Ugur Gold Deposit - JORC Resource and Reserves

·    Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.

·    Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used.

·    Aspects of the determination of mineralisation that are Material to the Public Report.

·    In cases where 'industry standard' work has been done this would be relatively simple (eg 'reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay'). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information.

·   Full core was split longitudinally 50% using a rock diamond saw and half-core samples were taken at typically 100centimetre intervals or to rock contacts if present in the core run for both mineralisation and wall rock. The drill core was rotated prior to cutting to maximise structure to core axis of the cut core.

·   Reverse Circulation (RC) drill samples were collected via a cyclone system in calico sample bags following on site splitting using a standard riffle "Jones" splitter attached to the RC drill rig cyclone, and into plastic chip trays for every one metre interval.

·   To ensure representative sampling, diamond drill core was marked considering mineralisation and alteration intensity, after ensuring correct core run marking with regards recovery.

·   RC samples were routinely weighed to ensure sample is representative of the metre run.

·   Sampling of drill core and RC cutting were systematic and unbiased.

·   RC samples varies from 3kg to 6kg, the smaller weight sample related to losses where water was present. The average sample size was 4.7kg, and pulverized to produce a 50g sample for routine Atomic Absorption analysis and check fire assaying.

·   Handheld XRF (model THERMO Niton XL3t) was used to assist with mineral identification during field mapping and core logging procedures.

·    Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).

·   Both diamond core drilling and reverse circulation (RC) drilling were completed.

·   Upper levels ofcore drilling from collar to an average depth of 35metres at PQ (85.0 mm) core single barrel wireline, stepping down to HQ (63.5mm) when necessary.

·   Diamond Core Drilling with HQ (63.5mm) core single tube barrel, steeping down to NQ (47.6mm) core barrel when necessary

·   Diamond Core drilling with NQ (47.6mm) core single tube barrel

·   The proportions of PQ:HQ:NQ drilling were 17:60:23 percentage.

·   Oriented drill coring was not used.

·   Reverse Circulation drilling using 133 millimetre diameter face sampling drill bit.

·   Downhole surveying was carried out on 92% of core drillholes utilizing Reflex EZ-TRAC equipment at a downhole interval of every 9 metres.

·   Drilling penetration speeds were also noted to assist with rock hardness indications.

·    Method of recording and assessing core and chip sample recoveries and results assessed.

·    Measures taken to maximise sample recovery and ensure representative nature of the samples.

·    Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.

·   Core recovery (TCR - total core recovery) was recorded at site, verified at the core logging facility and subsequently entered into the database. The average core recovery was 93%. Recovery measurements were poor in fractured and faulted rocks, however the contract drill crew maximized capability with use of drill muds and reduced core runs to enure best recovery. In these zones where oxidised friable mineralisation was present, average recovery was 86%.

·   RC recovery was periodically checked by weighing the sample per metre for RC drill cuttings and compared to theoretical weight.

·   Geological information was passed to the drilling crews to make the drillers aware of areas of geological complexity, to maximise recovery of sample through the technical management of drilling (downward pressures, rotation speeds, water flushing, use of clays).

·   Zones of faulting and presence of water resulted in variable weights of RC sample, suggesting losses of fines. Historical drilling at adjacent deposits with similar situations tended to underestimate the in-situ gold grades.

·   There is no direct relationship between recovery and grade variation, however in core drilling, losses of fines is believed to result in lower gold grades due to washout of fines in fracture zones. This is likely to result in an underestimation of grade, which will be checked during production.

·    Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.

·    Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography.

·    The total length and percentage of the relevant intersections logged.

·   Drill core was logged in detail for lithology, alteration, mineralisation, geological structure, and oxidation state by Anglo Asian Mining geologists, utilising logging codes and data sheets as supervised by the competent person.

·   RC cuttings were logged for lithology, alteration, mineralisation, and oxidation state.

·   Logging was considered sufficient to support Mineral Resource estimation, mining studies and metallurgical studies.

