REG - Central Asia Metals - Proposed acquisition of Lynx Resources Limited <Origin Href="QuoteRef">CAML.L</Origin> - Part 5

Central Asia MetalsAnnouncement

22/09/2017 07:08

- Part 5: For the preceding part double click  ID:nRSV5104Rd 

exploration period; and 
 
4)         introduce a new requirement to finance research and development works by Kazakhstan producers in the amount of
not less than 1 per cent. of the aggregate annual income derived from operations under the Kounrad Contract. 
 
Amendment No. 7 made on 20 March 2014 reflected the partial assignment of the Kounrad Contract in connection with the
transfer of 40 per cent. in the Kounrad Contract from Central Asia Investment Consulting Company LLP to Mr Kenges
Rakishev. 
 
Amendment No. 8 dated 6 May 2014 reflected further sale of the 40 per cent. stake in the Kounrad Contract from Mr Rakishev
to Sary Kazna, thus Sary Kazna became the sole holder of the Kounrad Contract. 
 
Amendment No. 9 executed on 28 November 2015 reflected the approval of full reserves of the Kounrad mine and full
transition to the production stage with the new work program. In addition, amendments were made to reflect that the
Ministry for Investments and Development became the successor of the Ministry of Industry and New Technologies. 
 
22.3.3      Financial obligations 
 
The main financial obligations under the Kounrad Contract are as follows: 
 
A.        Sary Kazna is required to invest not less than approximately US$195,576,220 during the production period,
starting from 2015; 
 
B.         Sary Kazna is required to allocate not less than 1 per cent. of the total expenditures during the production
period to professional training of local personnel involved in the works under the Kounrad Contract. In the event the
amounts to be spent exceed the actual demands for the professional training of local personnel, Sary Kazna is required to
use the remaining amount to finance the priority objectives of the secondary education system of Kazakhstan; 
 
C.         Sary Kazna is required to participate in the Karaganda region's social infrastructure development by
contributing US$30,000 each year during the exploration period and US$40,000 each year during the production period; 
 
D.        Sary Kazna is required to finance research and development works by Kazakhstan producers in the amount of no less
than 1 per cent. of the aggregate annual income derived from operations under the Kounrad Contract; and 
 
E.         Sary Kazna is required to form, and make deductions to, a relinquishment fund the aim of which is to finance the
restoration of the land which is the subject of subsoil use operations under the Kounrad Contract. The relinquishment fund
is formed by means of opening a deposit account in a commercial bank, and the annual deductions shall be equal to 1 per
cent. of the amount of investments during the exploration period and 1 per cent. of operational costs during the production
period. 
 
22.3.4      Tax Obligations 
 
Pursuant to the Kounrad Contract (as amended), Sary Kazna is required to pay taxes and other obligatory payments to the
budget in accordance with the laws in force as at the time the tax obligations arise. The current tax laws provide for,
inter alia, the following specific taxes related to subsoil use: 
 
A.        a commercial discovery bonus at the rate of 0.1 per cent. is required to be paid on the value of the recoverable
reserves determined by the Competent Body. Such value will be determined on the world prices in the Metal Bulletin
published by Metal Bulletin Journals Limited, or the Metal-pages published by Metal-pages Limited; 
 
B.         an excess profits tax is payable on a scale ranging from 10 per cent. to 60 per cent. depending on the ratio
between net income and applicable deductions during a tax year. Excess profit tax is payable if the net profit exceeds 25
per cent. of applicable deductions in a reporting period; 
 
C.         a mineral extraction tax will be payable at the rate of 5.7 per cent. of the market value of copper existing in
the mined minerals. Such value will be based on the world prices in the Metal Bulletin published by Metal Bulletin Journals
Limited, or the Metal-pages published by Metal-pages Limited; and 
 
D.        historical expenses are payable in accordance with the tax laws of Kazakhstan. In accordance with the Agreement
on Acquisition of Information concluded between the Geological and Subsoil Use Committee of MEMR and Saryarka on 18 June
2007, no historical costs will be charged for the state geological information 
 
22.3.5      Other material provisions of the Kounrad Contract 
 
The Kounrad Contract relates to the exploration and production of the mineral copper. Sary Kazna is obliged to use new
technologies in exploration and mining in accordance with best international mining practice. After completion of the
exploration, the contract area was required to be returned to the state except for the areas where commercial discovery has
been made. Following completion of the exploration period, Sary Kazna was required to arrange for the explored copper
resources to be approved by the State Committee for Reserves, GKZ (Republic of Kazakhstan) and this approval was obtained. 
 
The state has a pre-emption right to acquire copper from Sary Kazna. The terms, volume and price of the acquired copper
will be determined by a separate agreement between the parties. Sary Kazna may not assign its rights and obligations under
the Kounrad Contract to a third party without the prior approval of the Competent Body. 
 
Sary Kazna is required to comply with certain local content requirements in respect of the purchase of goods and engagement
of personal. 
 
Sary Kazna must evaluate the long term ecological effect of its subsoil use activity. 
 
22.3.6      Land lease under the Kounrad Contract 
 
Pursuant to the Decision of the Karaganda Region Akimat No. 08/05 of 6 April 2009 (as amended on 11 July 2011), Sary Kazna
was granted a temporary land use right for a land plot of 1,865.58 hectares for a fee until 20 August 2034. The purpose of
this land lease is to explore and produce copper at the Kounrad mine. On 27 April 2009, Sary Kazna entered into Land Plot
Lease Agreement No. 82-08/05 (as amended on 20 July 2011) with the Land Relations Department of Karaganda Region. The
agreement has been registered with the relevant justice authorities. 
 
22.3.7      Shuak Framework Agreement 
 
On 22 November 2016, CAML signed a framework agreement to acquire an 80 per cent. effective interest in the subsoil use
contract for the Shuak exploration property in northern Kazakhstan. Under the terms of the framework agreement, on 22
February 2017, CAML reduced its interest in Shuak BV to 80 per cent., with 20 per cent. effectively being held by local
partners. The transfer of the subsoil use contract to an entity wholly held by Shuak BV completed in August 2017. The
consideration for this acquisition is an investment in exploration activities of US$2 million over five years, subject to
continued positive results from exploration activities and the general economic outlook for commodity prices. 
 
22.3.8      Traxys Offtake Agreement 
 
On 21 October 2016 KCC LLP (as seller) entered into an offtake agreement with Traxys (as buyer). Pursuant to this
agreement, the seller gave the buyer the right to buy copper cathode from its Kazakh plant. The buyer is entitled to a
minimum of 90 per cent. of production from 1 November 2016 to 31 December 2018. 
 
