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REG - East Star Resources - Exploration Target: Verkhuba Cu-Zn-Pb Deposit

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RNS Number : 5888T  East Star Resources PLC  21 March 2023

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF
REGULATION 2014/596/EU WHICH IS PART OF DOMESTIC UK LAW PURSUANT TO THE MARKET
ABUSE (AMENDMENT) (EU EXIT) REGULATIONS (SI 2019/310) ("UK MAR"). UPON THE
PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION (AS DEFINED IN UK
MAR) IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR
INDIRECTLY IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE
REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

 

21 March 2023

East Star Resources Plc

("East Star" or the "Company")

Independent Exploration Target for Verkhuba Copper-Zinc-Lead Deposit,
Kazakhstan

East Star Resources Plc (LSE:EST), which is defining mineral resources in
Kazakhstan for the energy revolution, is pleased to announce an independent
JORC-compliant Exploration Target conducted by leading resource advisors AMC
Consultants on the Verkhuba Copper-Zinc-Lead Deposit on the Rudny Altai VMS
belt.

Highlights:

·    Exploration Target of 19-23 Mt at 1.0-1.4% Cu and 1.0-1.4% Zn
(1.4-1.9% CuEq)

·    Exploration Target is defined by 97 drill holes comprising 42,178 m
of historical diamond drilling, reviewed by East Star over the past 12 months,
providing a reasonable level of confidence in the geological interpretation

·    Historical drilling was over 2.89 km(2) of laterally extensive
mineralisation in a grid pattern of circa 100x100 m in the central part of the
deposit and 200x100 m on its flanks

·    Further possible significant exploration upside exists in drill-ready
satellite targets identified in 2022 helicopter electromagnetic ("HEM") survey

·    Historical metallurgical test work reported Au and Ag grades in
technological samples equal to 0.3 g/t Au and 14.2 g/t Ag indicating potential
to further enhance the value per tonne of ore

·    Potential for low-CAPEX development using existing processing
capacity within the region

·    Verification and infill drilling has been planned to upgrade
Exploration Target to JORC-compliant resources with drilling expected to
commence this summer

Exploration Target Summary Table

 Mining method  Tonnes           Zn         Cu         Pb
                (kt)             (%)        (%)        (%)
 Open pit       5,000 - 6,000    0.5 - 0.8  1.4 - 1.8  0.1 - 0.2
 Underground    14,000 - 17,000  1.2 - 1.6  0.8 - 1.2  0.1 - 0.2
 Total          19,000 - 23,000  1.0 - 1.4  1.0 - 1.4  0.1 - 0.2

·      This is an Exploration Target and should not be considered to be
a Mineral Resource

·      The Exploration Target assumes an open pit mining method with
marginal cut-off of 0.38% Cu equivalent and underground mining method with
the marginal cut-off of 0.86% Cu equivalent

·      A nominal dry density values of 3.0 t/m(3) was assumed to be
appropriate for the style of mineralisation

·      Cu equivalent was calculated using the following metal prices:
3,050 US$/t for Zn, 9,000 US$/t for Cu, 2,250 US$/t for Pb

·      Tonnage is reported on dry basis

 

Figure 1 Micromine model of ore bodies including modelled open pit scenario.

Alex Walker, East Star CEO, commented:

"This Exploration Target validates the statement that the Verkhuba Deposit is
a game changer for East Star. The Exploration Target is based on 42,178 m of
historical diamond drilling which should require a limited twin drilling
programme to upgrade to JORC-compliant resources. The Exploration Target of
19-23 Mt @ 1.4% - 1.9% Cu equivalent is already significant, with potential
for additional tonnage in some of the orebodies.

"The Verkhuba Deposit is 2.89 km(2) within a 30 km(2) ore district which also
includes multiple drill-ready HEM targets. Furthermore, with significant
infrastructure already in place and excess processing capacity within the
region from both Glencore (Kazzinc) and KAZ Minerals, it may be possible to
fast track the Verkhuba Deposit into production with low capital expenditure.

"With high-grade copper mineralisation already identified, significant
exploration upside and a potential route to low-CAPEX development, East Star
is uniquely positioned for growth in 2023 within a progressive mining
jurisdiction. We are eager to commence verification and infill drilling over
the Verkhuba Deposit this summer."

Webcast Presentation

A short webcast presentation about the independent Exploration Target for the
Verkhuba Copper-Zinc-Lead Deposit by East Star's CEO is available via the
Company's website at: https://www.eaststarplc.com/presentations
(https://www.eaststarplc.com/presentations) .

Background

East Star Resources commissioned AMC Consultants Pty Ltd ("AMC") to prepare a
Mineral Resource Estimate ("MRE") and a conceptual pit optimisation and
analysis for the Verkhuba Deposit located in eastern Kazakhstan. For reporting
purposes, the MRE was converted to an Exploration Target range under JORC
reporting standards.

Exploration of the project area was carried out in the 1950s through to the
1990s, mostly by surface core drilling. Exploration adits and drives were also
developed at the Verkhuba Deposit, but the database for underground channel
sampling was not available. Mineralised bodies are represented by VMS shallow
dipping sheet-like bodies and lenses.

A total of 97 diamond drillholes define the Verkhuba Deposit with a total of
42,178 m of drilling. 62 drillholes were used for the grade estimate. The
deposit area was sampled using diamond drillholes at variable spacings - from
200 m x 200 m to 100 m x 100 m spacing.

To establish the Exploration Target, AMC completed the following phases of
work:

·           Database import and validation

·           Classical statistical analysis

·           Interpretation and wireframing of mineralised zones using
metal equivalent grades available in the database

·           Data selection and compositing

·           Block model development

·           Grade interpolation and model validation

·           Preliminary pit optimisation study using a base case
scenario

·           Pit analysis and a preliminary scoping estimate of the
deposit's economic potential

·           Development of verification and an infill drilling
programme

Geological modelling was completed by AMC which resulted in 59 interpreted and
wireframed mineralised bodies. A block model constrained by the interpreted
mineralised bodies was constructed with the parent cell size of 5 mE x 5 mN x
2 mRL with standard sub-celling five times in all directions to maintain the
volume resolution of the mineralised bodies. Drillhole sample intervals have
been composited to 1 m length and were used to interpolate all main modelled
grades (Zn, Pb, Cu) into the block model using ordinary kriging (OK)
interpolation techniques. Block grades were validated both visually and
statistically and all modelling was completed using Micromine software.

Constant average bulk density values of 3.0 t/m(3) were applied to each model
cell, which was assumed from the historical reports.

 

Exploration Target

The grade estimate and subsequent Exploration Target allowed an assessment of
the integrity of the input data. It was also used to confirm estimation and
reporting of exploration potential ranges of tonnage and grades for the
Verkhuba Deposit. The Exploration Target is to be reported in accordance with
the JORC Code*.