·   Rock Quality Designation (RQD) logs were produced for all core drilling for geotechnical purposes. Fracture intensity and fragmentation proportion analysis was also used for geotechnical information.

·   Additionally, two "geotechnical" core drillholes were targeted and drilled to pass through mineralisation into wall rocks of the "planned" backwall to the open pit. This ensured geotechnical data collected related to open pit design work.

·   Point load testing and unconfined compressive strength (UCS) tests were conducted on all major rock (mineralised and wall rock) types. This data was utilised in establishing the open pit deign parameters.

·   Independent geotechnical studies have been completed by the environmental engineering company, CQA International Limited (CQA), to assess rock mass strength and structural geological relationships for mine design parameters.

·   Logging was both quantitative and qualitative in nature. All core wasphotographed in the core boxes to show the core box number, core run markers and a scale, and all RC chip trays were photographed.

·   100% of the core drilling was logged with a total of6,354.75 metres of core and 100% of RC drilling with a total of 4,608.00 metres, that is included in the resource model.

·    If core, whether cut or sawn and whether quarter, half or all core taken.

·    If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry.

·    For all sample types, the nature, quality and appropriateness of the sample preparation technique.

·    Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.

·    Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/second-half sampling.

·    Whether sample sizes are appropriate to the grain size of the material being sampled.

·   Full core was split longitudinally 50% using a rock diamond saw and half-core samples were taken at typically 100centimentre intervals or to rock contacts if present in the core run for both mineralisation and wall rock. The drill core was rotated prior to cutting to maximise structure to core axis of the cut core.

·   Half core was taken for sampling for assaying, and one half remains in the core box as reference material.

·   Reverse Circulation (RC) drill samples were collected in calico sample bags following on site splitting using a standard riffle "Jones" splitter, and into plastic chip trays for every one metre interval.

·   Where RC samples were wet, the total sample was collected for drying at the laboratory, following which, sample splitting took place. Primary duplicates have also been retained as reference material.

·   RC field sampling equipment was regularly cleaned to reduce the chance of sample contamination by previous samples, on a metre basis by compressed air.

·   Both core and RC samples were prepared according best practice, with initial geological control of the half core or RC samples, followed by crushing and grinding at the laboratory sample preparation facility that is routinely managed for contamination and cleanliness control. Sampling practice is considered as appropriate for Mineral Resource Estimation.

·   Sample preparation at the laboratory is subject to the following procedure.

Ø After receiving samples at the laboratory from the geology department, all samples are cross referenced with the sample order list.

Ø All samples are dried in the oven at 105-110 degree centigrade temperature  

Ø First stage sample crushing to -25mm size

Ø Second stage sample crushing to -10mm size.

Ø Third stage sample crushing to -2mm size.

Ø After crushing the samples are split and 200-250 gramme sample taken. 

Ø A 75 micron sized prepared pulp is produced that is subsequently sent for assay preparation.

·   Quality control procedures were used for all sub-sampling preparation. This included geological control over the core cutting, and sampling to ensure representativeness of the geological interval.

·   127 Field duplicates of the reverse circulation (RC) samples were collected, representing 2.6% of the total RC metres drilled.

·   Sample sizes are considered appropriate to the grain size of the material and style of mineralisation being sampled, by maximizing the sample size, hence the total absence of any BQ drill core.

·    The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.

·    For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.

·    Nature of quality control procedures adopted (eg standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and precision have been established.

·   Laboratory procedures and assaying and analysis methods are industry standard. They are well documented and supervised by a dedicated laboratory team. The techniques of Atomic Absorptionand Fire Assay were utilised, and as such both partial and total techniques were employed.

·   Handheld XRF (model THERMO Niton XL3t) was used to assist with mineral identification during field mapping and core logging procedures.

·   Commencement of drilling was 23/09/2016 and completion was 15/07/2017 being 295 days, during which period 4,928 RC samples and 6,447 core drill samples (a total of 11,375 samples) were taken. A total of 1,740 QA/QC samples were measured, equivalent to 15.3%.