The price payable for the offtake is calculated by reference to market prices or three month seller quotations, less a
discount. A quality discount may also be applicable depending on the copper content in the cathode. 
 
Pursuant to, and as a condition of, the Debt Financing, with effect from Completion, the term of this agreement will be
extended to five years from Completion and the buyer will be entitled to approximately 95 per cent. of annual production. 
 
23.           Information On Macedonia And Macedonian Mineral Policy & Law 
 
23.1         Overview of Macedonia 
 
23.1.1      Geography and Population 
 
Macedonia is located in the central part of the Balkan Peninsula and shares common borders with Albania to the west,
Bulgaria to the East, Greece to the South and Serbia and Kosovo to the North. The country's total area is 25,713 square
kilometres and, in January 2017, it had a population of approximately 2.08 million people. The capital, Skopje, is the
largest urban centre with over 500,000 inhabitants. 
 
23.1.2      Government 
 
Macedonia is a republic and its current constitution was adopted on 17 November 1991. The president is the head of state
and commander-in-chief of the army. The President is directly-elected, by secret ballot, for a maximum of two five-year
terms. The current President, Mr Gjorge Ivanov, is within his second term, which began in May 2014. The national
legislative body is the Parliament of Macedonia and is comprised of up to 123 members elected by popular vote who serve a
four-year term. The most recent parliamentary elections were held in December 2016. 
 
Executive power rests with the government. The government is headed by a Prime Minister, who is appointed by the
parliamentary majority. The current prime minister is Mr Zoran Zaev who has served since May 2017. 
 
Macedonia has 80 municipalities headed by mayors elected every four years, 10 of which constitute the city of Skopje, a
distinct unit of local self-government. Municipal councils, the local legislative bodies, determine the mayors' executive
functions. 
 
Macedonia has been in political turmoil in recent years, fuelled by tension between the two major political parties, the
conservative, Christian democratic VRMO-DPMNE party (the major party in the coalition government from 2006-2016), and the
Social Democratic Union of Macedonia (SDSM). Following a snap election in December 2016 and a protracted period of
political uncertainty, on 31 May 2017, the leader of the Social Democrat party, Mr Zoran Zaev, formed a coalition between
his own party, the Democratic Union for Integration and the "Alliance for the Albanians" coalition in order to serve as the
official government. The election of the new government has brought stability to the political situation in the country,
and the policy focus of the new coalition government includes progressing Macedonia's EU and NATO accession processes,
encouraging economic development, and raising living standards. 
 
23.1.3      Economic Overview 
 
The real GDP growth in 2015 was 3.8 per cent. compared to 3.5 per cent. in 2014. The real GDP growth for 2016 and 2017 is
estimated to be 3.2 per cent. per year, putting the country in the top five in Europe in terms of economic growth. In 2016,
the average inflation rate was -0.2 per cent. The current account deficit in 2016 was 3.1 per cent. of the GDP, compared to
2 per cent. in 2014, caused by the widening primary income deficit. 
 
The historically high official unemployment rate has slightly decreased to 22.9 per cent. in 2017 from 24 per cent. in
2016, 26.8 per cent. in 2015 and 28 per cent. in 2014 (although it is widely assumed that the actual unemployment is lower
due to the importance of the informal economy). 
 
Despite a series of political challenges during the past two years, the economy grew and benefitted from accommodative
policies, low commodity prices, sustained foreign investment and improving labour market conditions. An extended period of
accommodative fiscal policy has helped support domestic demand, but has also depleted policy space to counter further
shocks. 
 
23.2         Mineral Policy and Law in Macedonia 
 
23.2.1      General 
 
The mining sector and activities in the Republic of Macedonia are mainly regulated by the Minerals Law. The Minerals Law
serves as the overriding law with respect to mining related legal issues. 
 
Apart from the Minerals Law and its bylaws, the following laws and their corresponding bylaws amongst others also regulate
certain aspects of the mining sector in Macedonia: 
 
(A)       the Law on Concessions and Public Private Partnerships ("Concessions Law"); 
 
(B)       the Law on Trade Companies; 
 
(C)       the Law on General Administrative Procedure; 
 
(D)       the Law on Safety and Health at Work; and 
 
(E)       the Law on the Environment. 
 
23.2.2      Minerals Law 
 
The Minerals Law differentiates three general phases for the purposes of mining regulation: 
 
(A)       the surveying geological explorations phase; 
 
(B)       the exploration phase; 
 
(C)       the exploitation phase. 
 
The first two phases have been completed at the SASA Mine and the operations have been in the exploitation phase for some
time now. Any company that intends to perform exploitation of mineral resources within the Republic of Macedonia must first
obtain an exploitation concession. The term as well as the surface area of such exploitation concessions vary depending on
the type of mineral resource in question. Exploitation concessions for metal minerals can be given for a period of up to 30
years, with a possible extension period of another 30 years. The surface area covered by exploitation concessions for metal
minerals may be up to 30 square kilometres. 
 
The exploitation concession allows the entity that has been awarded such concession and has concluded an exploitation
concession agreement with the Ministry of Economy ("MoE") to exploit the mineral resources (that are otherwise owned by the
government of the Republic of Macedonia) within a certain surface area for a specified period of time at the expense and
risk of the concessionaire. The MoE can award exploitation concessions at the request of an interested party (i.e. the
owner of the results contained in an exploration report from a completed exploration) or after publishing a public call and
holding an electronic auction. 
 
The concessionaire needs to initiate the procedure and obtain the following property rights, depending on the owner of the
land for which the concession was awarded: 
 
(A)       for land owned by legal entities and individuals, the concessionaire needs to initiate an expropriation procedure
and obtain ownership of such land; and 
 
(B)       for land that is owned by the Republic of Macedonia, the concessionaire must request and obtain a right of use. 
 
Concessionaires also have various obligations with respect to labour and health and safety at work matters as well as
environmental issues. 
 
Once an entity obtains a concession, it must also obtain an exploitation licence from the MoE before commencing any
exploitation activities. The concessionaire must apply for an exploitation licence within four years after the conclusion
of the exploitation concession agreement. The concessionaire is obliged to begin the exploitation activities within three
years as of the issuance of the exploitation licence. If a concessionaire intends to further explore a certain surface area
in order to broaden the concession area with an area neighbouring the original concession area, it can request that the MoE
issues a license for geological exploration. 
 