Table 1 shows the Exploration Target for the Verkhuba Deposit for both open
pit and underground mining methods. The Exploration Target is based on actual
Exploration Results that were obtained during several historical exploration
programmes completed between 1950 and 1990 when a total number of 97 diamond
holes were drilled totaling 42,178 m. The estimated potential quantity of
tonnes and grades are conceptual in nature as there has been insufficient data
and evaluation to support estimation of a Mineral Resource. Tonnages and
grades are expressed as ranges that are considered appropriate for the
Exploration Target. There is no certainty that further exploration,
verification drilling, or twinned drilling will result in the estimation of a
Mineral Resource. The Exploration Target is not to be considered in any way to
represent a Mineral Resource or Ore Reserve.

Table 1    Verkhuba Exploration Target estimate for open pit and
underground mining methods

 Mining method  Tonnes           Zn         Cu         Pb
                (kt)             (%)        (%)        (%)
 Open pit       5,000 - 6,000    0.5 - 0.8  1.4 - 1.8  0.1 - 0.2
 Underground    14,000 - 17,000  1.2 - 1.6  0.8 - 1.2  0.1 - 0.2
 Total          19,000 - 23,000  1.0 - 1.4  1.0 - 1.4  0.1 - 0.2

Notes:

·      This is an Exploration Target and should not be considered to be
a Mineral Resource

·      The Exploration Target assumes an open pit mining method with
marginal cut-off of 0.38% Cu equivalent and underground mining method with
the marginal cut-off of 0.86% Cu equivalent

·      A nominal dry density values of 3.0 t/m(3) was assumed to be
appropriate for the style of mineralisation

·      Cu equivalent was calculated using the following metal prices:
3,050 US$/t for Zn, 9,000 US$/t for Cu, 2,250 US$/t for Pb

·      Tonnage is reported on dry basis

 

Following the Exploration Target, AMC made the following findings:

·           The quality of procedures for the historical data
collection used for the Exploration Target estimate is believed to be of
sufficient standard

·           The Exploration Target for the Verkhuba Deposit was
prepared using data, geological interpretation and understanding, and
estimation practices that are appropriate for the style of mineralisation

·           The cut-off grades which have been calculated for
reporting open pit and underground Exploration Target are considered
reasonable and based on justifiable assumptions and parameters

·           The Exploration Target has potential to be developed
via open pit and underground mining methods, and it has been delineated and
reported in accordance with the JORC Code

·           Further verification and infill drilling are required
to upgrade the current Exploration Target to a Mineral Resource

*Note: Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves. The JORC Code, 2012 Edition. Prepared by: The
Joint Ore Reserves Committee of The Australasian Institute of Mining and
Metallurgy, Australian Institute of Geoscientists and Minerals Council of
Australia (JORC).

Next Steps

As part of ongoing studies, AMC recommend that ten new drillholes, twined to
historical drillholes, should be drilled as verification holes to support
further mineral resource estimation and classification.  It is the intention
of the Company to drill these holes in summer 2023 to expediate the estimation
of JORC- compliant resources over the Verkhuba Deposit.

Upon conversion to JORC-compliant resources, East Star will be able to
undertake a Scoping Study on both the open pit and underground development
scenarios to confirm the potential economics of the project. East Star hopes
to complete and publish the results of this work by the end of 2023.

The Company will abide by industry standard QA/QC protocols for quality
assurance and intend on conducting geotechnical logging on all core for the
purpose of saving time and money on the subsequent stages of feasibility
assessment.

Figure 2 Arial view of mineralisation with OP outline and planned drillholes
(yellow)

Rudny Altai Region

 

The Rudny Altai region is one of the largest VMS provinces in the world, part
of the Central Asian Orogenic Belt. The Company's newest 1794-EL, 1795-EL
(containing the Verkhuba Deposit) and 1799-EL licences are located adjacent to
the Company's existing 847-EL and 914-EL licences (together, the "Licences").
Administratively, the Licences are within the Shemonaikha District and are
extraordinarily well connected to infrastructure. The regional centre of
Ust-Kamenogorsk is located 45 km, and its international airport is located 35
km, southeast of the Licences. The railway connecting Ridder (Kazzinc Mine)
and Tomsk cities crosses the Licences from the south to the northwest with two
railway stations located on the territory of the Licences. There is a network
of dirt roads within the Licences that are suitable for driving all year
round. A hard-surfaced road from Ust-Kamenogorsk to Shemonaikha crosses the
western part of the Licences.

The area is characterised by moderately hilly terrain with elevations ranging
between 270 m and 630 m above the mean sea level.

 

For further information visit the Company's website at www.eaststarplc.com
(http://www.eaststarplc.com) , or contact:

 

East Star Resources Plc

Alex Walker, Chief Executive Officer

Tel: +44 (0)20 7390 0234 (via Vigo Consulting)

 

Peterhouse Capital Limited (Corporate Broker)

Duncan Vasey / Lucy Williams

Tel: +44 (0) 20 7469 0930

 

Vigo Consulting (Investor Relations)

Ben Simons / Peter Jacob

Tel: +44 (0)20 7390 0234

 

About East Star Resources Plc

 

East Star Resources is focused on the discovery and development of strategic
minerals required for the energy revolution. With an initial nine licences
covering 1,321.5 km² in three mineral rich districts of Kazakhstan, East Star
is undertaking an intensive exploration programme, applying modern geophysics
to discover minerals in levels that were not previously explored. The Company
also intends to further expand its licence portfolio in Kazakhstan. East
Star's management are based permanently on the ground, supported by local
expertise, and joint ventures with the state mining company.

Follow us on social media:

LinkedIn: https://www.linkedin.com/company/east-star-resources/
(https://www.linkedin.com/company/east-star-resources/)

Twitter: https://twitter.com/EastStar_PLC (https://twitter.com/EastStar_PLC)

The person who arranged for the release of this announcement was Alex Walker,
CEO of the Company.

Competent Persons Statement

The information in this Report that relates to the Exploration Target is based
on and fairly represents information which has been compiled by Mr Dmitry
Pertel who is a member of the Australian Institute of Geoscientists. Mr Pertel
has sufficient experience relevant to the style of mineralisation and type of
deposit under consideration and to the activity that is being undertaken to
qualify as a Competent Person, as defined in the 2012 Edition of the
"Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves". Mr Pertel is a full-time employee of AMC Consultants Pty
Ltd..

The information in this Report that relates to QAQC (JORC Code Table 1
Sections 1 and 2) is based on and fairly represents information which has been
compiled by Dr Mikhail Tsypukov who is a Fellow of the Institute of Materials,
Minerals and Mining (UK). Dr Tsypukov has sufficient experience relevant to
the style of mineralisation and type of deposit under consideration and to the
activity that is being undertaken to qualify as a Competent Person, as defined
in the 2012 Edition of the "Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves". Mr Tsypukov is an independent
Consulting Geologist (not associated with AMC) and has consented to the
inclusion of the matters in this report based on his information in the form
and context in which it appears.