·   QA/QC procedures included the use of field duplicates of RC samples, blanks, certified standards or certified reference material (CRMs) from OREAS (Ore Research & Exploration Pty Ltd Assay Standards, Australia), in addition to the laboratory control that comprised pulp duplicates, check samples, and replicate samples. This QA/QC system allowed for the monitoring of precision and accuracy of assaying for the Ugur deposit.

·   The quality of the QA/QC is consideredadequate for resource and reserve estimation purposes.

·   Pulp duplicates analysis showed the largest error in waste or very higher grade samples (see below), Note: with silver classified by gold grade:

·   External check assay was carried out by ALS Minerals (OMAC) based in Ireland. The following analytical work was conducted for each sample:

Ø Sample login / pulverize split to 85% < 75 micron / pulverizing QC test / Received sample weight

Ø Ore grade for Gold 30g AA finish

Ø 35 Element Aqua Regia ICP-AES analysis (to include the following elements: Ag, Al, As, B, Ba, Be, Bi, Ca, Cd, Co, Cr, Fe, Ga, Hg, K, La, Mg, Mn, Mo, Ni, P, Pb, S, Sb, Sc, Sr, Th, Ti, TI, U, V, W, Zn.

·   Comparison of average gold grades between the on-site laboratory and ALS shows a general bias towards the on-site laboratory under-estimating grade with the exception of high grade (as presented below):

·   Based on QA/QC work, and instances of poor repeatability, it is recommended to carry out thorough QA/QC of all samples during the extraction process and assess laboratory capacities.

·    The verification of significant intersections by either independent or alternative company personnel.

·    The use of twinned holes.

·    Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.

·    Discuss any adjustment to assay data.

·   Significant intersections were verified by a number of company personnel within the management structure of the Exploration Department. Intersections were defined by the exploration geologists, and subsequently verified by the Exploration Manager. Further, independent verification was carried out as part of the due diligence for resource estimation. Assay intersection were cross validated with drill core visual intersections.

·   An initial programme of RC drilling was followed up by a core drilling programme where two drillholes were twinned and validated the presence of mineralisation.Reverse circulation drilling as compared with the core showed a positive grade bias of up to 10%. It is suspected that losses may have occurred during the core drilling process especially in very strongly oxidised mineralised zones due to drilling fluid interaction.

·   Data entry is supervised by a data manager, and verification and checking procedures are in place. The format of the data is appropriate for direct import into "Datamine"® software. All data is stored in electronic databases within the geology department and backed up to the secure company electronic server that has limited and restricted access. Four main files are created relating to "collar", "survey", "assay" and "geology". Laboratory data is loaded electronically by the laboratory department and validated by the geology department. Any outlier assays are re-assayed.

·   Independent validation of the database was made as part of the resource model generation process, where all data was checked for errors, missing data, misspelling, interval validation, and management of zero versus no data entries. 

·   All databases were considered accurate for the Mineral Resource Estimate.

·    No adjustments were made to the assay data.

·    Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.

·    Specification of the grid system used.

·    Quality and adequacy of topographic control.

·   The exploration area was initially surveyed by high resolution drone survey. Five topographic base stations were installed and accurately surveyed using high precision GPS, that was subsequently tied into the local mine grid using ground based total station surveying (LEICA TS02) equipment. All trench, drill holes collars were then surveyed using total station survey equipment.

·   Downhole surveying was carried out on 92% of core drillholes utilizing Reflex EZ-TRAC equipment at a downhole interval of every 9 metres.

·   The grid system used is Universal Transverse Mercator (UTM)84WGS zone 38T (Azerbaijan)

·    The adequacy of topographic control is adequate for the purposes of resource and reserve modeling (having been validated by both aerial and ground based survey techniques), with a contour interval of 2m metres.

·    Data spacing for reporting of Exploration Results.

·    Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

·    Whether sample compositing has been applied.

·   Drill hole spacing carried out was from 20 metres over the main mineralised zone to 45 metres on the periphery of the resource.