Lastly, a concessionaire can perform the following activities only after obtaining an additional mining project licence
issued by the MoE: 
 
(A)       mining activities on new horizons or ponds; 
 
(B)       construction of new export, ventilation and researching shafts; 
 
(C)       significantly changing the method of excavation; 
 
(D)       reconstruction of mines and new dumpsites; 
 
(E)       reconstruction of large landslides; or 
 
(F)        changes in terms of land reclamation. 
 
An annual fee is payable for use of the location or the surface amounting MKD 180,000 per square kilometre (approximately
EUR 3,000 per square kilometre) for surface and/or underground exploitation of metallic minerals. Furthermore, a royalty
amounting 2 per cent. of the market value of the metal per tonne for each tonne of metal concentrate exploited must also be
paid. 
 
The Minerals Law prescribes an obligation to obtain a prior approval and payment of a fee in the case of a transfer of an
exploitation concession or a change of ownership in the exploitation concessionaire's shares. The fee payable in connection
with obtaining approval for the concession transfer fee and/or the share transfer is equal to 7 per cent. of the value of
the exploitation concession. The basis on which the value of the exploitation concession is determined is not prescribed in
detail in the Minerals Law. 
 
23.2.3      Environmental regulation 
 
Given the environmental impact of mining activities, they are subject to strict regulation and inspection in Macedonia. The
basic law which applies to environmental issues is the Macedonian Law on the Environment ("Environment Law"). It regulates
the rights and duties of the Republic of Macedonia ("RoM"), the municipalities, the City of Skopje and the municipalities
in the city of Skopje, as well as the rights and duties of the legal entities and natural persons in providing conditions
for protection and improvement of the environment. The Environment Law prescribes that if a proposed project might have a
significant impact on the environment, then an Environmental Impact Assessment Study ("EIAS") must be prepared and
submitted it to the Ministry of Environment and Physical Planning ("Ministry of Environment"). The Ministry of Environment
ultimately needs to approve any such project after a report and public hearing in relation to the relevant EIAS. 
 
Certain activities can be performed only if the installation obtains an integrated environmental permit. This permit can be
either (i) an A-Integrated Environmental Permit ("A-Permit"); or (ii) B-Integrated Environmental Permit ("B-Permit"). The
A-Permit is issued by the Ministry of Environment and the B-Permit is issued by the relevant municipality, the city of
Skopje or the Ministry of Environment. Mining activities can be performed only after an A-Permit has been obtained for the
operation of an installation performing one or more activities stated in the Environmental Permit Decree and only up to the
level approved in the A-Permit. The A-Permit contains data for the operator and the installation, as well as mandatory
conditions related to emission levels, protection measures of individual media and areas of the environment, and the manner
of performing monitoring by the operator of the installation. 
 
The emissions of the installation specified in the A-Permit must not exceed the prescribed emission levels. During the
validity of the A-Permit and for five years after its expiration, the operator must keep all documents and data related to
the request, issuance and monitoring provided by the mandatory conditions in the A-Permit and make them available at the
request of the Ministry of Environment and the State Environmental Inspectorate. Also, the operator must regularly notify
and report to the Ministry of Environment. An A-Permit may be modified ex officio or at the request of the operator or may
be transferred fully or in part under certain conditions. The A-Permit can be revoked if the operator (i) breaches more
than three times the mandatory requirements contained in the A-Permit, as determined by the State Environmental
Inspectorate; (ii) has made changes to the installation without obtaining permission from the competent body; or (iii) it
does not perform the activity to the extent and at the time specified in the A-Permit. The holder of the permit must pay
yearly fees in respect of the permit. 
 
Moreover, if certain activities are performed in a system in which hazardous substances are present in quantities greater
than or equal to the prescribed levels, the operator must take all measures necessary to prevent accidents and to limit
their consequences on the environment and on human life and health, and prepare a Plan for the prevention of major
accidents. 
 
In 2004 RoM ratified the Kyoto Protocol to the United Nations Framework Convention on Climate Change which sets
internationally binding emission reduction targets. In order to implement the National Climate Change Mitigation Plan
("National Plan"), and involve RoM in global efforts to reduce climate change and implement the commitments under the Kyoto
Protocol, the Ministry of Environment evaluates and approves projects under the clean development mechanism established in
the KP. 
 
Water use permits 
 
The Macedonian Law on Waters ("Waters Law") regulates the issues pertaining to surface waters, lakes, accumulations and
springs, groundwaters, waterside land and water habitats and their management, water resources management facilities and
services; organisational set up and financing of water resources management, as well as the conditions and the procedures
under which the waters can be used and discharged. 
 
For the purpose of achieving the public interest in water use, as well as for the purpose of exercising the rights and
obligations of the legal entities and natural persons to use or discharge waters, the right of water use from bodies of
waters and the right to discharge into the bodies of waters, a water right is granted to the legal entities and natural
persons. The holder of water right shall have the right to freely and fully use and dispose with the water over which it
has acquired the water right. This water right is acquired on the basis of a water use permit and water discharge permit
which is issued for a period not longer than 10 years, unless provided otherwise. The water right that derives from and is
exercised under the conditions and in the manner determined in the permit can be temporarily restricted if it (i) endangers
human health; (ii) endangers the natural balance of the aquatic ecosystems and the water dependent ecosystems; (iii)
restricts the general water use; and (iv) has a harmful impact on the protected areas determined by the regulations on
protection of nature. 
 
The operators who discharge wastewater are obliged to install instruments for measuring the discharged quantities of water
and analysing their quality and to maintain the instruments in proper condition, to keep records of the performed
measurements and to submit these data to the Ministry of Environment. 
 
Water consents are issued for construction of new, or reconstruction or extension of existing, facilities that are located
in or beside the surface waters, facilities that cross above or under the surface waters or facilities that are located in
vicinity of surface waters or waterside lands and which may affect the water regime. They determine the water management
conditions that must be realised during the construction. Only after obtaining this consent, the competent authorities may
issue a construction permit for the concerned facility. 
 
Supervision 
 
The competent environmental supervision authority in RoM is the Ministry of Environment, while the inspection supervision
is conducted by the State Environmental Inspectorate. Among other matters, the state inspector has the following
responsibilities: 
 
(A)       to determine whether installations that meet the prescribed norms and standards from the environmental protection
system are being constructed or reconstructed; 
 
(B)       to determine whether pollutants and substances in the environment that exceed the prescribed norms are produced
and released, as well as whether they are handled in the prescribed manner and order their withdrawal from the market; 
 
(C)       to determine whether monitoring of the sources of emission and the technological process that pollutes one or
more environmental media, emissions, or the utilisation of natural resources; 
 
(D)       to determine whether monitoring is carried out in accordance with the A-Permit; 
 
(E)       to determine whether the emissions of the substances specified in the A-Permit are discharged according to the
specified limit values; etc. 
 
