Appendix 1: JORC Table 1 - London Stock Exchange · equipment used are available in SA Global’s 2012 Report. Drilling techniques Gorny Drill type (e.g. core, reverse circulation,

Appendix 1: JORC Table 1

Section 1: Sampling Techniques and Data

Criteria JORC-Code explanation Commentary

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

The deposit is sampled using diamond drilling (DD) and channel sampling of trenches over

several drilling campaigns.

Additionally, same grab samples and soil samples were collected for geochemical analysis.

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

Prior 2012 – Gorny/Zhilny

Topcon HiPer+ No.378-4322/4324 satellite system was used to locate geodetic control

stations and geo-reference drillholes and trenches with accuracy within centimetres.

2012 onwards – Gorny/Zhilny

Topographic geo-referencing of drillholes and surface mining workings was performed from

fixed points of survey stations condensed at the work site using navigational devices of

satellite positioning by means of the GPS system and Sokkia SET-610 electronic tachymeter.

Satellite tachymeter Topcon HiPer+ was fixed as a base station over a point of a survey

station close to a surveyed trench or hole; Topcon PG-A1 antenna was fixed over a surveyed

drillhole or a trench survey point at a 2 m height, and the data obtained through the

antenna were recorded to the connected receiver-controller Topcon GRS-1. The data

obtained from the receivers were subject to office processing by Topcon Tools software.

Trench start and finish points as well as drillholes were surveyed using static method with

an accuracy of: in plan – 0.02 m, in height – 0.05 m. Intermediate points of trench relief

bending as well as intermediate pickets were surveyed using a cinematic method with an

accuracy of: in plan – 0.02 m, in height – 0.05 m.

The work was performed in WGS84 system with further transfer to SK42 system with local

grid type and local geoid EGM 2008kap.


CRM and blanks samples were inserted into the sample sequences in according to QAQC

procedures. Duplicate samples were collected to check repeatability of sampling and

variability or nugget effect for gold and silver mineralisation. Results from this QAQC

sampling were considered satisfactory.

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

Channel sampling of trenches: A 10 x 3 cm channel was cut in the trench bed and in some

cases from trench walls (in case of ice or heavily watered areas). Channels were cut using

diamond saws. Samples were collected manually along the cut channels using mining pick

and other tools.

Core sampling: Core was sampled, while sludge was discarded. When drilling NQ holes

(diameter 75.7 mm) the achieved diameter was 47.6 mm. Quartz veins, veinlets, areas of

intensive hydrothermal and metasomatic alteration, sulphidisation, mineralised fractured

zones were sampled over the entire thickness. Maximum sample lengths did not exceed

1.5 m, and minimum sample length was 0.3 m. The average sample length was 1 m. Only

potentially mineralised intervals were sampled and 3 m to 4 m of surrounding host rocks.

Valunisty

In the period from 1989 to 2016, the Valunisty deposit has been explored from surface

(trenching) and at depth by core drilling. The drilling spacing ranges from 20 m to 80 m.

Channels within the trenches were driven at a 5 m spacing.

In the period from 1989 to 2011 the exploration amounted to 128 trenches and channels

with 1,047 chip samples and 2,818 channel samples.

Chip samples were subjected to spectral analysis for gold and if the analysis returned high

mineral grades the samples were sent for fire assay. The length of the chip samples ranged

from 0.1 m to 9.0 m with an average of 4.0 m. A total of 38 entries with spectral analysis

values for gold were restored in the database containing primary documentation and five

entries with spectral analysis values for silver. Seven samples in the database contain fire

assay results for gold and six for silver.

Channel samples were taken honouring the boundaries of the lithological varieties. The

length of the channel samples ranged from 0.1 m to 7.0 m with an average of 1.1 m. That

said, the database contains only 587 spectral analysis entries and 489 entries with fire assay

values (only 17.4% of total assays).

No traces of sampling of surface trenches were found in the field.


Core drilling has been performed since 1990. A total of 145,105 m of exploration core

drilling has been completed in the period from 1990 to 2016. The drilling grid within the

identified mineralised bodies amounts to 20 x 20 with an average density of 20 m x 40 m.

The flanks and deep levels of the deposit were drilled with coring at a grid of 40 m x 80 m.

The vast majority of drilling is inclined (single vertical or subvertical drill holes have been

excluded from the resource estimate as not being reliable). The drilling angle ranges from

47o to 90o, with an average of 61.1o. The vast majority of the holes were drilled along

exploration lines perpendicular to the mineralised bodies (single holes drilled along the

mineralised bodies have been excluded from the estimate as not being reliable).

From 1990 to 2016, a total of 43,658 core samples have been taken from the exploration

drill holes, of which 40,743 samples were fire assayed and included in the mineral resource

estimate, whereas 1,145 samples were subjected to spectral analysis and excluded from the

resource estimate. The database contains no historical assay data for 1,470 samples.

Samples were formed of core halves taken from exploration drill holes.

Non-core grade control drilling in the period from 2000 to 2016 amounts to 126,208 m; all

grade control drilling is inclined with an average angle of 60o. Drilling was perpendicular to

the mineralised bodies along exploration lines with an average spacing of 5 m to a depth of

one to two mining benches (bench height – 5 m).

A total of 67,308 drill cuttings samples have been taken from grade control drill holes. All

grade control drilling sample have been fire assayed.

Quality control of the field work as well as certificates and calibration statements for the

equipment used are available in CSA Global’s 2012 Report.

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

Gorny

A total of 113 DD drillholes (15,954 m) were drilled: 2010 to 2011 – 46 drillholes; 2012 – 26

drillholes; 2013 to 2015 – 41 drillholes. All holes are inclined and most holes were drilled at

angles between 45⁰ and 60⁰ with the most common dip angle is 50⁰. There were only six

drillholes that were drilled at angle steeper than 70⁰ with only one hole drilled at 80⁰.

There were 110 trenches at the deposit totalling 15,324 m.

Zhilny

A total of 103 drillholes (13,758 m) were drilled: 2012 – 70 drillholes; 2013 to 2015 – 33

drillholes. All holes are inclined and drilled at approximately 50⁰. There are 48 trenches


totalling 6,460 m.

Drillhole logging and downhole surveying were carried out by LLC Geofizik Primorya in 2010

(subcontractor of Eastern Drilling Company LLC, the drilling contractor). In 2011 drilling was

completed by Eastern Drilling Company LLC.

In 2010, a GAZ-66 truck-based logging station including LG-500 winch, digital recorder

Vulcan V3 and downhole tools MKRS-2, KSP-42, KM-43 and MIR-36 were used for downhole

logging. Excluding downhole surveys, the entire logging suite was performed in digital

format.