 

 

 

 

JORC Table 1. Verkhuba Deposit

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections)

 Sampling Techniques                                      ¡ Nature and quality of sampling (eg cut channels, random chips, or specific     ¡ The deposit was explored by drilling producing 59 and 76 mm diameter core.
                                                          specialised industry standard measurement tools appropriate to the minerals      Sampling was performed only on mineralised intervals identified by visual core
                                                          under investigation, such as down hole gamma sondes, or handheld XRF             logging and downhole geophysics (X-ray radiometric and/or electric downhole
                                                          instruments, etc). These examples should not be taken as limiting the broad      logging).
                                                          meaning of sampling.

                                                                                ¡ Mineralised core of different mineralogy was sampled separately at
                                                          ¡ Include reference to measures taken to ensure sample representivity and the    intervals ranging from 0.1 to 2.0 m in length.
                                                          appropriate calibration of any measurement tools or systems used.

                                                                                ¡ 59 mm core was sampled in full, 76 mm core was cut in half, one half of
                                                          ¡ Aspects of the determination of mineralisation that are Material to the        core was sampled for laboratory studies.
                                                          Public Report.

                                                                                ¡ Host rocks in hanging wall and footwall of mineralisation were sampled by 1
                                                          ¡ In cases where 'industry standard' work has been done this would be            m long samples, 2-3 samples were collected from each contact.
                                                          relatively simple (eg 'reverse circulation drilling was used to obtain 1 m

                                                          samples from which 3 kg was pulverised to produce a 30 g charge for fire         ¡ Non-mineralised core was sampled by 10 m long composite core samples by
                                                          assay'). In other cases, more explanation may be required, such as where there   collecting rock chips every 10 cm of core for rock chemical and mineralogical
                                                          is coarse gold that has inherent sampling problems. Unusual commodities or       studies.
                                                          mineralisation types (eg submarine nodules) may warrant disclosure of detailed

                                                          information.                                                                     ¡ In case of low core recovery (<50%) sampling intervals were increase to
                                                                                                                                           3 m to provide enough sampling material for chemical studies.

                                                                                                                                           In the opinion of the Competent Person, the sampling techniques were
                                                                                                                                           appropriate for the geology, scale of deposit, and are of an acceptable
                                                                                                                                           standard for the purpose of data used in estimating an Exploration Target.
 Drilling Techniques                                      ¡ Drill type (eg core, reverse circulation, open-hole hammer, rotary air         ¡ Double barrel wireline system was used in Exploration Target definition
                                                          blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or       drilling.
                                                          standard tube, depth of diamond tails, face-sampling bit or other type,

                                                          whether core is oriented and if so, by what method, etc).                        ¡ Upper 10-20 m transported deposits were drilled by 132 mm diamond drill
                                                                                                                                           bit, followed by 112 mm bit up to depth of 35-70 m below the surface. After
                                                                                                                                           casing of drill hole by 89 mm casing pipes, the drilling was continued by 76
                                                                                                                                           mm bit (core diameter 57 mm), followed by 59 mm drill bit (core diameter 42
                                                                                                                                           mm).

                                                                                                                                           ¡ Most of the mineralised intervals were drilled with 59 mm drill bits.

                                                                                                                                           In the opinion of the Competent Person, the drilling techniques are suitable
                                                                                                                                           for estimating Exploration Target: the core sizes are appropriate, but the
                                                                                                                                           standards of work completed in the Soviet era should be quantified and
                                                                                                                                           compared to the planned verification drill programme. The data obtained using
                                                                                                                                           the older drilling techniques is acceptable for the definition of an
                                                                                                                                           Exploration Target.
 Drill Sample Recovery                                    ¡ Method of recording and assessing core and chip sample recoveries and          ¡ On undisturbed core, the recovery was estimated by dividing of core length
                                                          results assessed.                                                                by the length of drilling run reduced to 100%. Most of the core was presented

                                                                                by broken and fragmented core and its recovery was measured using weight
                                                          ¡ Measures taken to maximise sample recovery and ensure representative nature    method.
                                                          of the samples.

                                                                                ¡ To increase core recovery on mineralised intervals the length of drilling
                                                          ¡ Whether a relationship exists between sample recovery and grade and whether    runs was reduced to 1 m and drill bit load was also reduced.
                                                          sample bias may have occurred due to preferential loss/gain of fine/coarse

                                                          material.                                                                        ¡ Core recovery on mineralised intervals was reported above the limit of 70%
                                                                                                                                           and above 60% within the bioherm sequence.

                                                                                                                                           ¡ There were no requirements on core recovery on non-mineralised intervals
                                                                                                                                           and host rocks, where core recovery varied within 23-40% (1987-1990).

                                                                                                                                           ¡ No relationship between sample recovery and grade was reported nor it was
                                                                                                                                           apparent.

                                                                                                                                           In the opinion of the Competent Person, the drill sample recoveries are
                                                                                                                                           suitable for data used in estimating an Exploration Target.
 Logging                                                  ¡ Whether core and chip samples have been geologically and geotechnically        ¡ All drill holes were geologically logged except upper sections of drill
                                                          logged to a level of detail to support appropriate Mineral Resource              holes with transported sediments, however only limited original information
                                                          estimation, mining studies and metallurgical studies.                            from geological archives has been obtained to date.

                                                          ¡ Whether logging is qualitative or quantitative in nature. Core (or costean,    ¡ No results of historical geotechnical logging are available.
                                                          channel, etc) photography.

                                                                                ¡ Historical logging was qualitative, in many cases rock nomenclature is not
                                                          ¡ The total length and percentage of the relevant intersections logged.          confirmed by rock chemistry and by other exploration campaigns.

                                                                                                                                           ¡ No core photos were taken during historical exploration.

                                                                                                                                           In the opinion of the Competent Person, the available geological logging is
                                                                                                                                           sufficient to support estimate of an Exploration Target.
 Sub-sampling Techniques and Sample Preparation           ¡ If core, whether cut or sawn and whether quarter, half or all core taken.      ¡ 57 mm core was cut along the core axe, half core subsamples were taken for

                                                                                control purposes. 42 mm core was sampled in full, no geological duplicates
                                                          ¡ If non-core, whether riffled, tube sampled, rotary split, etc and whether      were available for control purposes.
                                                          sampled wet or dry.

                                                                                ¡ Sample preparation was robust and included all necessary procedures,
                                                          ¡ For all sample types, the nature, quality and appropriateness of the sample    including multiple crushing controlled by sieving, staged size reduction,
                                                          preparation technique.                                                           pulverizing and collection of one analytical sample and three duplicates of

                                                                                sufficient weight for analytical studies.
                                                          ¡ Quality control procedures adopted for all sub-sampling stages to maximise

                                                          representivity of samples.                                                       ¡ Sample size was appropriate to the grain size of the sampling material.

                                                          ¡ Measures taken to ensure that the sampling is representative of the in situ    The Competent Person's opinion that the subsampling techniques and sample
                                                          material collected, including for instance results for field                     preparation were suitable for data used in estimating an Exploration Target.
                                                          duplicate/second-half sampling.