If the environmental inspector finds that an operator has breached its environmental obligations, it can issue a decision
prescribing measures to eliminate the causes of such environmental pollution and establishing certain obligations for the
operator. For some misdemeanours, an applicable misdemeanour procedure is conducted and a misdemeanour fine and/or sanction
is issued by the Ministry of Environment. If an operator's actions cause ecological damage, the operator may face claims in
civil proceedings. Finally, if there is significant environmental damage, the operator could face criminal charges. 
 
23.3         SUMMARY OF KEY AGREEMENTS-THE SASA MINE 
 
23.3.1      Concession Agreement 
 
A concession agreement was entered into between Rudnik SASA DOOEL and the Republic of Macedonia on 12 December 2014 (the
"SASA Concession Agreement"). The SASA Concession Agreement regulates the rights and obligations of Rudnik SASA DOOEL and
the Macedonian government arising from the award of the concession to exploit lead and zinc ore mineral resources at the
SASA Mine near the town of Makedonska Kamenica. The concession is valid until 28 September 2030, with a possibility to be
extended for a further 30 years. 
 
Pursuant to the terms of the SASA Concession Agreement, Rudnik SASA DOOEL was obliged to resolve certain issues pertaining
to the use of the land on which the mineral resources were located, such obligations now having been fulfilled. The SASA
Concession Agreement also imposes a number of ongoing environmental and health and safety obligations on Rudnik SASA
DOOEL.Rudnik SASA DOOEL is required to pay MKD 758,800 in fees per annum (payable on a quarterly basis) for the use and
exploitation of the concession area, plus an additional exploitation fee of 2 per cent. of the market value of lead/zinc
per tonne of metal concentrate produced. 
 
The Republic of Macedonia performs continuous and regular supervision of Rudnik SASA DOOEL's concession activity and its
compliance with its legal and contractual obligation. The Rudnik SASA Concession Agreement automatically becomes invalid
upon expiry of the concession term, bankruptcy or liquidation of Rudnik SASA DOOEL, unilateral termination by either party
or otherwise in accordance with the law. 
 
A concession agreement is terminable by the Republic of Macedonia following the occurrence of certain events, including
where: (i) prior approval from the Government of Macedonia is not granted, or the payment of the related applicable fee is
not made, upon a transfer of the exploitation concession granted to the concessionaire or a change of ownership in the
concessionaire's shares; (ii) the concessionaire loses the economical, technical or operative capacities necessary to
operation the concession in accordance with law; (iii) the applicable environmental permits are withdrawn or terminated; or
(iv) there has been an interruption of mining activities for a period exceeding one year. 
 
The concession agreement is also terminable by the Republic of Macedonia following the occurrence of the following events:
(i) the activity is carried out in an inappropriate or low quality manner; (ii) the concessionaire has committed a material
violation of the provisions of the contract or of the laws and regulations applicable to the contract; (iii) the
concessionaire has terminated or has caused the termination of the performance of the activity; (iv) the concessionaire
undergoes a merger, acquisition and division without a written consent of the Government of Macedonia; (v) the
concessionaire gives the subject of the concession under lease; (vi) the concessionaire starts the exploitation of minerals
before a permit for exploitation is granted; (vii) the concessionaire does not act upon the measures imposed in the
procedure for supervision under the law; (viii) the concessionaire does not submit a request for issuance of an
exploitation permit within the period prescribed by law; (ix) the concessionaire does not start the exploitation of
minerals within the period set out in the law (unless due to force majeure event); (x) the concessionaire has not made a
geodetic survey and has not prepared a geodetic survey report with calculation of the dug quantities of minerals or has not
submitted the geodetic survey report to the relevant state administrative body for two consecutive years; (xi) the
concessionaire does not submit a report on the conducted testing of the exploitation facilities for exploitation of the
minerals for two consecutive years; (xii) the concessionaire does not deliver authentic data on the contents of the
minerals in the concentrates, i.e. the metals that are received in the processing process; or (xiii) the concessionaire
does not comply with the decision and the measures in relation to environmental protection set out in the environmental
regulations. 
 
23.3.2      Offtake Agreements 
 
Lead and Silver Offtake Agreement 
 
Lynx Metals entered into a lead concentrate sales agreement executed on 19 December 2016 in its capacity as seller of lead
concentrates at the SASA Mine. This agreement provides for the sale of an approximate total quantity of 44,000 wet metric
tons (plus or minus 10 per cent. at Lynx Metals' option) of lead concentrate. This amount equates to approximately 3,666
wet metric tons per month, plus or minus Lynx Metals' option. 
 
Under the agreement, the buyer has an obligation to make a 90 per cent. provisional payment against Lynx Metals'
provisional invoice value on a bi-monthly basis, with final settlement within three business days of presentation of the
final invoice by Lynx Metals. 
 
Under the agreement, the buyer pays for a percentage of the payable metals (being lead and silver) minus the charge for the
treatment of the lead and a charge for refining the Silver. 
 
Pursuant to the Acquisition Agreement, the Sellers have also agreed to enter into certain agreed form documents on
Completion including, amongst others, a deed of novation in respect of this agreement pursuant to which Lynx Metals will
transfer its rights and obligations to Lynx Mining. In the event that such deed of novation is unlikely to be executed
prior to Completion, Lynx Metals will continue to be the counterparty but all payments received by Lynx Metals pursuant to
this agreement will be held on trust for the Purchaser and such payment shall be transferred to the Purchaser. 
 
First Zinc Offtake Agreement 
 
Lynx Metals entered into a zinc concentrate sales agreement executed on 19 December 2016 in its capacity as seller of zinc
concentrate at the SASA Mine. This agreement provides for the sale of an approximate total quantity of 33,000 wet metric
tons (plus or minus 10 per cent. at Lynx Metals' option) of zinc concentrate. This amount equates to approximately 2,750
wet metric tons per month, plus or minus Lynx Metal's option. 
 
Under the agreement, the buyer has an obligation to make a 90 per cent. provisional payment against Lynx Metals'
provisional invoice value on a bi-monthly basis, with final settlement within three business days of presentation of the
final invoice by Lynx Metals to the buyer. 
 