Tools MIR-36 (2010) and REFLEX EZ-SHOT (2011) were used for downhole surveys with

recording at 10 m to 20 m intervals. Control measurements were 10%.

Measurement accuracy did not exceed instrument specifications and was ±3о for magnetic

azimuth and ±0.20о for dip angle. Every month the tool underwent calibration at USI-2

calibration table.

In 2011 directional surveys were carried out by REFLEX EZ-SHOT (No. 1219) tool.

Approximately 10% the measurements were taken twice. Survey spacing was 20 m.

Valunisty

In 1990 to 1994, core drilling was performed using SKB-4 drill rigs. Drilling in loose and

fractured rock was accomplished using a single core barrel with dry sinking and insert bits.

Drilling after casing was performed using SSK-59 rig only.

In 1999 to 2010, core drilling was performed along exploration lines oriented across the

strike of the ore zones and quartz veins at an azimuth of 150-3300 within the Glavnaya

zone, and 300-1200 and 30-2100 at a 40 m x 40 m and 80 m x 80 m grid within the Novaya

zone. SKB-4 drill rigs were employed for drilling. Collaring was performed using short

starting borers with 156 mm insert bits. Drill hole collars and quaternary eluvial-deluvial

deposits were blocked off by casing pipes until penetration into competent bedrock. Drilling

in Category 9-11 formations utilised SSK-59 drill string with a retrievable core barrel and a

diamond rock-breaking tool.

About 22% of the total metres drilled were drilled using insert bits. The rest of drilling was

completed using diamond tools. Drilling through quaternary formations with high ice

content often resulted in core recovery decreasing to 30% to 50% due to great amounts of

ice. The circulation fluid was composed of water with salt, hydrolysed polyacrylonitrile, clay


and sulfonic.

In 2012 to 2016, exploration inclined drilling was performed using Boart Longyear LF-90-LS

drill rig. NQ (75.7 mm) diamond drill bits were used. Collaring in core drilling was performed

down to 5 m to 10 m using 96.0 (HQ) to 122.6 mm (PQ) bits. This interval was then cased

over the entire length with casing pipes which acted as surface pipes and were connected

to the drill rig. NQ (75.7 mm) diamond bits were used to drill down to the target depth (core

diameter - 47.6 mm). Water was used for flushing.

ROC L8 30 FlexiRoc D 65 LF (Atlas Copco, Sweden) was used for grade control drilling.

Diameter of drilling – 136 mm. The drill rig is equipped with a RC system that diverts drill

cuttings and collects them as samples.

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

Diamond core recovery is logged and recorded in the database. No significant core loss

issues exist.

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

Diamond core was reconstructed into continuous runs for orientation marking, with depths

checked against the depth marked on the core blocks and core recovery.

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.

Sample Recovery for diamond holes is generally very high (over 95%). No significant bias is

expected, and any potential bias is not considered material at this stage.

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

Geological logging of trenches was carried out to study geological features to give definition

and detailed description of zones of metasomatically altered rocks and quartz veins in order

to define sampling intervals.

Geological logging was completed immediately after trenching and cleaning. Generally, one

wall and the bed of the trench were logged. Geological logging was completed in

compliance with the requirements specified in corresponding regulatory guidelines and

accepted standards.

Geological drillhole logging includes definition of intervals of lithology varieties based on

petrography, intensity of fracturing and metasomatic alterations, based on structural and


textural features and other indicators which can contribute in defining and mapping of

mineralised zones. Intervals of sampling are also defined.

Prior to geological logging geologists checked correctness of core placement in the core

boxes, conformity of records in the drill logs with tags in the core boxes, matching of core

length specified in the tag with its actual length. Boundaries of drill runs were marked on

the dividers using a graphite pencil; the core boxes were marked with identification labels

or marking on the end wall of the core box.

All core was delivered to the base camp in a specially equipped facility where it was

geologically logged, photographed and sampled. The core boxes were placed onto tables

for logging sequentially. After the core boxes were registered, washed core was

documented and marked for sampling. For consistency in logging a collection of

reference/standard samples were used. Geological logging was completed by qualified

geologists.

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

Diamond core logging included records of lithology and mineralogy defined by petrography,

textures, oxidation state and colour, fracturing and alteration.

The total length and percentage of the relevant intersections logged.

All drillholes were logged in full.

Subsampling techniques and sample preparation

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

All diamond drill core was cut in half by a diamond saw. If the sampled interval was

represented by heavily crushed material with solid pieces of core amounting to less than

30%, then all the material was taken into the sample.

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

Not applicable.

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

Processing of samples was performed in the base camp. ROKLABS equipment mounted in a

shipping container with dust exhaust ventilation and other auxiliary equipment was used to

prepare the samples.

The sample preparation procedure included crushing, grinding, reduction and attrition of

samples to a maximum grain size of 0.074 mm (200 mesh).


The original sample (either channel or core one) was first dried in a drying cabinet at a

temperature of up to +105С.

After drying the sample was weighed and loaded to the jaw crusher (Boyd-RSD Combo) to

crush it to 2 mm to 3 mm grain size. In crushing the sample material was subjected to

automatic division (depending on the original weight material was split two-fold, four-fold,

etc.). The crushing product was –3 mm grains. After reduction at the first crushing stage the

sample was loaded into the ring mill (Boyd-RSD Combo) where it was reduced to 0.3 mm

grain size. Different capacity segments (% to the total volume) were installed in crusher

input, i.e. the crushed material was automatically reduced.

Depending on the required minimum weight of a laboratory sample a required segment

was selected from which the material was transferred to the standard ring mill intake. The

remainder of the sample after crushing was preserved as a duplicate of the geological

sample.

In a standard ring mill the sample was reduced to 0.074 mm (minimum weight of a lab

sample was 205 g). After pulverising the lab sample was poured into a package (craft-paper

type), a label was put into the package and the package itself was marked with the sample

number. This data was also entered to the sample process log from where it was entered to

the electronic database.

Quality control procedures adopted for all subsampling stages to maximise representivity of samples.

Field QAQC procedures included the insertion of field duplicates, blanks and commercial

standards.

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.

Field duplicates were used for analytical analysis and returned satisfactory results.

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

Sample sizes are appropriate to accurately represent the mineralisation at the deposits

based on the thickness and consistency of the intersections, the sampling methodology and

the grade value assay ranges for the primary elements.


Quality of assay data and laboratory tests

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

Fire assaying with ICP finish has proven to be a very accurate analytical technique for

precious metals such gold and silver.

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.

Gold and silver grades in all the samples used in the mineral resource estimation were

determined by quantitative fire assay (method No. 505-Х).

A series of geophysical studies were completed on the project area and included:

magnetometer survey, electrical survey using IP-MG, electrotomography.