                                                          ¡ Whether sample sizes are appropriate to the grain size of the material
                                                          being sampled.
 Quality of assay data and laboratory tests               ¡ The nature, quality and appropriateness of the assaying and laboratory         ¡ Atomic absorption spectral analysis was used for determination of Cu, Pb
                                                          procedures used and whether the technique is considered partial or total.        and Zn. Fire assay analysis with atomic absorption finish was use for

                                                                                determination of Au and Ag.
                                                          ¡ For geophysical tools, spectrometers, handheld XRF instruments, etc, the

                                                          parameters used in determining the analysis including instrument make and        ¡ Analytical test results for Cu, Pb and Zn on main and duplicate samples
                                                          model, reading times, calibrations factors applied and their derivation, etc.    performed in main and umpire laboratories demonstrated discrepancy within the

                                                                                acceptable limits.
                                                          ¡ Nature of quality control procedures adopted (eg standards, blanks,

                                                          duplicates, external laboratory checks) and whether acceptable levels of         ¡ There is no available information on internal QAQC procedures in main and
                                                          accuracy (ie lack of bias) and precision have been established.                  umpire laboratories.

                                                                                                                                           The Competent Person is satisfied that the overall quality of the assay
                                                                                                                                           results is acceptable and fit for the purpose of estimating an Exploration
                                                                                                                                           Target.
 Verification of Sampling and Assaying                    ¡ The verification of significant intersections by either independent or         ¡ No verification drilling has been performed by ESR at this stage.
                                                          alternative company personnel.

                                                                                ¡ No twinning of historical drill holes was performed by ESR.
                                                          ¡ The use of twinned holes.

                                                                                ¡ Limited primary historical data as core lithological and structural logs,
                                                          ¡ Documentation of primary data, data entry procedures, data verification,       drill hole inclination etc. is available by the time of preparation of the
                                                          data storage (physical and electronic) protocols.                                report.

                                                          ¡ Discuss any adjustment to assay data.                                          ¡ Location of mineralised intervals can be corrected after obtaining of
                                                                                                                                           historical topographic survey results, drill hole logs and on-site inspection.

                                                                                                                                           No control or verification results were available at the time of reporting;
                                                                                                                                           thus estimated grades and tonnes were not classified.
 Location of Data Points                                  ¡ Accuracy and quality of surveys used to locate drill holes (collar and         ¡ Location and deviation of historical drill holes was digitised from
                                                          down-hole surveys), trenches, mine workings and other locations used in          georeferenced geological sections and maps at scale 1:10,000, which is
                                                          Mineral Resource estimation.                                                     considered as appropriate for Exploration Target mineral inventory.

                                                          ¡ Specification of the grid system used.                                         ¡ By the time of preparation of the report no historical drill hole logs with

                                                                                collar coordinates were available. ESR is in the process of obtaining this
                                                          ¡ Quality and adequacy of topographic control.                                   information from geological archives.

                                                                                                                                           ¡ Topography of the deposit area was presented as digital terrane model with
                                                                                                                                           sufficient resolution which is considered as appropriate for Exploration
                                                                                                                                           Target mineral inventory.

                                                                                                                                           The Competent Person is satisfied that the location of data points is fit for
                                                                                                                                           the purpose of estimating an Exploration Target.
 Data Spacing and Distribution                            ¡ Data spacing for reporting of Exploration Results.                             ¡ Data spacing is appropriate for delineation of Exploration Target

                                                                                assessment of volume of mineralised material and metal endowment and grades.
                                                          ¡ Whether the data spacing and distribution is sufficient to establish the

                                                          degree of geological and grade continuity appropriate for the Mineral Resource   ¡ Historical data spacing and distribution is sufficient to establish
                                                          and Ore Reserve estimation procedure(s) and classifications applied.             mineralised bodies, continuity of lithology and grade appropriate for

                                                                                delineation of Exploration Target. Verification drilling and twinning of some
                                                          ¡ Whether sample compositing has been applied.                                   drill holes are required for subsequent Mineral Resource Estimate in Inferred
                                                                                                                                           and Indicated categories.

                                                                                                                                           ¡ Exploration grid includes 97 diamond holes drilled with 200 m by 200 m to
                                                                                                                                           100 m by 100 m spacing.

                                                                                                                                           ¡ Most mineralised zones do not outcrop, but some of them do outcrop.
                                                                                                                                           Mineralised bodies were traced to a depth exceeding 800 m from the surface,
                                                                                                                                           using adit levels and inclined core drillholes. Drillholes were located along
                                                                                                                                           the profiles, oriented across the mineralised bodies strike, the profiles
                                                                                                                                           strike at 100-105º.

                                                                                                                                           The Competent Person is satisfied that data spacing is appropriate for
                                                                                                                                           estimating an Exploration Target.
 Orientation of Data in relation to Geological Structure  ¡ Whether the orientation of sampling achieves unbiased sampling of possible     ¡ Most of the drill holes were sub-vertical, intersecting of flat lying
                                                          structures and the extent to which this is known, considering the deposit        lithology at steep angles. Thus, no correction of width of mineralised
                                                          type.                                                                            intersections was applied which is considered as appropriate to the considered

                                                                                deposit type.
                                                          ¡    If the relationship between the drilling orientation and the

                                                          orientation of key mineralised structures is considered to have introduced a     ¡ The sampling orientation was appropriate for the reliable sampling of the
                                                          sampling bias, this should be assessed and reported if material.                 identified structures, considering the mineralisation type.

                                                                                                                                           ¡ Drilling profiles were oriented across the mineralisation.

                                                                                                                                           ¡ The flat lying mineralised bodies were sampled by inclined or vertical
                                                                                                                                           drillholes, oriented across the mineralised zone strike.

                                                                                                                                           ¡ Sampling bias from the orientation of the drilling was not identified.

                                                                                                                                           The Competent Person is satisfied that orientation of data in relation to
                                                                                                                                           geological structure is appropriate for estimating an Exploration Target.
 Sample Security                                          ¡ The measures taken to ensure sample security.                                  ¡ Not appropriate. All historical core and laboratory samples were disposed
                                                                                                                                           of shortly after completion of exploration programmes.
 Audits or Reviews                                        ¡ The results of any audits or reviews of sampling techniques and data.          ¡ As far as Competent Person aware, there were no audits or reviews of
                                                                                                                                           sampling techniques and data related to Verkhuba deposit performed by any
                                                                                                                                           third party.

 

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    ¡ Verkhuba deposit is located in the eastern part of exploration licence
                                                                   material issues with third parties such as joint ventures, partnerships,         1795-EL, owned by Discovery Ventures Kazakhstan Ltd. The licence was issued on
                                                                   overriding royalties, native title interests, historical sites, wilderness or    27 July 2022 for initial period of 6 years with a possibility of further five
                                                                   national park and environmental settings.                                        years extension subject to reduction of the licence area by 40%. The licence

                                                                                has an area of 37.1 km(2) and contains VHMS deposits Pokrovskoe-2 (mined out
                                                                   ¡ The security of the tenure held at the time of reporting along with any        in 1960-1970(th)) and Verkhuba and several VHMS occurrences. No native title
                                                                   known impediments to obtaining a licence to operate in the area.                 interests, historical sites, wilderness or national park and environmental
                                                                                                                                                    setting identified by ESR appointed environmental consultants.