Under the agreement the buyer pays for a percentage of the payable metal (being zinc) minus the charge for the treatment of
the zinc. 
 
Pursuant to the Acquisition Agreement, the Sellers have also agreed to enter into certain agreed form documents on
Completion including, amongst others, a deed of novation in respect of this agreement pursuant to which Lynx Metals will
transfer its rights and obligations to Lynx Mining. In the event that such deed of novation is unlikely to be executed
prior to Completion, Lynx Metals will continue to be the counterparty but all payments received by Lynx Metals pursuant to
this agreement will be held on trust for the Purchaser and such payment shall be transferred to the Purchaser. 
 
Second Zinc Offtake Agreement 
 
Lynx Metals entered into a second zinc concentrate sales agreement executed on 19 December 2016 in its capacity as seller
of zinc concentrate at The SASA Mine. This agreement provides for the sale of approximately 12,000 wet metric tons (plus or
minus 5 per cent. at Lynx Metals' option) of zinc concentrate. 
 
Under the agreement, the buyer has an obligation to make a provisional payment of 100 per cent of Lynx Metals' provisional
invoice at the later of 14 days after the load date or Lynx Metals' presentation of the provisional invoice, certificate of
analysis and certificate of weight and moisture. Final payment settlement must be made within three working days of receipt
of the final invoice and written notice of final weights, assays and prices. The agreement also provides for an adjustment
mechanism following the determination of a benchmark price. 
 
Under the agreement the buyer pays for a percentage of the payable metal (being zinc) minus the charge for the treatment of
the zinc. 
 
Pursuant to the Acquisition Agreement, the Sellers have also agreed to enter into certain agreed form documents on
Completion including, amongst others, a deed of novation in respect of this agreement pursuant to which Lynx Metals will
transfer its rights and obligations to Lynx Mining. In the event that such deed of novation is unlikely to be executed
prior to Completion, Lynx Metals will continue to be the counterparty but all payments received by Lynx Metals pursuant to
this agreement will be held on trust for the Purchaser and such payment shall be transferred to the Purchaser. 
 
Silver Purchase Agreement 
 
On 1 September 2016, SASA DOOEL (as seller) entered into a silver purchase agreement with Lynx Metals (as buyer). Lynx
Metals' rights and obligations under this agreement were novated to a third party on 31 July 2017. The agreement governs
the sale of refined silver from SASA DOOEL to the third party and such refined silver need not be physically produced at
the SASA Mine and may be purchased on the open market. 
 
The agreement has a term of 40 years with automatic ten year extensions thereafter. In consideration for the refined silver
to be delivered under the agreement, Lynx Metals paid US$22,064,374.42 to SASA DOOEL in advance. Deliveries of silver by
SASA Mine to Lynx Metals (and following novation, the third party) are offset against the prepayment. 
 
24.           EXECUTIVE SUMMARY ON THE KOUNRAD MINE 
 
A Competent Person's Report in respect of the Company's Kounrad mine has been prepared by Wardell Armstrong International
and is available on the Company's website, https://www.centralasiametals.com/investors/proposed-acquisition/. The executive
summary of the Competent Person's Report is set out below. 
 
Historically, copper ore was mined from the porphyry deposit at Kounrad from 1936, originally by Balkhashtsvetmed and more
recently by Kazakhmys, which still owns the open pit mine and the liabilities associated with restoration of the site.
Importantly, over the decades of production, detailed mining and processing records have been maintained relating to the
classification and grades of the various waste dumps. 
 
The sulphide ores were treated by conventional flotation, whilst oxide ores and low-grade sulphide ores were stockpiled
around the site, to the eastern and western margins of the pit, namely the Eastern and Western Dumps. 
 
Currently, CAML operate an in situ dump leach operation from the Eastern and Western Dumps that were left by the Soviet
mining operations, and CAML irrigate these dumps with acidic solutions "in situ" and transport the copper pregnant leach
solution to the SX-EW plant for copper mineral processing and metal recovery. 
 
In-situ acid leaching, is where acidic solutions are irrigated on top of the dumps in order to recover soluble copper as a
pregnant solution. The copper pregnant solution flowing from the base of the dumps is collected and pumped to a solvent
extraction and electro-winning (SX-EW) plant which is located at the Eastern Dumps. 
 
The higher-grade oxide ores which are restricted to the Eastern Dumps provided the focus for initial production during
2012-2016. Testwork on the potential methods for the extraction and recovery of copper from the various waste dumps and
leaching of the dumps has been undertaken since the 1970s. 
 
In 2006 CAML, through its Kazakhstan wholly owned subsidiary Sary Kazna LLP, acquired 60% ownership of the sub-soil use
contract (contract number 2447) covering the Kounrad waste dumps from the State Entrepreneurial Corporation Saryarka (SEC
Saryarka). 
 
Having raised US$60 million at IPO in September 2010, CAML completed construction of the Kounrad SX-EW copper plant in
2012, on schedule and US$9m below budget. The plant began producing copper in late April 2012. 
 
CAML completed the acquisition of the remaining 40% of the project in 2014. 
 
Summary of Assets 
 
 Asset    Holder  Interest (%)  Status                      Licence Expiry Date  Licence Area  
 Kounrad  CAML    100%          Exploration and Processing  20th August 2034     22.5 Km2      
 
 
Since operations on the Eastern Dumps commenced, CAML has increased annual production each year and has now produced
approximately 61,000 tonnes of copper cathode. 
 
 Year    2012   2013    2014    2015    2016    H1 2017  
 CU (t)  6,586  10,509  11,136  12,071  14,020  7,027    
 
 
In May 2015, CAML successfully completed the Kounrad Stage 1 Expansion, on schedule, and under budget, which involved
increasing the PLS handling facilities, boiler capacity and copper plating capacity. 
 
The Stage 2 Expansion project (covering the Western Dumps) was materially completed in Q4 2016 and copper production from
this area commenced in Q2 2017. 
 
In terms of the Mineral Resource model, WAI prepared a Mineral Resource Estimate in accordance with the JORC Code (2004) in
2013 based on work carried out using CAE Studio 3 (Datamine) software. The base data for this work included the large
volume of historical data from open pit mine records, and the more recent reverse circulation drilling works carried out in
2011 and 2012. 
 
Subsequently the JORC Code has been updated to the JORC Code (2012) which took full effect as of 01 December 2013, and the
Mineral Resources reported within this CPR have therefore been amended to meet the guidelines of the JORC Code (2012). 
 