·   The data spacing and distribution (20 x 20 metre grid) over the mineralised zones is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied. The depth and spacing is considered appropriate for defining geological and grade continuity as required for a JORC Mineral Resource estimate.

·    No physical sample compositing has been applied for assay purposes, however for some metallurgical tests, 4 to 5 metre composites were applied.

·    Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.

·    If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.

·   Detailed surface mapping and subsequent drilling has provided the characteristics of the deposit. The orientation of the drill grid to NNE was designed to maximise the geological interpretation in terms of true contact orientations.

·   The Ugur gold deposit is considered as a high sulfidation gold deposit located in rocks ranging from Bajocian (Mid-Jurassic) to Tithonian (Upper-Jurassic) in age. The gold mineralisation is hosted by Upper Bajocian age sub-volcanic rocks, that comprise rhyo-dacitic breccias. These rocks have been intruded into a sub-volcanic sequence that was subsequently subjected to strong hydrothermal alteration.

·   The Ugur primary mineralisation is hosted in acidic volcanic rocks, that consists of haematite-barite-quartz-kaolin veins-veinlets and breccia, pyritic stock-stockwork and quartz-sulphide veins. The central surface expression of the mineralisation exhibit accumulations of hydrous ferric oxides cementing breccias of silica with vein-veinlets barite-haematite mineralisation.

·   The deposit was emplaced at the intersection of NW, NE, N and E trending structural systems regionally controlled by a first order NW transcurrent fault structure. The fault dips between 70º to 80° to the north-west. The faults of the central zone control the hydrothermal metasomatic alteration and gold mineralisation.

·   Given the geological understanding and the application of the drilling grid orientation, grid spacing and vertical drilling, no orientation based sample bias has been identified in the data which resulted in unbiased sampling of structures considering the deposit type.

·    The measures taken to ensure sample security.

·   Regarding drill core: at the drilling site which was supervised by a geologist, the drill core is placed into wooden core boxes that are sized specifically for the drill core diameter. Once the box is full, a wooden lid is fixed to the box to ensure not spillage. Core box number, drill hole number and from/to metres are written on both the box and the lid. The core is then transported to the core storage area and logging facility, where it is received and logged into a data sheet. Core logging, cutting, and sampling takes place at the secure core management area. The core samples are bagged with labels both in the bag and on the bag, and data recorded on a sample sheet. The samples are transferred to the laboratory where they are registered as received, for laboratory sample preparation works and assaying. Hence, a chain of custody procedure has been followed from core collection to assaying and storage of reference material.

·   Reverse Circulation samples are bagged at the drill site and sample numbers recorded on the bags. Batches of 10 metre samples are boxed for transport to the logging facility where the geological study and sample preparation for transfer to the laboratory take place. 

·   All samples received at the core facility are logged in and registered with the completion of an "act". The act is signed by the drilling team supervisor and core facility supervisor (responsible person). All core is photographed, subjected to geotechnical logging, geological logging, samples interval determinations, bulk density, core cutting, and sample preparation (size 3-5 centimetre).

·   Daily, all samples are weighed and Laboratory order prepared which is signed by the core facility supervisor prior to release to the laboratory. On receipt at the laboratory, the responsible person countersigns the order.

·   After assaying all reject duplicate samples are received from laboratory to core facility (recorded on a signed act). All reject samples are placed into boxes referencing the sample identities and stored in the core facility.

·   In the event of external assaying, Anglo Asian Mining utilsed ALS-OMAC in Ireland. Samples selected for external assay are recorded on a data sheet, and sealed in appropriate boxes for shipping by air freight. Communication between the geological department of the Company and ALS monitor the shipment, customs clearance, and receipt of samples. Results are sent electronically by ALS and loaded to the Company database for study. 

·    The results of any audits or reviews of sampling techniques and data.

·   Reviews on sampling and assaying techniques were conducted for all data internally and externally as part of the resource and reserve estimation validation procedure. No concerns were raised as to the procedures or the data results. All procedures were considered industry standard and well conducted. QA/QC tolerance concerns of some of batches of assaying has been raised.