                                                                                                                                                    ¡ Discovery Ventures Kazakhstan Ltd is a 100% owned entity of East Star
                                                                                                                                                    Resources.

                                                                                                                                                    ¡ Ministry of Industry and Infrastructural Development of the Republic of
                                                                                                                                                    Kazakhstan does not carry any negotiations with any other party in respect of
                                                                                                                                                    the property. All required documents including Exploration programme,
                                                                                                                                                    Environmental impact assessment (EIA) and enhanced technical and economic
                                                                                                                                                    calculations studies are completed by ESR and approved by the Kazakhstan
                                                                                                                                                    mining authorities allowing ESR to perform exploration on the property.

                                                                                                                                                    ¡ According to Kazakh mining legislation, exploration licence can be
                                                                                                                                                    converted to mining licence after completion of exploration in case the
                                                                                                                                                    applicants is compliance with qualification requirements of Subsoil Use Code
                                                                                                                                                    of the Republic of Kazakhstan.

                                                                                                                                                    The Competent Person is satisfied that mineral tenement and land tenure status
                                                                                                                                                    are appropriate for Exploration Target estimation.
 Exploration done by other parties                                 ¡  Acknowledgment and appraisal of exploration by other parties.                 ¡ The deposit was discovered in 1948-1949 during geological survey at scale
                                                                                                                                                    1:50,000 of topographic sheets M-44-57-D and M-44-69-B (Yakovlev et al., 1950)

                                                                                                                                                    ¡ Several exploration campaigns through 1950-1990s were carried out within
                                                                                                                                                    the deposit area by East Kazakhstan Geological Enterprise mostly by surface
                                                                                                                                                    core drilling:

                                                                                                                                                    o  1956-1957 (Yusupov et al., 1957);

                                                                                                                                                    o  1970-1972 (Anoshin et al., 1973);

                                                                                                                                                    o  1974-1976 (Rodionov et al., 1976);

                                                                                                                                                    o  1985-1987 (Radchenko et al., 1987);

                                                                                                                                                    o  1987-1990 (Grigorovich et al., 1990);

                                                                                                                                                    ¡ Exploration adit and drives totalling 3001 m were also developed at the
                                                                                                                                                    deposit, but the database for underground channel sampling and metallurgical
                                                                                                                                                    sampling was not available.

                                                                                                                                                    ¡ Historical exploration was completed in 1990 by Technical Economic
                                                                                                                                                    Consideration supported by Mineral Resource Estimate (Yermolaev et al., 1990).
 Geology                                                           ¡ Deposit type, geological setting and style of mineralisation.                  ¡ Verkhuba polymetallic deposit belongs to volcanogenic hosted massive
                                                                                                                                                    sulphide deposit type (VHMS), formed in Devonian time within Rudny Altai VHMS
                                                                                                                                                    province as a result of hydrothermal activity in the vicinity of spreading
                                                                                                                                                    centre or subduction zone.

                                                                                                                                                    ¡ Mineralised bodies are represented by shallow dipping thin sheet-like
                                                                                                                                                    bodies and lenses hosted mainly by volcanogenic sedimentary rocks including,
                                                                                                                                                    tuffaceous siltstone and sandstone, marl, carbonate rock, felsic tuff and
                                                                                                                                                    lava.

                                                                                                                                                    ¡ Mineralisation is considered as a distal to a volcanic centre due to
                                                                                                                                                    significant amount of sedimentary rocks. Mineralised bodies are controlled by
                                                                                                                                                    a contact of Berezovskaya and Losishinskaya suites (Eifelian-Frasnian stages)
                                                                                                                                                    and are represented by disseminated, string and massive Cu-Zn mineralisation.

                                                                                                                                                    The Competent Person is satisfied that geological understanding of this
                                                                                                                                                    deposit is appropriate to support Exploration Target estimation.
 Drill hole Information                                            ¡ A summary of all information material to the understanding of the              ¡ Verkhuba VHMS deposit had been explored by sub-vertical or steeply dipping
                                                                   exploration results including a tabulation of the following information for      drill holes that provided a grid of ca. 100x100 m in the central part of the
                                                                   all Material drill holes:                                                        deposit and 200x100 m on its flanks.

                                                                   -     easting and northing of the drill hole collar                              ¡ The area studied by drilling is approximately 1.7 x 1.7 km and contains 97

                                                                                drill holes, totalling 42,178 m. The drill holes varied in length from 120 to
                                                                   -     elevation or RL (Reduced Level - elevation above sea level in              893 m (average length of 434 m).
                                                                   metres) of the drill hole collar

                                                                                ¡ Polymetallic mineralisation was intersected on several stratigraphic levels
                                                                   -     dip and azimuth of the hole                                                at depth from to 13.5 to 849 m below the surface.

                                                                   -     down hole length and interception depth                                    ¡ Information on historical drilling, including collar coordinates, drill

                                                                                hole inclination and length was extracted by ESR from georeferenced geology
                                                                   -     hole length.                                                               maps and geological sections at scale 1:10 000. Depth of mineralised intervals

                                                                                and grades were taken from historical mineral resource estimate reports
                                                                   ¡ If the exclusion of this information is justified on the basis that the        (Ermolaev et al., 1990, Grigorovich et al., 1990) and require verification and
                                                                   information is not Material and this exclusion does not detract from the         correction during the follow-up exploration and delineation of JORC
                                                                   understanding of the report, the Competent Person should clearly explain why     Code-compliant Mineral Resources.
                                                                   this is the case.

                                                                                                                                                    ¡ A table of drill hole collars and relevant mineralised intersections is
                                                                                                                                                    presented in the report.

                                                                                                                                                    ¡ All the available geological information has been included into the report.
 Data Aggregation Methods                                          ¡ In reporting Exploration Results, weighting averaging techniques, maximum      ¡ Exploration results are not the subject of this report.
                                                                   and/or minimum grade truncations (eg cutting of high grades) and cut-off

                                                                   grades are usually Material and should be stated.                                ¡ The following metal equivalent calculations were used:

                                                                   ¡ Where aggregate intercepts incorporate short lengths of high grade results     No metallurgical metal recoveries were not applied in the metal equivalent
                                                                   and longer lengths of low grade results, the procedure used for such             formula dues to the conceptual nature of the estimate of Exploration Target.
                                                                   aggregation should be stated and some typical examples of such aggregations

                                                                   should be shown in detail.                                                       Copper equivalent was calculated using conversion factor of 0.3389 for zinc

                                                                                and 0.2500 for lead. Metal prices used were 9,000 US$/t for copper, 3,050
                                                                   ¡ The assumptions used for any reporting of metal equivalent values should be    US$/t for zinc and 2,250 US$/t for lead.
                                                                   clearly stated.

                                                                                                                                                    The resultant formula was: CuEq = Cu(%) + Zn(%) x 0.33889 + Pb(%) x 0.250000

                                                                                                                                                    Where: CuEq - copper equivalent (%), Zn - in situ zinc grade (%), Cu - in situ
                                                                                                                                                    copper grade (%), Pb - in situ lead grade (%).