Summary of Eastern, Western and Northern Mineral Resources 
 
 Category                   Gross        Net attributable  Operator         
 Kounrad Mineral Resources  Tonnes (kt)  Grade (%)         Contained metal  Tonnes (kt)  Grade (%)  Contained metal        
 Indicated                  388,977      0.10              372,546          388,977      0.10       372,546          CAML  
 Inferred                   264,023      0.09              237,175          264,023      0.09       237,175          CAML  
 Sub-total                  653,000      0.09              609,722          653,000      0.09       609,722                
 Total                      653,000      0.09              609,722          653,000      0.09       609,722                
 
 
Between the commencement of production at Kounrad and the end of H1 2017, circa 61,000t of copper cathode have been
produced. Due to the leaching method, it is not possible to specifically define where within the dumps copper
mineralisation has been leached, with leached solutions potentially propagating through several contiguous irrigation
blocks before being sent to the process plant. 
 
To account for the depletion of the Mineral Resource as of end of H1 2017, the updated Mineral Resource statement includes
columns for the recovered copper "Cu Production 2012-2017 (t)" and the remaining copper "Remaining Cu (t)". 
 
The results of this work are summarised in the table below, and demonstrate a close correlation with previous historical
Mineral Resource Estimates. 
 
An important factor that has been noted during the 2011-2012 exploration as well as production is that many of the
assumptions pertaining to the makeup of the material identified as "mixed" (10 to 20% acid soluble copper) and "sulphides"
(less than 10% acid soluble species) are no longer correct. Assay results show that acid soluble assays in "mixed" dump
15-16 were higher than expected and averaged around 45% and with similar values being determined in the "sulphide" dumps
such as 1, 1a, 21. 
 
It is highly likely that these higher than anticipated levels of soluble copper are due to the historic and ongoing
(continuously active) natural oxidation conditions occurring within the dumps, over a 70-80 year time frame. 
 
Such changes can be accelerated by near surface oxidation, species conversion related with ferric iron leaching; and both
being accelerated by the presence of naturally occurring bacteria. Visually, it is very clear to see such natural activity
having occurred, with extensive plumes of copper oxide colouration seen on large areas of the dump side walls. 
 
Consequently, and in particular for the Western Dump Mineral Resources, this has implications for potential enhanced
recoveries. 
 
24.1         Processing 
 
In terms of processing, a considerable amount of testwork, pilot scale testing together with the last five years
operational data, has been compiled for the leaching of the Eastern and Western Dumps at Kounrad. The quantity of material
remaining in the dumps (most notably the Western Dumps), the copper content, and its amenability to leaching, all confirm
the continued viability of the CAML Kounrad project. 
 
The oxide waste was dumped entirely on the eastern margin of the open pit and has been the initial operational focus of the
project. The sulphide, and the bulk of the mixed waste, are located in the Western Dumps area and have been subjected to
metallurgical testing in the period 2009-2012 to verify copper recoveries and acid consumptions. 
 
24.2         Summary of Testwork 
 
In addition to a pilot scale trial undertaken at the Eastern Dump, a pilot scale trial was also performed at the Western
Dumps in 2011-2012. The pilot plant trial had demonstrated the feasibility of producing saleable copper cathode from the
Eastern Dumps. 
 
From the Western Dumps, the pilot plant ran from June 2011 to the end of September 2012, but was stopped during the severe
winter of 2011-2012. Two cells of Western Dump material were subject to leaching during this period, with the second test
cell being curtailed early due to some operational issues regarding solutions return connected with unknown ground
topography. 
 
Although the trial did not deliver the same quantity of specific metallurgical data as generated when running at the
Eastern Dump, it had however shown that the copper was recoverable via acid leaching with a recovery approaching 50% being
obtained from Western Dump material. 
 
The required FS design data was subsequently enhanced from undertaking large diameter column tests at site, this was also
used to develop a realistic kinetic model for leaching. It is known, and expected, that this can only be a best
approximation, based upon the data presently available. Two leach recovery curves were produced, one for lower grade
material (<0.05% TCu) with a final recovery of 35%, and a higher grade (>0.5% TCu) terminating at 42% total Cu recovery,
both at 20 months. 
 
In 2012, the SX-EW Plant was commissioned and later expanded in 2015. In 2013, BGRIMM completed a Feasibility Study as part
of the expansion. BGRIMM detailed the leaching schedule and designed a plant capable of treating a range of flow rates and
solution grades to produce up to 50 tonnes of copper cathode per day at 99.99% quality. The plant design has taken the
extremes of climate into consideration, especially the operability through the winter period. 
 
For the Eastern Dumps, CAML has adopted recovery levels of 51% for Dumps 6,7,9 and 10, while a leach recovery level of 42%
was adopted for Dumps 2 and 5. 
 
The Eastern Dumps are expected to recover a further 25,136t (from 79,843t originally available) of leached copper during
its remaining operational life. Leaching of the Western Dumps has only recently commenced (Q2 2017) following the
installation of solution ponds, pumps, 3 boilers and two overland pipelines, which transport the PLS and raffinate between
the western facility and the SX-EW Plant at the Eastern Dump. The site is now supplied with technical water from the nearby
Lake Balkhash via an overland pipeline at a flow rate of up to 200m3/hr. 
 
Over the life of operation for the Western Dumps, it is expected that some 173,173t of copper will be recovered to the PLS.
This is significantly higher than the copper to be recovered from the Eastern Dump because the Western Dumps contain
significantly more material. 
 
In summary, production from the Eastern Dumps has demonstrated that CAML has successfully leached copper from the low-grade
copper waste dumps, and early indications suggest that the Western Dumps will continue this process for the long-term. 
 
WAI has reviewed the environmental and social performance of the Kounrad operations based on a review of documentation
provided by CAML. 
 
The operation is compliant with local Kazakh legislation, and a considerable amount of work has been undertaken to bring it
in line with International Best Practice. A document register is maintained for all Environment and Social, and Health and
safety policies, plans and procedures; and 
 
WAI considers the Environmental and Social performance is well managed, and to a high standard. 
 
Studies show that there is potential for Acid Mine Drainage ("AMD") and Pregnant Leach Solution ("PLS") migration down
gradient of the Dumps due to "historic" contamination. CAML has instigated a number of studies to develop a detailed
understanding of these issues, and continues to monitor closely to manage the risk. WAI is satisfied that historical
liability is not the responsibility of CAML, and furthermore, WAI believes this aspect of the operations is given
sufficient consideration, and the risks associated with potential contamination are well managed. 
 