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

Field QA/QC procedures included the insertion of field duplicates, blanks and commercial

standards. Assay results have been satisfactory demonstrating acceptable levels of accuracy

and precision.

Verification of sampling and assaying

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

CSA Global visited the site in 2012 and reviewed core.

The use of twinned holes. No twinned hole was drilled.

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

Logging was completed at the base camp in specially equipped facility using customized

logging forms.

Data was validated on-site by the supervising geologist. It was then loaded into Micromine

and validated for logging codes, missing intervals, overlapping intervals, hole location and

downhole surveying.

Discuss any adjustment to assay data. No adjustments were made, other than for values below the assay detection limit which

have been entered as the negative of the detection limit.

Location of data points Accuracy and quality of surveys used to locate drillholes (collar and down-hole

Gorny/Zhilny

Once each drillhole was drilled to the targeted depth, it was routinely downhole surveyed.


surveys), trenches, mine workings and other locations used in Mineral Resource estimation.

Downhole surveying was measured by the drill contractors using either a survey

instrument.

Prior 2012: Topcon HiPer+ No.378-4322/4324 satellite system was used to locate geodetic

control stations and geo-reference drillholes and trenches with accuracy within

centimetres.

2012 onwards: Topographic geo-referencing of drillholes and surface mining workings was

completed from the fixed points of survey stations condensed at the work site using

navigational devices of satellite positioning by means of the GPS system and Sokkia SET-610

electronic tachymeter.

Valunisty

1990 to 2011:

Surveys were based on the topographic base of scale 1:10,000 prepared in 1969 D. Kiryan.

The area which includes the main mineralised zones identified in 1991 was covered by a

stadia survey of scale 1:2,000 completed by Exploration Party No.15.

Trenches and drill holes were surveyed from triangulation and polygonometric points by

theodolite traverses with scale accuracy of 1:2,000; angles were measured by reciprocal

observation using 3T5KG theodolite; sides were measured using a tape measure; levelling

was trigonometrical. The system of coordinates was local, the elevation system was Baltic

(1977).

In 1993 to 1994, topographic surveying for prospecting purposes was performed by

surveyor A. Bryansky (Survey Department). Class 4 triangulation and Class 1 polygonometric

stations were used as reference points to build a Class 1-2 polygonal network. These

stations had been established by North-East Aerial Survey in 1991 – 1992 compliant with

code 10.01.1320D.

Fixed stations were created as 2nd order polygonometric traverses using 1st-2nd order

traversing points and Class 4 triangulation points. Coordinates and elevations of individual

points were defined using the method of intersections and resections. Establishment of

fixed positions and tacheometric survey of drill holes was performed using ELTAR-55

electronic tachymeter in compliance with Engineering Regulations for Land Surveying

Operations (Moscow, Nedra, 1987).

2012-2016:

Surveying support for mining and drilling is based on Class 2-4 triangulation stations


established by the North-Eastern Aerogeodesic Enterprise in 1991 to 1992 (assignment code

10.01.1320D) and 1st-2nd order polygonometric points established during surveying in 1993

to 1994.

Surveying was also performed using control stations and survey grid points established by

Valunisty Mine’s Surveying Service. New stations that complement the control network

were fixed by temporary centres (laying depth - 0.8 m) and were defined by the method of

polar coordinates. In determination of survey grid points using the polar method the

distance to the points was 1 km maximum; the angles were measured from two reference

directions; the difference between the position angles for a determined point was 45 sec

maximum. Elevations of the points using the polar method were defined by repeat

measurements with changing the elevation of the target. Measurements were performed

using SOKKIA SET550RX electronic tachymeter.

Design locations of drill hole collars and drilling azimuth were set out using SOKKIA

SET550RX tachymeter and marked with wooden survey pegs. Drill holes were surveyed

using an electronic tachymeter in two positions: angle to left, angle to right. A list of

coordinates and drill hole collar elevations was compiled based on survey results.

Directional survey was performed for all the exploration drill holes for precise definition of

drill hole spatial positions. Prior to 2012, MIR-36 survey tool was used with 10 m

measurement intervals downhole. Starting from 2012 REFLEX EZ-SHOT survey tool was used

with 20 m intervals downhole.

Quality control of the field work as well as certificates and calibration statements for the

equipment used are available in CSA Global’s 2012 Report.

Specification of the grid system used. Local grid system and Baltic elevation system. State geodetic network stations Gornaya,

Yagelnaya and Vysokaya were used as reference points.

Quality and adequacy of topographic control.

UzhUralService, LLC have completed a standard range of topographic-geodetic operations

to stake out boreholes location and mining workings followed by their instrumental geo-

referencing, i.e. establishment of field plan and elevation geodetic basis for exploration.

The work was completed in accordance with Instructions for topographic and navigational

exploration support [TsNIIGA Instructions, 2002] and instructions for development of

geodetic surveying fixed stations and geological setting and terrain mapping using global

positioning systems such as Glonass and GPS [Instructions NTsPI].


Data spacing and distribution Data spacing for reporting of Exploration Results.

Gorny

Drillholes were generally drilled using a 40–50 x 50 m grid. Selected sections have 20 m

infill holes.

Zhilny

Drillholes were generally drilled using 100 x 50 m grid. Selected sections have 50 m and 20

m infill holes.

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.

Valunisty

The exploration grid density is 20 m x 20 m within detailed exploration areas, 20 m x 40 m

for the major portion of the mineralised bodies and 40 m x 80 m on the flanks and at deep

levels.

The extensive drilling grid allows for highly reliable definition of the morphology of the

mineralised bodies and estimation parameters such as average grade and mineralisation

volume. The available data is sufficient to classify the Mineral Resources as Indicated and

Inferred.

The data spacing and distribution is sufficient to demonstrate spatial and grade continuity

of the mineralised horizon to support the definition of Inferred Mineral Resources under

the 2012 JORC Code.

Whether sample compositing has been applied.

Sample compositing was applied prior to Mineral Resource estimation

Orientation of data in relation to geological structure

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

The drill sections are orientated approximately perpendicular to the strike of the

mineralised units observed at the deposits.

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.

Diamond drilling has confirmed that drilling orientation did not introduce any bias.


Sample security The measures taken to ensure sample security.

All sample numbers were generated in the site office. Once samples intervals were

selected, the numbers were assigned to each sample. The sample number, drillhole name

and sampled interval were recorded in the sampling sheets. All sample bags are properly

sealed.

Valunisty

All the drill core (core halves) recovered during the prospecting and exploration within the

Valunisty deposit in 2012 to 2016 is stored in a specially equipped core storage facility.

The drill core is stored in a hangar constructed of corrugated sheets with concrete flooring.

Linear dimensions of the storage facility are 36 m x12 m. Storage capacity is approx. 40,000

line metres of drill core.