                                                                                                                                                    The Competent Person is satisfied that appropriate data aggregation methods
                                                                                                                                                    have been applied to support Exploration Target estimation.
 Relationship between Mineralisation widths and intercept lengths  ¡ These relationships are particularly important in the reporting of             ¡ Exploration results are not the subject of this report.
                                                                   Exploration Results.

                                                                                ¡ No true thickness of mineralisation has been calculated in the current
                                                                   ¡ If the geometry of the mineralisation with respect to the drill hole angle     study.
                                                                   is known, its nature should be reported.

                                                                                ¡ Relationships between thickness of mineralisation and length of intercepts
                                                                   ¡ If it is not known and only the down hole lengths are reported, there          were interpreted during historical exploration by core observations and
                                                                   should be a clear statement to this effect (eg 'down hole length, true width     correlation of lithology and mineralisation between adjacent drill holes
                                                                   not known').                                                                     confirming flat lying stratigraphy and polymetallic mineralisation concordant
                                                                                                                                                    to layering.

                                                                                                                                                    ¡ According to historical reports most of drill holes were steeply dipping or
                                                                                                                                                    sub-vertical and intersected mineralisation at steep angle so it is assumed
                                                                                                                                                    that the width of mineralised intervals in most drill holes is close to true
                                                                                                                                                    thickness of mineralisation.
 Diagrams                                                          ¡ Appropriate maps and sections (with scales) and tabulations of intercepts      ¡ Historical geology maps and sections at scale 1:10,000 are included into
                                                                   should be included for any significant discovery being reported These should     the report as well as and most significant historical mineral intersections.
                                                                   include, but not be limited to a plan view of drill hole collar locations and
                                                                   appropriate sectional views.
 Balanced Reporting                                                ¡ Where comprehensive reporting of all Exploration Results is not                ¡ Mineral inventory presented in the report is based on historical drilling
                                                                   practicable, representative reporting of both low and high grades and/or         results including both barren and mineralised drill holes.
                                                                   widths should be practiced to avoid misleading reporting of Exploration

                                                                   Results.                                                                         ¡ All material historical exploration results and conclusions in which the
                                                                                                                                                    authors are confident in are reported, as well as main concerns related to
                                                                                                                                                    continuation of mineralisation.
 Other Substantive Exploration Data                                ¡ Other exploration data, if meaningful and material, should be reported         ¡ Based on historical drilling results, a Technical-Economic Consideration
                                                                   including (but not limited to): geological observations; geophysical survey      supported by a historical mineral resource estimate was produced by Ermolaev
                                                                   results; geochemical survey results; bulk samples - size and method of           et al.(1990). The historical resource estimate considered three cut-off grades
                                                                   treatment; metallurgical test results; bulk density, groundwater, geotechnical   3.0, 2.0 and 0.8% sum of metals (Zn equivalent), minimal thickness of
                                                                   and rock characteristics; potential deleterious or contaminating substances.     mineralised bodies as 1.6 m and maximal thickness of barren rocks included
                                                                                                                                                    into the mineralised interval - 3 m. Results of the estimate are presented in
                                                                                                                                                    table below.

Cut-off grade  Ore     Cu    Pb    Zn    Cu      Pb     Zn      Au    Ag
                                                                                                                                                    %       Kt      %     %     %     Kt      Kt     Kt      t     t
                                                                                                                                                    3.0            2,714   1.84  0.27  4.65  49.90   7.41   126.25  0.81  38.50
                                                                                                                                                    2.0            5,445   1.34  0.22  3.19  74.62   4.73   173.94  1.66  77.30
                                                                                                                                                    0.8            10,897  1.14  0.14  1.91  124.22  15.68  208.54  3.27  154.70

¡ Au and Ag resources were calculated based on Au and Ag grade in
                                                                                                                                                    technological sample №4 equal to 0.4 g/t Au, 14.2 g/t Ag.

                                                                                                                                                    ¡ Au and Ag recovery to concentrates was below 50%:

Cut-off grade  Cu concentrate      Zn concentrate      Pyrite concentrate      Tailings
                                                                                                                                                    %       Au        Ag        Au        Ag        Au          Ag          Au     Ag
                                                                                                                                                    3.0            11.15     51.93     15.5      31.26     15.37       4.7         57.98  12.17
                                                                                                                                                    2.0            8.29      38.5      12.8      21.45     15.81       27.24       63.82  12.81
                                                                                                                                                    0.8            6.89      31.96     6.28      11.2      23.78       43.5        63.05  13.34

¡ Bulk density for mineralised material was estimated as 3.0 t/m(3) based on
                                                                                                                                                    500 samples collected from drill core and underground channels.

                                                                                                                                                    ¡ It was concluded by Ermolaev et al. (1990) that the mining could be
                                                                                                                                                    profitable with 3 % of sum of metals as a cut-off grade in accordance with
                                                                                                                                                    economic conditions and costs of 1990.

                                                                                                                                                    ¡ According to Yermolaev et al. (1990), total of 9 metallurgical tests were
                                                                                                                                                    performed on Verkhuba mineralised material by Central Laboratory of East
                                                                                                                                                    Kazakhstan Geological Expedition (Vostkazgeologia) and All Union Scientific
                                                                                                                                                    Institute (VNIIzvetmet, Ust-Kamenogorsk, 1989) . The 9 individual and
                                                                                                                                                    composite samples differed in ore mineralogy and varied in weight from 14 to
                                                                                                                                                    1500 kg. Several treatment schemes were applied producing Cu, Pb, Zn and
                                                                                                                                                    pyrite concentrate with the recovery varying within 86-96% (Cu), 75-85% (Pb),
                                                                                                                                                    75-94% (Zn), 48-60 (pyrite). Based on test results it was recommended to use
                                                                                                                                                    bulk-differential flotation which provide 83-84% Cu and Zn recovery to
                                                                                                                                                    concentrates.
 Further Work                                                      ¡ The nature and scale of planned further work (eg tests for lateral             ¡ ESR intends to verify continuity and grades of mineralisation and perform
                                                                   extensions or depth extensions or large-scale step-out drilling).                metallurgical test work, hydrogeological and geotechnical and other

                                                                                appropriate studies.
                                                                   ¡ Diagrams clearly highlighting the areas of possible extensions, including

                                                                   the main geological interpretations and future drilling areas, provided this     ¡ Model geology of the deposit using results of verification and infill
                                                                   information is not commercially sensitive.                                       drilling and whole rock geochemistry.

                                                                                                                                                    ¡ Produce JORC compliant Mineral Resource Estimate at Indicated and Inferred
                                                                                                                                                    categories by completion of field and laboratory programme.

                                                                                                                                                    The Competent Person is satisfied that the proposed work is appropriate to
                                                                                                                                                    support subsequent objectives.

¡ Au and Ag resources were calculated based on Au and Ag grade in
technological sample №4 equal to 0.4 g/t Au, 14.2 g/t Ag.