24.3         Financial Analysis 
 
WAI has performed a technical valuation of the Kounrad copper dump leach project using a Discounted Cash Flow (DCF)
analysis. The operating costs and sustaining capital requirements were estimated by CAML based on the actual operation
results and approved Company budgets. WAI finds these costs to be reasonable for the scale and the location of the
operation. 
 
Based on the financial analysis performed by WAI, the Kounrad Project generates a strongly positive Net Present Value (NPV)
of US$355M at a 10% discount rate (Base Case). As a part of a sensitivity analysis, NPVs based on various discount rates
ranging between 8% and 20% were also calculated. A summary of the Project NPVs at various discount rates is shown in the
table below: 
 
 Project NPV Summary         
 NPV @ Discount Rate of 8%   US$ M  401  
 NPV @ Discount Rate of 10%  US$ M  355  
 NPV @ Discount Rate of 15%  US$ M  271  
 NPV @ Discount Rate of 20%  US$ M  215  
 
 
Total average life of mine C1 project cash costs were estimated at US$0.54 per pound. 
 
A Base Case metal price forecast used for the financial analysis is presented below: 
 
 Selected Project Copper Price Forecast*  
 Cu Price                                 Units  2017E  2018E  2019E  2020E  2021E  LT  
 US$/t                                    5,401  5,512  5,908  6,393  6,415  6,283  
 US$/lb                                   2.45   2.50   2.68   2.90   2.91   2.85   
 
 
*Broker consensus copper price forecasts, supplied CAML 
 
Based on the sensitivity analysis performed, the project is mostly sensitive to the change in copper price. None of the
assessed sensitivity analysis parameters were observed to bring the project to negative results. 
 
25.           EXECUTIVE SUMMARY ON THE SASA MINE 
 
A Competent Person's Report in respect of the SASA Mine has been prepared by SRK and is available on the Company's website,
https://www.centralasiametals.com/investors/proposed-acquisition/. The executive summary of the Competent Person's Report
is set out below. 
 
25.1         Background 
 
For the 12-month period ended 31 December 2016, Lynx Resources reported the following key operating statistics for the
Mineral Assets: saleable products comprising: 39,507 dmt Pb concentrate and 45,548 dmt Zn concentrate from 782,823 dmt
mined and 779,231 dmt processed. For the first 6 months of 2017 ("H1 2017") these statistics are: 20,301 dmt Pb concentrate
and 21,719 dmt Zn concentrate from 391,043 dmt mined and 392,257 dmt processed. 
 
The current Life of Mine Plan ("LoMp") (starting H2 2017, limited to end-2037) assumes ore production of 15.98 Mt ore to
the process plant, with saleable products comprising 357.2 kt Zn in concentrate, 559.8 kt Pb in concentrate and 6,949 koz
Ag in concentrate. 
 
25.2         The Mineral Assets 
 
The SASA Mine is located in northeastern Macedonia, approximately 150 km from the capital city of Skopje and 10 km to the
north of the small village of Makedonska Kamenica. 
 
SASA Mine comprises an operating underground lead-zinc mine and flotation plant, which allows for the production of
separate zinc and lead concentrates. Concentrates are currently transported by truck for treatment in smelters in the
surrounding region. 
 
The mine is located in the Osogovo Mountains of eastern Macedonia at the head of the deeply incised Kamenica River valley,
with an elevation range of approximately 975 to 1,600 m above sea level. The mine site is subject to continental and
Mediterranean climatic influences, with hot dry summers and cold winters. Underground mine infrastructure is extensive,
with many historic worked out areas. A number of restored and operational tailings storage facilities ("TSF") are located
in the valley below the processing plant. A new TSF, TSF 4, is currently under construction, immediately downstream of the
active TSF 3.2. Active and legacy waste rock dumps are located around the property. Waste rock from the active mine is
transported to the surface for capping of the TSFs as part of the rehabilitation plan or is stored for future use in TSF
construction. 
 
A summary of all licences related to the SASA Mine is included in Table ES 1. Whilst the current exploration licence
expires on 13 December 2017, the application for renewal is already in progress. SRK has every reason to expect that the
licence will be renewed as a matter of course within the allowable 12-month period following the expiry of the licence. 
 
Table ES 1:     Summary Table of Mineral Assets 
 
 Asset                 Holder             Interest  Status       Licence expiry date          Licence area  Comments                                                                                
 SASA Mine, Macedonia  Rudnik SASA DOOEL  100%      Production   28 September 2030            4.22 km2      Current annual run of mine production is 780 kt, producing lead and zinc concentrates.  
 SASA Mine, Macedonia  Rudnik SASA DOOEL  100%      Exploration  Expires on 13 December 2017  1.42 km2                                                                                              
 
 
25.3         Historical Mining 
 
The initial mining and geological surveys of the Osogovo Mountains' ore-bearing massif and the SASA Mine locality date from
1954. The period between 1954 and 1960 was a period of exploration and the mine construction took place between 1960 and
1965. In November 1965, the mine was opened for trial processing with a projected production capacity of 0.3 Mtpa of
lead-zinc ore. 
 
The SASA Mine commenced operation from 1966 as a state-owned entity. During the 1990s, ore production levels at SASA Mine
were roughly 0.5 Mtpa and, in 2002, the mining and milling operation was shut down due to lack of operating capital on the
part of the Macedonian government, which owned the mine. Subsequently, the mine was put into bankruptcy and closed. The
Solway Group subsequently purchased the mine and operations were restarted in 2006. 
 
Table ES 3 provides a summary of the recent annual mine and processing production at the SASA Mine. 
 