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

Sampling techniques are consistent with industry standards. Consistency of data was

validated by the company while loading data into the database (Depth from < Depth to;

interval is within hole depth, check for overlapping samples or intervals, etc.).

Section 2: Reporting of Exploration Results

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


Mineral tenement and land tenure status

Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.

Gorny/Zhilny

At present, Kanchalano-Amguemskaya Area LLC holds the Licence for the right to use subsurface

Mineral Resources for geological study, exploration and mining of gold and silver within Kanchalano-

Amguemskaya area.

Licence АНД 01201 БР was issued and registered by the Department for Subsurface Use of Chukotka

Autonomous District on 8 July 2011 (No. 1201, Chukotnedra). The Licence is valid through 20 October

2031.

Valunisty

AND 01204 BE for geological study, mining of gold and silver at the Valunisty deposit, valid through

to 1 February 2024; the licensed area is located in the municipal district of Anadyr, Chukotka

Autonomous Region, registered as a mining tenement; the licence was issued by the Department for

Subsurface Management of Chukotka Autonomous Region. The total licensed area is 6.56 km2.

AND 01219 BE for geological study, exploration and mining of gold and silver within the Valunisty

deposit, valid through to 10 October 2037; the licensed area is located in the municipal district of

Anadyr, Chukotka Autonomous Region, registered as an exploration tenement; the licence was

issued by the Department for Subsurface Management of Chukotka Autonomous Region. The

licensed area not covered by the area of current licence AND 01204 BE is 11.27 km2.

The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.

To the best of CSA Global’s knowledge, the tenements are in good standing.

Exploration done by other parties

Acknowledgment and appraisal of exploration by other parties.

Gorny/Zhilny

Prior to 1992 prospecting works were completed in the area and were funded by the state.

From 1994 to 1996, geological activities were conducted by Anadyr geological expedition (licence

АНД00279 БЭ).

From 1999 to 2011 geological exploration was run by LLC “Chukotka” (licence (АНД 00741 БЭ).

Valunisty


Prior to 1992, the prospecting and prospect-evaluation of the Valunisty area was performed using

public funds and those activities resulted in a report and approving the reserves as at 1 January 1993

by the Territorial Committee for Natural Reserves of Chukotgeolkom (Minutes of Meeting and

Resolution No. 5).

In 1994 to 1996, prospect evaluation of the area was carried out by Anadyrskaya GRE exploration

company (Licence AN-00279 BE). On 1 January 1997, the deposit was returned back to the State

Reserve Agency.

Starting from 1999 to 2011, exploration was performed by AS Chukotka LLC (Licence AND 00741 BE,

which was then changed to AND 12723 BE in 2004). In 2005, based on the results of the previous

exploration FSUE TsNIGRI developed a Feasibility Study of final exploration parameters for the

Valunisty deposit. The final exploration parameters approved in 2005 were not used for re-

estimation or approval of reserves by GKZ Rosnedra. In 2007 Chukotnedra Territorial Committee

approved the reserves of the Valunisty Novaya zone.

Starting from 2012 and up to data the exploration has been performed by Valunisty Mine LLC in

accordance with Licence AND 01204 BE and AND 01219 BR.

In 2014, GKZ Rosnedra (Resolution 384-k) approved final exploration parameters for open pit mining

as well as temporary exploration parameters for underground mining. A reserve estimate was

subsequently completed for the Valunisty deposit as at 1 January 2014.

The Valunisty open pit mining was commenced in 2003.

Interpretation of the mineralisation controlling structures was based on the data from trenching and

core drilling for the entire period of exploration (1989 to 2016).

The resource estimation utilised the data from core drilling for the entire period of exploration. The

trenching data was excluded from the estimate as unreliable.

Geology Deposit type, geological setting and style of mineralisation.

Mineralisation is associated with metasomatites which host quartz and adular-quartz veins with

silver-gold mineralisation (at the Valunisty deposit, and mineral occurrences Gorny, Ognennoe,

Zhilny, Shakh, and Osennee). Distribution of metasomatites and mineralised bodies is controlled by

the Kanchalan fault zone.

Drillhole Information

A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drillholes:

Not relevant when reporting Mineral Resource estimates.

In the company’s opinion, this material has been adequately reported in previous announcements

for drilling.


If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.


Data aggregation methods

In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (e.g. cutting of high grades) and cut-off grades are usually Material and should be stated.


Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail.


The assumptions used for any reporting of metal equivalent values should be clearly stated.

No metal equivalent values are currently being used.

Relationship between mineralisation widths and intercept lengths

These relationships are particularly important in the reporting of Exploration Results.


If the geometry of the mineralisation with respect to the drillhole angle is known, its nature should be reported.

Drilling is generally perpendicular to the strike of mineralisation. Holes intersect mineralisation at

between 30 and 60° and with an average angle of 450.

If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg ‘down hole length, true width not known’).

Geometry of the mineralisation with respect to the drillhole angle is known.

Diagrams Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported. These should include, but not be limited to a plan view of drillhole collar locations and appropriate sectional views.

Refer to diagrams in body of report.

Balanced reporting

Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.


Other substantive exploration data

Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical

In the company’s opinion, this material has been adequately reported in previous announcements.


survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.

Further work The nature and scale of planned further work (e.g. tests for lateral extensions or depth extensions or large-scale step-out drilling).

Drilling will be planned to test for strike extensions and new targets around the deposits

Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.

All relevant diagrams are included in this document.

Section 3: Estimation and Reporting of Mineral Resources (Criteria listed in section 1, and where relevant in section 2, also apply to this section.)


Database integrity

Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resource estimation purposes.

Data used in the Mineral Resource estimate is sourced from Micromine DAT files. All data

was validated in Micromine software and verified that all the available data was utilised.

Data validation procedures used. Validation of the data import included checks for overlapping intervals, missing survey

data, missing and incorrectly recorded assay data, missing lithological data and missing

collars.

Site visits Comment on any site visits undertaken by the Competent Person and the outcome of those visits.

Anatoly Jadeyev, a representative of CSA Global, conducted a site visit to the project area

in September 2012. A site visit report was compiled and attached and earlier version of the

resource estimation report.

If no site visits have been undertaken indicate why this is the case.

Not applicable.

Geological interpretation

Confidence in (or conversely, the uncertainty of) the geological interpretation of the mineral deposit.

There is a reasonable level of confidence in the geological interpretation of quartz veins

and the mineralisation selvages that is traceable over numerous drillholes and drill sections

and in surface mapping of the outcrops and trench exposures.

Nature of the data used and of any assumptions made.

Surface mapping of mineralised outcrop, drillhole intercept logging and assay results have

formed the basis for the geological interpretation.

The effect, if any, of alternative interpretations on Mineral Resource estimation.