¡ Au and Ag recovery to concentrates was below 50%:

 Cut-off grade  Cu concentrate      Zn concentrate      Pyrite concentrate      Tailings
 %              Au        Ag        Au        Ag        Au          Ag          Au     Ag
 3.0            11.15     51.93     15.5      31.26     15.37       4.7         57.98  12.17
 2.0            8.29      38.5      12.8      21.45     15.81       27.24       63.82  12.81
 0.8            6.89      31.96     6.28      11.2      23.78       43.5        63.05  13.34

¡ Bulk density for mineralised material was estimated as 3.0 t/m(3) based on
500 samples collected from drill core and underground channels.

¡ It was concluded by Ermolaev et al. (1990) that the mining could be
profitable with 3 % of sum of metals as a cut-off grade in accordance with
economic conditions and costs of 1990.

¡ According to Yermolaev et al. (1990), total of 9 metallurgical tests were
performed on Verkhuba mineralised material by Central Laboratory of East
Kazakhstan Geological Expedition (Vostkazgeologia) and All Union Scientific
Institute (VNIIzvetmet, Ust-Kamenogorsk, 1989) . The 9 individual and
composite samples differed in ore mineralogy and varied in weight from 14 to
1500 kg. Several treatment schemes were applied producing Cu, Pb, Zn and
pyrite concentrate with the recovery varying within 86-96% (Cu), 75-85% (Pb),
75-94% (Zn), 48-60 (pyrite). Based on test results it was recommended to use
bulk-differential flotation which provide 83-84% Cu and Zn recovery to
concentrates.

Further Work

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

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

¡ ESR intends to verify continuity and grades of mineralisation and perform
metallurgical test work, hydrogeological and geotechnical and other
appropriate studies.

¡ Model geology of the deposit using results of verification and infill
drilling and whole rock geochemistry.

¡ Produce JORC compliant Mineral Resource Estimate at Indicated and Inferred
categories by completion of field and laboratory programme.

The Competent Person is satisfied that the proposed work is appropriate to
support subsequent objectives.

 

 

Section 3 Estimation and Reporting of Mineral Resources

(Criteria listed in Section 1, and where relevant in Section 2, also apply to
this section)

AMC comments that this section is provided to support some aspects of the
determination of the Exploration Target. It is not strictly required for
public reporting of an Exploration Target nor are all items applicable to an
Exploration Target. AMC provides this information for the purposes of
transparency and materiality.

 Database Integrity                            ¡ Measures taken to ensure that data has not been corrupted by, for example,     This relates only to the estimation of an Exploration Target which is
                                               transcription or keying errors, between its initial collection and its use for   conceptual in nature.
                                               Mineral Resource estimation purposes.

                                                                                A database with 97 diamond holes was used for estimation of Exploration Target
                                               ¡ Data validation procedures used.                                               of the deposit. The historical database was created based on previous studies,
                                                                                                                                in accordance with the mining industry regulations of the USSR and Russia.

                                                                                                                                All historical drilling results were entered into electronic database in Excel
                                                                                                                                format.

                                                                                                                                The following error checks were carried out during the final database
                                                                                                                                creation:

                                                                                                                                ¡ Missing collar coordinates

                                                                                                                                ¡ Missing values in fields FROM and TO

                                                                                                                                ¡ Cases when FROM values equal or exceed TO ones (FROM≥TO)

                                                                                                                                ¡ Data availability. The data availability was checked for each drillhole in
                                                                                                                                the tables:

                                                                                                                                ¡ Collar coordinates

                                                                                                                                ¡ Sampling data

                                                                                                                                ¡ Downhole survey data

                                                                                                                                ¡ Lithological characteristics

                                                                                                                                ¡ Duplicate drillhole numbers in the table of the drillhole collar
                                                                                                                                coordinates.

                                                                                                                                ¡ Duplicate sampling intervals

                                                                                                                                ¡ Duplicate downhole measurement data

                                                                                                                                ¡ Duplicate intervals of the lithological column

                                                                                                                                ¡ Sample "overlapping" (when the sample TO value exceeds FROM value of the
                                                                                                                                next sample).

                                                                                                                                ¡ Negative-grade samples.

                                                                                                                                The Competent Person is satisfied that database integrity is appropriate to
                                                                                                                                support Exploration Target estimation.
 Site Visits                                   ¡ Comment on any site visits undertaken by the Competent Person and the          ¡ No site visit was deemed necessary for determination of an Exploration
                                               outcome of those visits.                                                         Target.

                                               ¡ If no site visits have been undertaken indicate why this is the case.
 Geological Interpretation                     ¡ Confidence in (or conversely, the uncertainty of ) the geological              This relates only to the estimation of an Exploration Target which is
                                               interpretation of the mineral deposit.                                           conceptual in nature.

                                               ¡ Nature of the data used and of any assumptions made.                           The interpretation of the mineralised structures was based on geological

                                                                                logging and metal equivalent grades, and also used scanned and georeferenced
                                               ¡ The effect, if any, of alternative interpretations on Mineral Resource         historical geological cross sections. Different metals were not interpreted
                                               estimation.                                                                      separately. ESR supplied AMC with the validated database, topography surface

                                                                                and scanned cross sections with interpreted geology of the deposit and
                                               ¡ The use of geology in guiding and controlling Mineral Resource estimation.     mineralised bodies.

                                               ¡ The factors affecting continuity both of grade and geology.                    There is a reasonable level of confidence in the geological interpretation of
                                                                                                                                the main mineralised bodies is traceable over a number of drillholes and drill
                                                                                                                                sections.

                                                                                                                                Drillhole intercepts with geological logging, assay results and structural
                                                                                                                                interpretations have formed the basis for the geological interpretation.

                                                                                                                                Interpretation of the main polymetallic mineralised envelopes forms the basis
                                                                                                                                for modelling. 0.5% Zn equivalent was used to interpret polymetallic
                                                                                                                                mineralisation.

                                                                                                                                The Competent Person is satisfied that the geological interpretation is
                                                                                                                                appropriate to support determination of an Exploration Target.
 Dimensions                                    ¡ The extent and variability of the Mineral Resource expressed as length         This relates only to the estimation of an Exploration Target which is
                                               (along strike or otherwise), plan width, and depth below surface to the upper    conceptual in nature.
                                               and lower limits of the Mineral Resource.

                                                                                                                                59 sheet-like flat-lying mineralised bodies were interpreted and modelled at
                                                                                                                                the deposit. All modelled bodies vary in size. The largest one is over 1,100 m
                                                                                                                                along strike and over 1,000 m across strike with an average thickness of about
                                                                                                                                2 m. All other bodies are smaller with the length along and across strike of
                                                                                                                                about 100 to 200 m. The depth below surface varies from 0 m to 800 m.