Table ES 3:     Historical Production at the SASA Mine 
 
 Description                Units     2010   2011   2012   2013   2014   2015   2016   H1 2017  
 Mine Performance                     
 Total Ore Mined            (kt wet)  838    788    784    807    809    806    807    402      
                            (kt dry)  809    759    753    777    780    780    783    391      
 Lead grade                 (% Pb)    4.05   3.83   3.93   4.13   4.16   4.04   3.95   4.01     
 Zinc grade                 (% Zn)    3.81   3.43   3.35   3.47   3.48   3.52   3.41   3.20     
 Process Plant Performance            
 Ore Processed              (kt wet)  840    787    785    804    809    803    803    404      
                            (kt dry)  811    758    754    774    780    777    779    392      
 Lead grade                 (% Pb)    4.05   3.83   3.93   4.13   4.16   4.04   3.95   4.01     
 Zinc grade                 (% Zn)    3.81   3.43   3.35   3.47   3.48   3.52   3.41   3.20     
 Lead Concentrate                     
 Lead Concentrate           (kt dry)  41.3   37.1   38.0   41.0   41.6   40.2   39.5   20.3     
 Lead Recovery              (%)       94.4   95.1   94.4   94.4   94.5   94.1   94.1   94.6     
 Lead Grade                 (% Pb)    75.15  74.32  73.64  73.62  73.73  73.51  73.29  73.29    
 Zinc Grade                 (% Zn)    2.82   2.66   2.43   2.59   2.59   2.86   2.71   2.56     
 Lead Contained             (kt)      31.0   27.6   28.0   30.2   30.7   29.5   29.0   14.9     
 Zinc Concentrate                     
 Zinc Concentrate           (kt dry)  52.8   44.6   43.1   46.2   46.9   47.2   45.5   21.7     
 Zinc Recovery              (%)       86.0   86.6   86.2   86.3   86.5   85.8   84.6   85.6     
 Lead Grade                 (% Pb)    1.13   1.05   1.08   1.06   1.33   1.64   1.33   1.10     
 Zinc Grade                 (% Zn)    50.36  50.56  50.51  50.14  50.13  49.78  49.43  49.45    
 Zinc Contained             (kt)      26.6   22.5   21.8   23.2   23.5   23.5   22.5   10.7     
                                                                                                  
 
 
25.4         Mineral Tenement and Land Tenure States 
 
The exploitation concession (24-5550/1) covers an area of 4.22 km2 and comprises sub-areas labelled by year, which relate
to expansions of previous licence boundaries. The current exploitation concession was most recently issued to Lynx
Resources on 13 November 2014 and is valid until 28 September 2030, with the possibility of extending for another 30
years. 
 
The exploration concession (24-4971/1) covers an area of 1.42 km2, was issued to Lynx Resources on 13 December 2013 and
expires on 13 December 2017. Lynx Resources is currently in the process of applying to renew the exploration concession. A
study detailing the results of exploration between 2013 and 2017 is going to be submitted by October 2017, and following
revision of the study by the Geological Department of the Ministry of Economy, Lynx Resources will apply for an extension
of the mining concession to include the current exploration concession area. Once this extended mining concession is
approved, a new application for an exploration concession area will be submitted. Lynx Resources has 12 months from the
date of expiration in which to complete the applications for both the extension of the mining concession and the new
exploration concession. 
 
12% of the Inferred Mineral Resources of the Svinja Reka deposit fall outside the current exploitation licence, but within
the exploration licence. A total of 2.1 Mt of material is to be mined at Svinja Reka from the Inferred category from 2029
to 2034, 12% of which corresponds to only 0.25 Mt of material outside the exploitation licence area. There is potential to
extend the mine life by further defining and potentially extending the Svinja Reka and Golema Reka resources at depth, and
by delineating and quantifying extents of the Kozja Reka deposit, combined with further licence extensions, and that such
studies are ongoing or planned. 
 
25.5         Mineral Resources Statement 
 
25.5.1      Regional and Local Geology, Deposit Type and Mineralisation 
 
SASA Mine comprises the Svinja Reka, Golema Reka and Kozja Reka lead-zinc-silver deposits, which lie within the
Serbo-Macedonian Massif, a belt which extends through Serbia, Macedonia, Bulgaria, and eastern Greece into Turkey and hosts
a large number of lead-zinc deposits. The mineral deposits are located on the eastern flank of a Tertiary intermediate
intrusive complex and related porphyry Cu-Mo system, within which a northwest striking stockwork alteration zone is
developed. Lead-zinc-silver mineralisation occurs as stratiform deposits hosted predominantly by quartz-graphite schist and
marbles of Lower Palaeozoic age at Svinja Reka and by gneisses at Golema Reka. The mineralisation is considered to relate
to the intrusion of Tertiary volcanics. High-temperature hydrothermal fluids and bedding-parallel faulting are responsible
for metasomatism of the host sediments, producing skarn and base metal mineralisation. 
 
The well-defined, partially exploited, lenses of lead-zinc-silver mineralisation dip at approximately 35° to the south-west
and typically range in true thickness from between 2 and 30 m. The mineralised lenses are present in parallel sheets
(typically two or three bodies, namely the hanging wall, central and footwall orebodies), separated by an interburden with
thicknesses of 1 to 10 m. The lenses pinch and swell along strike and down-dip. The mineral deposits are considered to be
metasomatic skarn-hydrothermal deposits with replacement and bedding-parallel fault controlled mineralisation. The skarns
occur in the form of replacement of marble, whereas the hydrothermal lead-zinc-silver mineralisation appears as
replacements and as open-space fillings. The hydrothermal association, which is superimposed onto the skarn assemblages,
contains argentiferous galena, sphalerite, pyrite and minor chalcopyrite. 
 
Only Svinja Reka and Golema Reka form part of the Mineral Resources as described in this report. Kozja Reka was mined
previously but has not been further evaluated at this stage. 
 
25.5.2      Mineral Resource Estimation 
 
The SASA Mine has been explored since 1954 including geophysics, mapping, trenching, and drilling from both surface and
underground excavations. The Mineral Resource models at the SASA Mine consider 1,442 underground and surface diamond
drillholes and 15 underground channels conducted between the years of 1974 and 2016 for the Svinja Reka deposit and 104
underground and surface diamond drillholes and 51 underground channels conducted between the years of 1974 to 2010 for the
Golema Reka deposit. The resource database was reviewed and verified by SRK before use in the Mineral Resource Estimates. 
 
Whilst no routine external assay Quality Assurance/Quality Control ("QAQC") procedures are currently implemented, SRK has
previously completed an independent check by selecting 400 duplicate pulp samples, from SASA Mine drilling intercepts,
which were submitted to the Eurotest Control Sofia laboratory. Analysis of the results indicates in general the reasonable
quality of results, albeit with a slight bias toward lower grade. The SASA Mine laboratory is annually audited by the
Macedonian Accreditation Institute and also acts as control for the plant concentrate shipment. The SASA Mine laboratory
also regularly submits check samples to a laboratory in Sofia, Bulgaria as part of its own internal QAQC programme. 
 
A number of historical Mineral Resource Estimates, in accordance with the JORC guidelines, have been completed by
international consulting groups 

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