The precise limits and geometry cannot be defined due to the limitations of the current

drill coverage. Further work is required to better define the geometry and limits of the

mineralised zones, but no significant downside changes to the interpreted mineralised

volume are anticipated.

The use of geology in guiding and controlling Mineral Resource estimation.

Estimation was carried out within the quartz veins defined by logging and surrounding

alteration haloes that were defined by the laboratory analytical results.

The factors affecting continuity both of grade and geology.

Post-mineralisation magmatic and tectonic events that can significantly affect

mineralisation have not been identified.

Dimensions The extent and variability of the Mineral Resource expressed as length (along strike or otherwise), plan width, and depth below surface to the upper and lower limits

The currently interpreted mineralisation of the Gorny area extends for approximately 1 km

along a 20° northeast strike for the lower southern portion of the deposit and for

approximately 1.2 km along a 340o northwest strike for the upper northern portion of the


of the Mineral Resource. deposit. The dip angle of the zone varies from -60° to -90° with most common dip angle at

-70°. The zone extends from surface to 300 m below the surface.

The mineralisation of the Zhilny area extends for approximately 950 m along a 340o to

360o strike. The dip of the zone varies from -70° to -90°. The zone extends from surface to

180 m below the surface.

Valunisty

Novaya zone: Extends for about 4,000 m. The mineralisation has been traced to a depth of

300 m from surface.

Glavnaya zone: Extent of the mineralised bodies within the Glavnaya zone is about

1,500 m. The mineralisation has been traced to a depth of 250 m from surface.

Estimation and modelling techniques

The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters and maximum distance of extrapolation from data points. If a computer assisted estimation method was chosen include a description of computer software and parameters used.

Gorny/Zhilny

CSA Global unfolded the model and sample composite files before geostatistical analysis

and grade interpolation. Without unfolding the deposit would have to be domained

according to the general dip of different parts of the structures. In that case, every

structural domain would have to be estimated separately, and that would downgrade the

reliability of the estimate.

Grade estimation was by inverse distance weighting (IDW) using Micromine 2013 software.

The interpretation was extended perpendicular to the corresponding first and last

interpreted cross section to the distance equal to a half distance between the adjacent

exploration sections. If a mineralised envelope did not extend to the adjacent drillhole

section, it was projected halfway to the next section and terminated. The general direction

and dip of the envelopes was maintained.

CSA Global carried out the reported Mineral Resource estimate in November 2016.

There is good comparison between the January 2013 estimate and the November 2016

estimate, as expected with the same methodology applied being used with addition of 41

diamond exploration drillholes at Gorny and 33 diamond drillholes at Zhilny.

No previous mining activity has taken place at these deposits.

No assumptions regarding recovery of by-products have been made.

No deleterious or non-grade variables were estimated.

The block model was constructed using a 5 mE x 5 mN x 10 mRL parent block size, with sub-

The availability of check estimates, previous estimates and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data.

The assumptions made regarding recovery of by-products.

Estimation of deleterious elements or other non-grade variables of economic significance (e.g. sulphur for acid mine drainage characterisation).

In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed.

Any assumptions behind modelling of selective mining units.

Estimation and modelling techniques (continued)

Any assumptions about correlation between variables.

Description of how the geological interpretation was used to control the


resource estimates. celling to 1 mE x 1 mN x 1 mRL for domain volume resolution. The parent cell size was

chosen on the basis of the general morphology of mineralised zones and in order to avoid

the generation of large block models. The sub-cell size was chosen to maintain the

resolution of the mineralised zones. The sub-cells were optimised in the models where

possible to form larger cells.

The parameters of the search ellipse were defined to reflect the sub-vertical and vertical

nature of the mineralised zones as well as the layout and density of the exploration grid.

The axes along the easting and northing directions were set to the same length while the

vertical axis was set to four times longer than the other two axes resulting in 0.5:0.5:2 ratio

(E:N:RL) among the ellipse axes.

The search ellipse radii for the first interpolation run was equal to 25 m which was

approximately equally to the density of the exploration grid achieved at certain areas of

the deposits. For each subsequent interpolation run the parameter was increased by 25 m

up to 300 m. The last Interpolation run used a search radii of 1,000 m to populate any

remaining empty cells.

No selective mining units were assumed in this estimate.

No strong correlations were found between the grade variables estimated.

Domain 1 – veins and vein-shaped bodies were defined by the geological boundaries.

Interpretation of the geological boundaries was carried out based on geological logging of

the trenches and drillholes.

Domain 2 – selvage mineralisation and separate mineralised bodies represented by veinlet

zones and disseminated mineralisation. Interpretation of this domain used sampling

intervals with >0.5 g/t Au. The cut-off grade for interpretation of this domain was

consistent with the previous Mineral Resource estimation.

Domain 3 (Zhilny deposit only) – areas with silver grades greater than 40 g/t and low gold

grades.

Statistical analysis to determine top-cut grade values was carried out separately for each of

the Gorny and the Zhilny zones, and for two mineralisation domains (veins and mineralised

zones). No top-cut grades were applied to any assay intervals.

Validation of the block model included comparison of the block model volume to the

wireframe volume. Grade estimates were validated by statistical comparison with the drill

Discussion of basis for using or not using grade cutting or capping.

The process of validation, the checking process used, the comparison of model data to drillhole data, and use of reconciliation data if available.


data, visual comparison of grade trends in the model with the drill data trends, and by

using a second interpolation technique. No reconciliation data is available at this early

stage of the project.

Valunisty

The boundaries of the mineralised area have been identified by wireframing based on

three domains (first order mineralisation-bearing veins; second order mineralisation-

bearing veins (branching); selvage mineralisation).

The boundaries of the quartz veins have been defined based on coded geological

documentation. The boundaries of the mineralisation beyond the quartz veins have been

delineated based on 0.5 g/t gold cut-off grade. The cut-off value for delineation was

defined by the completed classical statistical analysis.

Solid wireframes were created using all the strings of the interpreted outlines of the

mineralised zones and domains.

Block models with parent block size of 10 m x 10 m x 10 m were generated within the

wireframe models. Minimum sub-celling was 1m.

The wireframe models were used for coding of assay data. All assay intervals were coded in

accordance with mineralised envelope as well as domain IDs. The coded assay data were

reduced to the standard length of 1 m.

The geostatistical analysis was completed by CSA Global as part of the previous Mineral

Resource estimate and the results are available in the 2013 report.

All the mineralised envelopes were unfolded onto the vertical plane together with the

assay data.

Grade interpolation was completed using the search radii which relied on the modelled

semivariogram range:

The first run had a 5 m radius so that parent blocks would receive the grades of the

samples that are physically located within the block

The second run – 2/3 of the semi-variogram range, two drill holes minimum and 12 samples

maximum

The third run – full semi-variogram range, two drill holes minimum and 12 samples

maximum


The fourth and all subsequent runs – increasing the radii by semi-variogram ranges, one

drill hole/trench minimum and 12 samples maximum.

