade
		From (m)	To (m)	Length (m)	Ni (%)	Cu (%)	From (m)	To (m)	Length (m)	Ni (%)	Cu (%)
C404	138.6	47.9	76.0	28.1	0.72	0.20	47.9	52.4	4.5	0.55	0.19
							55.4	66.0	10.6	0.93	0.24
		83.5	109.0	25.5	0.78	0.20	83.5	86.0	2.5	0.69	0.22
							93.5	107.5	14.0	1.02	0.21
C405	171.0	131.9	136.4	4.5	0.87	0.24	131.9	136.4	4.5	0.87	0.24
		154.9	163.0	8.1	0.67	0.17	156.4	163.0	6.6	0.76	0.19
C407	153.2	74.9	143.3	68.4	0.93	0.26	74.9	98.2	23.3	0.94	0.25
							100.8	143.3	42.5	1.01	0.29
C408	193.0	155	165.5	10.5	0.79	0.25	155.0	165.5	10.5	0.79	0.25
		174.4	183.3	8.9	0.55	0.14	177.5	183.3	5.8	0.65	0.13
C409	204.0	135.8	201.1	65.3	0.86	0.273	135.8	153.3	17.5	0.90	0.33
							156.3	199.6	43.3	0.93	0.28
Totals	859.8			219.3	0.83	0.24			185.6	0.92	0.26
Average Per Hole				43.9	0.83	0.24			37.1	0.92	0.26
Average Per Interval				27.4	0.83	0.24			15.5	0.92	0.26

 

The Phase 1 Infill drill results for Area A indicate the following:

 

·     The continuity of the mineralisation has been verified and the current drill spacing is equivalent to that used to identify Indicated resources.  Future resource estimates at MKF are anticipated to have a larger Indicated resource inventory.

 

·     Infill drilling substantially varies for the previous existing drill results.  The cumulative true thickness of the infill holes is indicated to be 43.9 metres whilst the average true thickness from the holes used in the estimation of the resource was 16.3 metres.  This represents a 169% increase over the existing thicknesses and the mineralised tonnage (3.4 million tonnes) in the Inferred area could substantially increase.

 

·     Infill length weighted grades at a 0.20% COG have also increased over that of the previous existing holes.  Infill grades are estimated to be 0.83% nickel and 0.24% copper while historical results were 0.70% nickel and 0.17% copper.  This indicates the potential to increase the contained metal per tonne grades for both nickel and copper.  The infill grades are 20% higher for nickel and 40% higher for copper.

 

·     The reason for such a dramatic upgrade over the historical results is primarily related to the fact that the widely spaced drilling had not identified the high grade pervasive lense to be present.  This lense is now interpreted to be 2,200 metres in length, typically greater than 40 metres in thickness and averaging approximately 0.75% nickel.

 

A second phase of infill drilling is now under consideration to determine mineral limits in the up and down dip direction.  Three additional holes may be completed.

 

Step Out Drilling - Resource Limit Delineation

 

Step out drilling to the west of the limits of the block model was planned and has begun.  The drilling is designed to more precisely identify the western limits of the mineralisation and resource model during the next resource update.  Located approximately 100 metres to the west of the westernmost infill drill section, a total of 548.0 metres within three holes has been completed.  A fourth hole is planned to determine the orientation of the fault.  Minor subeconomic mineralisation is present in the immediate vicinity of the fault.

 

Metallurgical Bulk Sampling Drill Programme

 

The primary objective of the 2016 drill programme is to obtain a bulk metallurgical sample for use in the derivation of the flow sheet, plant design, determination of the composition of the concentrate and the design of a furnace to smelt the concentrate into a LGM.  This represents nearly half of the planned 15,000 metres to be drilled.  To date, two holes (total of 198.0 metres) have been completed in Area A with an additional three planned for completion within the Inferred drilled area.  The total planned drill metres for the three holes amounts to 495.0 metres.  MET holes will be drilled adjacent to C404, C407 and C409 thereby completing the MET portion of the drill plan in Area A.

 

Area B Drilling Started

 

Now that the Area A programme is suitably advanced and one rig is capable of completing the remaining drill commitment, the LF70 has been moved to Area B (24 May 2016) where the majority of the drilling will be the acquisition of the representative metallurgical sample.  One hole has been completed to a depth of 270 metres as an infill hole to define the deep limits of mineralisation.  Once Area A drilling has been completed, the LF90 will also move to Area B to drill MET holes.

 

Analytical Results - Cautionary Comment

 

The analytical results presented within this RNS have been internally derived by the Company using two Niton XL2 500 X-Ray Fluorescence units ("RFA").  Use of these units provides a rapid turnaround allowing for knowledgeable decisions to be made in the field.  Use of these results is not without risk if a unit has not been rigorously tested and calibrated.  It is therefore, necessary to utilise the standards provided with the units, to test existing samples that have been analysed by external facilities and to use samples from the types of ore that are to be encountered to calibrate the units.  Both units are calibrated at the beginning of the season and are tested daily at the start and end of each shift to ensure that there is no drift during the course of the shift or damage to the Niton units thereby introducing erroneous information.  The reported RFA results provide reasonable but not definitive results and for this reason, the Company reports RFA results with this cautionary comment.  This rigorous calibration process allows the Company to report preliminary but reasonable results in advance of obtaining the final externally derived results which require a minimum of 6 weeks and up to 10 weeks to obtain from Alex Stewart Laboratories ("ASL") based in Moscow, Russia.

As noted, the second source of analytical results is produced by Alex Stewart Laboratories ("ASL") located in Moscow, Russia.  This fully independent, licenced and certified laboratory provides the results that are considered to be the final analytical values used in resource estimation and is of a greater accuracy than that of the RFA unit.

For information purposes, a comparison of the results generated by the RFA unit with that of ASL during the 2015 drill programme are summarised in the table below.

Niton (RFA) Versus ALS Analytical Results

Control Analysis

 

Commodity / COG	Metal %	Metal %
Nickel +0.2%	0.717	0.725
Nickel +0.5%	0.942	0.951
Copper +0.1%	0.246	0.244
Copper +0.2%	0.312	0.310
Copper +0.3%	0.410	0.388

 

Alex Stewart Laboratory Turnaround

The turnaround time from when a mineralised core sample is recovered at the drill rig to obtaining the final analytical result is dependent upon multiple factors.  The Company provides a monthly helicopter flight to the site to provide fresh food stuffs, undertake staff changes and provide required spares.  On the return flight, the sample pulps are delivered to Khabarovsk staff and then are transshipped by rail to ASL's Moscow, Russia facility.  On receipt of the ASL results, the Company then carefully examines the data to ensure that the external results are accurately reported.  This is accomplished by the insertion of blind known and blank samples.  If there is any notable difference within the reported results from these hidden samples, the Company will request a re-assay of the samples.  Once samples are verified as representative, these become the master result available for future use in resource estimation and metallurgical test work.  Final externally derived results require a minimum of 6 and up to 10 weeks to be obtained from ASL.  

 

Glossary

 

DEFINITIONS OF EXPLORATION RESULTS, RESOURCES & RESERVES

EXTRACTED FROM THE JORC CODE: (December 2012) (www.jorc.org)

 

A 'Mineral Resource' is 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.

 

An 'Inferred Mineral Resource' is 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.

 

An 'Indicated Mineral Resource' is 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.

 

A 'Measured Mineral Resource' is 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/or grade continuity.

 

An 'Ore Reserve' is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. Ore Reserves are sub-divided in order of increasing confidence into Probable Ore Reserves and Proved Ore Reserves.