                                                                                                                                The Competent Person is satisfied that the dimensions interpreted are
                                                                                                                                appropriate to support determination of an Exploration Target.
 Estimation and Modelling Techniques           ¡ The nature and appropriateness of the estimation technique(s) applied and      This relates only to the estimation of an Exploration Target which is
                                               key assumptions, including treatment of extreme grade values, domaining,         conceptual in nature.
                                               interpolation parameters and maximum distance of extrapolation from data

                                               points. If a computer assisted estimation method was chosen include a            A preliminary block model was based on surface diamond drill core using
                                               description of computer software and parameters used.                            ordinary kriging (OK) to form 5 x 5 x 5 m blocks. The block model was

                                                                                constrained by wireframes modelled using sectional interpretation at a nominal
                                               ¡ The availability of check estimates, previous estimates and/or mine            0.5% ZnEq wireframing cut-off grade for mineralisation.
                                               production records and whether the Mineral Resource estimate takes appropriate

                                               account of such data.                                                            All parameters and estimates supporting the Exploration Target are

                                                                                preliminary.
                                               ¡ The assumptions made regarding recovery of by-products.

                                                                                The Competent Person is satisfied that estimation and modelling techniques are
                                               ¡ Estimation of deleterious elements or other non-grade variables of economic    appropriate to support Exploration Target estimation.
                                               significance (eg 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.

                                               ¡ Any assumptions about correlation between variables.

                                               ¡ Description of how the geological interpretation was used to control the
                                               resource estimates.

                                               ¡ 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 drill hole data, and use of reconciliation data if available.
 Moisture                                      ¡ Whether the tonnages are estimated on a dry basis or with natural moisture,    This relates only to the estimation of an Exploration Target which is
                                               and the method of determination of the moisture content.                         conceptual in nature.

                                                                                                                                Moisture was not considered in the bulk density assignment and all tonnage
                                                                                                                                estimates were based on dry tonnes.

                                                                                                                                The Competent Person accepts that moisture was not considered due to the
                                                                                                                                conceptual nature of an Exploration Target.
 Cut-off Parameters                            ¡ The basis of the adopted cut-off grade(s) or quality parameters applied.       This relates only to the estimation of an Exploration Target which is
                                                                                                                                conceptual in nature.

                                                                                                                                Nominal cut-off grades of 0.38% CuEq and 0.86% CuEq (copper equivalent) were
                                                                                                                                used to report the Exploration target for open pit and underground mining
                                                                                                                                methods respectively.

                                                                                                                                Cut-off grades were based on open pit and underground mining methods,
                                                                                                                                according to an ESR's in-house estimates of unit costs and using metal's spot
                                                                                                                                prices at the day of reporting. Copper equivalent was calculated using the
                                                                                                                                following metal prices: 3,050 US$/t for Zn, 9,000 US$/t for Cu, 2,250 US$/t
                                                                                                                                for Pb.

                                                                                                                                The Competent Person is satisfied that cut-off parameters were appropriately
                                                                                                                                considered, to support an Exploration Target.
 Mining Factors or Assumptions                 ¡ Assumptions made regarding possible mining methods, minimum mining             This relates only to the estimation of an Exploration Target which is
                                               dimensions and internal (or, if applicable, external) mining dilution. It is     conceptual in nature.
                                               always necessary as part of the process of determining reasonable prospects

                                               for eventual economic extraction to consider potential mining methods, but the   Mining is assumed to be by open pit and underground methods. Mining losses
                                               assumptions made regarding mining methods and parameters when estimating         were assumed to be 5% and mining dilution was assumed 5% for open pit mining,
                                               Mineral Resources may not always be rigorous. Where this is the case, this       and 10% dilution was assumed for underground mining method.
                                               should be reported with an explanation of the basis of the mining assumptions
                                               made.
 Metallurgical Factors or Assumptions          ¡ The basis for assumptions or predictions regarding metallurgical               This relates only to the estimation of an Exploration Target which is
                                               amenability. It is always necessary as part of the process of determining        conceptual in nature.
                                               reasonable prospects for eventual economic extraction to consider potential

                                               metallurgical methods, but the assumptions regarding metallurgical treatment     No material assumptions are considered at this stage.
                                               processes and parameters made when reporting Mineral Resources may not always

                                               be rigorous. Where this is the case, this should be reported with an             The Competent Person is satisfied that conceptual metallurgical factors and
                                               explanation of the basis of the metallurgical assumptions made.                  assumptions were appropriately considered to support Exploration Target
                                                                                                                                estimation.
 Environmental Factors or Assumptions          ¡ Assumptions made regarding possible waste and process residue disposal         This relates only to the estimation of an Exploration Target which is
                                               options. It is always necessary as part of the process of determining            conceptual in nature.
                                               reasonable prospects for eventual economic extraction to consider the

                                               potential environmental impacts of the mining and processing operation. While    No environmental factors or assumptions were made.
                                               at this stage the determination of potential environmental impacts,
                                               particularly for a greenfields project, may not always be well advanced, the
                                               status of early consideration of these potential environmental impacts should
                                               be reported. Where these aspects have not been considered this should be
                                               reported with an explanation of the environmental assumptions made.
 Bulk Density                                  ¡ Whether assumed or determined. If assumed, the basis for the assumptions.      This relates only to the estimation of an Exploration Target which is
                                               If determined, the method used, whether wet or dry, the frequency of the         conceptual in nature.
                                               measurements, the nature, size and representativeness of the samples.

                                                                                A nominal bulk density of 3.0 t/m(3) was used for the Exploration Target based
                                               ¡ The bulk density for bulk material must have been measured by methods that     on historical data.
                                               adequately account for void spaces (vugs, porosity, etc), moisture and

                                               differences between rock and alteration zones within the deposit.                The Competent Person is not aware of the nature and quality of the historical

                                                                                bulk measurement methods and quality. However, the applied value is considered
                                               ¡ Discuss assumptions for bulk density estimates used in the evaluation          reasonable for the purposes of Exploration target reporting.
                                               process of the different materials.

 Classification                                ¡ The basis for the classification of the Mineral Resources into varying         This relates only to the estimation of an Exploration Target which is
                                               confidence categories.                                                           conceptual in nature.

                                               ¡ Whether appropriate account has been taken of all relevant factors (ie         No classification was applied to Exploration Target estimate.
                                               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).

                                               ¡ Whether the result appropriately reflects the Competent Person's view of
                                               the deposit.
 Audits or Reviews                             ¡ The results of any audits or reviews of Mineral Resource estimates             This relates only to the estimation of an Exploration Target which is
                                                                                                                                conceptual in nature.

                                                                                                                                The Exploration Target estimate was reviewed internally by Ingvar Kirchner,
                                                                                                                                who is employed by AMC as a Geology Manager / Principal Geologist, who
                                                                                                                                concluded that the procedures used to estimate the Exploration Target are
                                                                                                                                appropriate.
 Discussion of Relative Accuracy / Confidence  ¡ Where appropriate a statement of the relative accuracy and confidence level    This relates only to the estimation of an Exploration Target which is
                                               in the Mineral Resource estimate using an approach or procedure deemed           conceptual in nature.
                                               appropriate by the Competent Person. For example, the application of

                                               statistical or geostatistical procedures to quantify the relative accuracy of    This is not relevant to reporting of an Exploration Target.
                                               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 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.

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

 

 

 

 

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