Moisture Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.

The tonnages are estimated on a dry basis

Cut-off parameters

The basis of the adopted cut-off grade(s) or quality parameters applied.

A 0.5 g/t Au cut-off grade was used to report the Mineral Resource for Gorny and

Valunisty.

A 40 g/t Ag cut-off grade was used to report the Mineral Resource for Zhilny

Mining factors or assumptions

Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential mining methods, but the assumptions made regarding mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the mining assumptions made.

At this stage of resource development, it is assumed that mining would be by open pit

methods.

Valunisty

Residual Mineral Resources have been estimated for additional open pit mining with

potential subsequent transition to underground mining.

Metallurgical factors or assumptions

The basis for assumptions or predictions regarding metallurgical amenability. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential metallurgical methods, but the assumptions regarding metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical assumptions made.

Zhilny/Gorny

It is assumed that gold and silver can be liberated using standard processing methods.

Valunisty

Not considered in resource estimation


Environmental factors or assumptions

Assumptions made regarding possible waste and process residue disposal options. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider the potential environmental impacts of the mining and processing operation. While at this stage the determination of potential environmental impacts, particularly for a greenfields project, may not always be well advanced, the status of early consideration of these potential environmental impacts should be reported. Where these aspects have not been considered this should be reported with an explanation of the environmental assumptions made.

No assumptions regarding possible waste and process residue disposal options have been

made. As the project is still in early stage exploration, it was not considered necessary to

yet make such determinations.

Bulk density Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size and representativeness of the samples.

The bulk density value of 2.63 t/m3 was used for Zhilny and 2.53 t/m3 for Gorny

Valunisty

During mining, grab samples were taken from production blocks to determine ore specific

gravity. A total of 218 samples were taken [FS, 2014].

Specific gravity for all types of rock of the Novaya and Glavnaya zones is 2.5 t/m3 [FS, 2014].

Some porosity can be expected however the bulk density assigned is considered

reasonable. The bulk density for bulk material must have been measured by methods that adequately account for void spaces (vugs, porosity, etc), moisture and differences between rock and alteration zones within the deposit.

Discuss assumptions for bulk density estimates used in the evaluation process of the different materials.

Classification The basis for the classification of the Mineral Resources into varying confidence categories.

Gorny

The Inferred and Indicated Mineral Resource classification is based on the evidence from

the available drill sampling and surface mapping.


Whether appropriate account has been taken of all relevant factors (i.e. relative confidence in tonnage/grade estimations, reliability of input data, confidence in continuity of geology and metal values, quality, quantity and distribution of the data).

Zhilny

The Inferred Mineral Resource classification is based on the evidence from the available

drill sampling and surface mapping. This evidence is sufficient to imply but not verify

geological and grade continuity.

Valunisty

The classification is based on search and interpolation parameters which in turn rely on the

exploration grid density with consideration for the geostatistical analysis data. Minimum

number of samples and minimum number of workings (drill holes, trenches or channels)

used for grade interpolation into each block were also considered. With all these factors

taken into account, resource classification was performed visually for each cross section.

Indicated Resources included those blocks where exploration grid density amounted to at

least 25 m x 25 m and interpolation involved at least three composites for each search

ellipsoid sector from at least two workings. All the rest of the model blocks were classified

as Inferred Resources.

The classification has considered all available geological and sampling information, and the

classification level is considered appropriate for the current stage of this project.

Whether the result appropriately reflects the Competent Person’s view of the deposit.

The Mineral Resource estimate appropriately reflects the view of the Competent Person.

Audits or reviews.

The results of any audits or reviews of Mineral Resource estimates.

Internal audits were completed by CSA Global which verified the technical inputs,

methodology, parameters and results of the estimate.


Discussion of relative accuracy/ confidence

Where appropriate a statement of the relative accuracy and confidence level in the Mineral Resource estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate.

The relative accuracy of the Mineral Resource estimate is reflected in the reporting of the

Mineral Resource to an Inferred classification as per the guidelines of the 2012 JORC Code.

The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.

The statement refers to global estimation of tonnes and grade.

These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

No production data is available For Gorny and Zhilny

Valunisty

No attempts have been taken to verify the completed modelling against actual mining

since the updated model was based on wireframe models built down to the bottom of the

existing pit.

Section 4: Ore Reserves


Mineral Resource estimate for conversion to Ore Reserves

Description of the Mineral Resource estimate used as a basis for the conversion to an Ore Reserve. Clear statement as to whether the Mineral Resources are reported additional to, or inclusive of, the Ore Reserves.

The Mineral Resource for Valunisty, Gorny and Zhilny estimate is described in the current report

and summarized in the table below:

Deposit (mineralisation zone)

Ore Au Grade Contained Au Ag Grade Contained Ag

(kt) (g/t) (koz) (g/t) (koz)

Mineral Resources

Gorny 3,668 2.3 271 31.0 3,652

Zhilnoe 2,330 1.0 74 209.1 15,667

Valunisty - Novaya 9,505 2.8 864 40.4 12,353

Valunisty - Glavnaya 2,095 2.2 150 20.8 1,400

Total 17,598 2.4 1,359 58.5 33,072

including:

Indicated class 9,328 3.0 893 38.1 11,435

Inferred class 8,270 1.8 466 81.4 21,637

The Mineral Resource statement is reported inclusive of Ore Reserves.

Site visits

Comment on any site visits undertaken by the Competent Person and the outcome of those visits. If no site visits have been undertaken indicate why this is the case.

A site visit has not been undertaken by the competent person as part of the Ore Reserves 2018.

A site visit was undertaken on the 13-29th September 2012 by CSA Global (Anatoly Zhadeev,

Geological Consultant) to review data QA/QC and laboratory inspection of Kanchalano-

Amguemskaya license area.

Refer to CSA Report R112.2013, “Technical Review of Geological Exploration Data of the

Kanchalano-Amguemskaya Area and the Valunisty Deposit and Mineral Resources Estimate in

accordance with the JORC Code”.

Following the initial site visit, there has been no material changes to the project infrastructure and

mining approach. A site visit has not been deemed necessary for the 2018 Ore Reserves.

Study status The type and level of study undertaken to enable Mineral Resources to be converted to

The Ore Reserve update is based on the Ore Reserve estimation undertaken in 2017 as described

Ore Reserves. The Code requires that a study to at least Pre-Feasibility Study level has been undertaken to convert Mineral Resources to Ore Reserves. Such studies will have been carried out and will have determined a mine plan that is technically achievable and economically viable, and that material Modifying Factors have been considered.

in following reports:

o CSA Global Report Nº R274.2017 25 July 2017 (Valunisty); and

o CSA Global Report Nº R364.2017 17 October 2017 (Gorny).

Ore Reserves were developed from pit optimisation and mine designs with modifying factors

estimated to prefeasibility study level accuracy.

Metallurgical factors are consistent with historical performance.

The topography (as surveyed) 1st January 2018 was provided by the client to define the upper limit

of Ore Reserves.

Cut-off parameters

The basis of the cut-off grade(s) or quality parameters applied.

The cut-off grades remain unchanged from the 2017 Ore Reserves.

Cut-off grades are based on historical costs for the Valunisty open pit and fixed metallurgical

recoveries.

The breakeven gold cut-off grade for Gorny open pit operations was calculated by the formula:

COG = (Total Ore Processing Cost) / (Gold Processing Recovery*Net Gold Price)

The gold-equivalent cut-off grades are:

o Valunisty deposit - 1.485 g/t, and

o Gorny deposit - 1.0 g/t

Equivalent gold grades have been calculated according to the following formula: Au Eqv (g/t) = Au

(g/t) + Conversion Factor*Ag (g/t)

The Silver-to-Gold Conversion Factors were:

o Valunisty deposit = 0.01011, and

o Gorny deposit = 0.01032.

From Ag to Au conversion factor have been calculated according to the following formula: (Net Ag

price / Net Au price) * (Ag recovery / Au recovery)

Mining factors or assumptions

The method and assumptions used as reported in the Pre-Feasibility or Feasibility Study to convert the Mineral Resource to an Ore Reserve (i.e. either by application of appropriate factors by optimisation or by preliminary or detailed design). The choice, nature, and appropriateness of the selected mining method(s) and other mining parameters including associated design issues such as pre-strip, access, etc.

Valunisty is an active operation and mining related Modifying Factors are based on existing

practice, estimation and analysis of past performance.

The Gorny deposit was mined via a trial pit from October 2017. The Valunisty deposit was deemed

a suitable analogue for the selection of modifying factors.

Valunisty pit slope angles are based on technical recommendations from industry experts.

Historical rock mass stability performance at the Project indicates that the geotechnical

The assumptions made regarding geotechnical parameters (e.g. pit slopes, stope sizes, etc.), grade control and pre-production drilling. The major assumptions made and Mineral Resource model used for pit and stope optimization (if appropriate). The mining dilution factors used. The mining recovery factors used. Any minimum mining widths used. The manner in which Inferred Mineral Resources are utilised in mining studies and the sensitivity of the outcome to their inclusion. The infrastructure requirements of the selected mining methods.

parameters applied are appropriate.

Gorny pit slope angles were provided by “EcoPojectKarier” company (based in Moscow, Russia) in

2017.

Modifying factors are applied as follows:

Valunisty open pit mine:

o Dilution of 10% at 0.0 g/t;

o Mining Recovery of 96%.

Valunisty underground mine:

o Dilution of 14% at 0.06 g/t;


Gorny open pit mine:

o The dilution factor was estimated by an indirect method based on the planning block model

with regular size cells 2.0 x 2.0 x 2.5m (X, Y, Z respectively). Approximate average ore dilution

value is about 40%;


All pit designs and considerations such as minimum mining width are based on the current

operations, formal geotechnical advice and general practices at similar operations.

Inferred Mineral Resources comprise a negligible component of the life of mine plan and are not

included in the Ore Reserve statement.

The infrastructure requirements for the Valunisty operations are well established. Processing

plant throughput is planned to be upgraded from 250 ktpa to 350 ktpa and put into effect in

2020.

The Gorny mine utilises the existing Valunisty infrastructure. Access to the Gorny mine is via an

unsealed road 18 km in length.

Only mobile diesel equipment will be used in mining operations.

Metallurgical factors or assumptions

The metallurgical process proposed and the appropriateness of that process to the style of mineralisation. Whether the metallurgical process is well-tested technology or novel in nature. The nature, amount and representativeness of metallurgical test work undertaken, the nature of the metallurgical domaining applied and the

The process plant at Valunisty is well established and currently in operation.

The metallurgical process used is well established and a tested technology.

Planned modifications to the process plant will be made during 2018 to increase plant throughput

to 350Ktpa without affecting plant recovery. The plant is expected to run at full capacity from

2020.

corresponding metallurgical recovery factors applied. Any assumptions or allowances made for deleterious elements. The existence of any bulk sample or pilot scale test work and the degree to which such samples are considered representative of the orebody as a whole. For minerals that are defined by a specification, has the ore reserve estimation been based on the appropriate mineralogy to meet the specifications?

There are no known deleterious elements impacting metallurgical recoveries based on historical

mining activities.

Assumptions are based on realised metallurgical recoveries from both operations as follows:

o Valunisty: Gold 95%, Silver 75%; and

o Gorny: Gold 93%, Silver 75%.

The gold doré produced is not subject to specification requirements.

Environmental

The status of studies of potential environmental impacts of the mining and processing operation. Details of waste rock characterisation and the consideration of potential sites, status of design options considered and, where applicable, the status of approvals for process residue storage and waste dumps should be reported.

The exploitation license has been approved by the national government based on Environmental

Impact Studies and their amendments. Through this, permits were granted for the mine itself, for

building of mine facilities, the tailings storage facility, power lines and access roads.

The mine operates under an environmental management plan, which is part of the environmental

study report.

Waste rock characterisation is described in the environmental study report, it has shown that

there are no identified sources of acid generation.

No environmental issues are known that will potentially limit or prevent operations from meeting

planned production targets and financial guidance.

Infrastructure The existence of appropriate infrastructure: availability of land for plant development, power, water, transportation (particularly for bulk commodities), labor, accommodation; or the ease with which the infrastructure can be provided or accessed.

Valunisty is an established operating mine site with the required infrastructure for ongoing

operation.

Ore mined from the Gorny pits will be processed at the Valunisty processing plant. All staff

involved at Gorny operations share the Valunisty camp facilities.

Costs The derivation of, or assumptions made, regarding projected capital costs in the study. The methodology used to estimate operating costs. Allowances made for the content of deleterious elements. The source of exchange rates used in the study. Derivation of transportation charges. The basis for forecasting or source of treatment and refining charges, penalties for failure to meet specification, etc. The allowances made for royalties payable, both Government and private.

Costs are largely based on historical performance from mining and processing from the Valunisty

deposits. Mining contractor quotations are used for mining costs. Underground costs (Novaya) are

based on a mining study completed by RPM and reviewed by CSA Global.

Total CAPEX for the project is estimated at US$80.4m (RUR 4,824m) including:

o Underground mine development – US$29.8m;

o Underground equipment – US$26.4m;

o Open pit mining equipment – US$14.4m;

o Processing plant expansion – US$2.17m;

o Re-cultivation and rehabilitation – US$1.00m; and,

o Gorny open pit mining equipment – US$0.17m.

No metallurgical allowances have been made for the effect of deleterious elements since none

have been detected.

The client has pre-existing contracts for the transportation of produced gold (at 0.12%) and other

costs (at 0.1%).

Refining costs are contracted at a fee of US$3.58/oz of gold and US$0.48/oz of silver.

Government royalties are included in the LoM plan and financial model at a rate of 6.0% for gold

and 6.5% of silver. The royalties were not included in the financial model for the Gorny deposit

due to tax concessions.

Revenue factors The derivation of, or assumptions made regarding revenue factors including head grade, metal or commodity price(s) exchange rates, transportation and treatment charges, penalties, net smelter returns, etc. The derivation of assumptions made of metal or commodity price(s), for the principal metals, minerals and co-products.

The assumed metal prices used in the estimation of Ore Reserves are:

o Valunisty: US$1,250/oz gold, US$16/oz of silver; and

o Gorny: US$1,250/oz gold, US$16/oz of silver.

The LoM financial model assumes a base exchange rate of:

o Valunisty: 60 RUR to 1 USD, and

o Gorny: 62.1 RUR to 1 USD.

The LoM financial model assumes a metallurgical recovery that is based on historical averages as

advised by the client, and is appropriate in the opinion of the Competent Person:

o Valunisty: Gold 95%, Silver 75%; and

o Gorny: Gold 93%, Silver 75%.

Market assessment The demand, supply and stock situation for the particular commodity, consumption trends and factors likely to affect supply and demand into the future. A customer and competitor analysis along with the identification of likely market windows for the product. Price and volume forecasts and the basis for these forecasts. For industrial minerals the customer specification, testing and acceptance requirements prior to a supply contract.

Gold and silver is traded freely and no market assessment has been completed for the Gorny Ore

Reserves. An estimate has been made of the real gold and silver price for the LoM at a level close

to the current market price. No hedging is in place or is planned.

The Competent Person is satisfied that the market assessment is appropriate to support the Ore

Reserve estimate.

Economic The inputs to the economic analysis to produce the net present value (NPV) in the study, the source and confidence of these economic inputs including estimated inflation, discount rate, etc. NPV ranges and sensitivity to variations in the significant assumptions and inputs.

The Valunisty and Gorny LoM financial model shows a positive cash flow.

The Valunisty and Gorny operations economics are most sensitive to gold price and metallurgical

recoveries realised (based on the 2017 Ore Reserves). A sensitivity analysis was not undertaken for

the 2018 Ore Reserves. From the 2017 Ore Reserves. The sensitivity analysis showed the Project

remains profitable with a gold price reduction of 20%.

Social The status of agreements with key stakeholders and matters leading to social license to operate.

Existing agreement titled “Социально-экономическое соглашение” (Social and Economic

Agreement) defines that the parties (regional administration, an association of local peoples and

the mine) should cooperate in developing indigenous people, provide them with employment

opportunities, hold regular meetings, and to buy goods from local suppliers.

The Competent Person is satisfied that the social aspects of the Gorny project have been

considered to an appropriate level to support the Ore Reserve estimate.

Other To the extent relevant, the impact of the following on the project and/or on the estimation and classification of the Ore Reserves: Any identified material naturally occurring risks. The status of material legal agreements and marketing arrangements. The status of governmental agreements and approvals critical to the viability of the project, such as mineral tenement status, and government and statutory approvals. There must be reasonable grounds to expect that all necessary Government approvals will be received within the timeframes anticipated in the Pre-Feasibility or Feasibility study. Highlight and discuss the materiality of any unresolved matter that is dependent on a third party on which extraction of the reserve is contingent.

No material naturally occurring risks have been identified that could impact the estimation or

classification of the Ore Reserves.

The legal agreements with the local and state governments are in place for the ongoing operation.

No marketing arrangements such as hedging are in effect.

The Valunisty and Gorny operation operates under an established exploitation permit. The

Valunisty license is valid for a period of 20 years and as such covers the entire Life of the Mine.

The Gorny license is valid for a period of 14 years (until 17 Oct 2031) and as such covers the entire

Life of the Mine.

KAS LLC (owner of KAS license are and Gorny deposit) and Rudnik Valunisty LLC (owner of

Valunisty mine) are associated companies, jointly managed by RGK with the office in Moscow. The

companies have agreement about joint use of Valunisty mine facilities.

Classification The basis for the classification of the Ore Reserves into varying confidence categories. Whether the result appropriately reflects the Competent Person’s view of the deposit. The proportion of Probable Ore Reserves that have been derived from Measured Mineral Resources (if any).

The classification of Ore Reserves appropriately reflects the Competent Person’s view of the

deposits and the assumptions, parameters and modifying factors to which they are derived.

There is no Measured Mineral Resources. Accordingly, there is no Proved material in the Ore

Reserves.

All Indicated Mineral Resources in the mine designs (all deposits), comprising the Ore Reserves,

are classified as Probable.

Audits or reviews The results of any audits or reviews of Ore Reserve estimates.

The Competent Person for Ore Reserves (Karl van Olden) is an independent consultant, who is a

full-time employee of CSA Global, and has conducted a thorough review and audit of the analysis

and technical planning work used to develop the Valunisty and Gorny Ore Reserves. The work has

been found to be of a satisfactory standard to meet the requirements of JORC 2012.

Results of previous audits and reviews have been provided by the client for review.

Discussion of relative accuracy/ confidence

Where appropriate a statement of the relative accuracy and confidence level in the Ore Reserve estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the reserve within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors which could affect the relative accuracy and confidence of the estimate. The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to the technical and economic evaluation. Documentation should include assumptions made and the procedures used. Accuracy and confidence discussions should extend to specific discussions of any applied Modifying Factors that may have a material impact on Ore Reserve viability, or for which there are remaining areas of uncertainty at the current study stage. It is recognised that this may not be possible or appropriate in all circumstances. These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

Ore Reserve designs are developed from the resource block models via interrogation of individual

block values.

Ore Reserves are derived using modern specialised mining software based on the appropriate

mining and economic input parameters for both open pit and underground deposits.

The assumptions, parameters and modifying factors used to estimate the Ore Reserves for the

Valunisty and Gorny deposits are in accordance with relative industry standards and on the

balance of risk are reasonable, providing requisite accuracy to meet JORC standard and reporting

of Ore Reserves.

Documents

Appendix 1: JORC Table 1 - London Stock Exchange · equipment used are available in SA Global’s 2012 Report. Drilling techniques Gorny Drill type (e.g. core, reverse circulation,