Operations

Reserves, exploration and development

Reserves and Exploration

1. Mineral reserves

Key to the future development of the Gedabek site is our knowledge of the mineral resources and ore reserves within the contract area. The Group’s latest ore reserve estimate was carried out as of 1 September 2014. This ore reserve estimate showed an increase of approximately 3.9 million tonnes of ore, after allowing for depletion due to mining since the previous estimate. It also showed a significantly higher copper content than the previous estimate.

Table 1 shows the ore reserve estimate as at 1 September 2014.

Table 1 - ore reserve estimate as at 1 September 2014
Reserve Category Ore Reserve
In Situ In Situ Grades Contained metal Recoverable Metal
(tonnes) Au (g/t) Cu (%) Ag (g/t) Au (oz) Cu (t) Ag (oz) Au (oz) Cu (t) Ag (oz)
Proven 16,733,000 1.12 0.61 7.63 600,000 87,000 4,105,000 447,000 65,000 1,346,000
Probable 3,761,000 0.68 0.40 6.12 82,000 15,000 740,000 58,000 11,000 268,000
Total 20,494,000 1.03 0.50 7.35 682,000 102,000 4,845,000 505,000 76,000 1,614,000

2. Exploration

In 2016, various activities were carried out within the greater Gedabek area with the aim of delineating further resources and reserves to increase the life of mine of the Company.

a. Surface brownfield exploration

This focused on areas adjacent to the current operating mine and along strike where mineralisation is exposed at the surface. Geological mapping was carried out over 1.4 square kilometres from which 401 outcrop samples were taken and 214 metres of follow-up trenching was carried out. In addition, 8 drill holes with a total of 2,172 metres of diamond drilling were completed. Additional field mapping is planned along strike to define future exploration targets in H2 2016.

Wider exploration activity continued over the 300 square kilometre Gedabek contract area with positive results from surface mapping and sampling, which has targeted other areas for follow-up work.

b. Gadir underground mine

Exploration works continued at the Gadir underground mine. Efforts focused on underground mapping that comprised 1,494 linear metres backed up with 3,764 linear metres of channel sampling. With underground development having reached significant ore zones, an exploration drift was constructed to allow drilling to take place. Mineral resource delineation drilling continued with the aim of assessing the down dip and lateral extensions of the known ore bodies. A significant new copper rich zone was discovered, which will be subject to evaluation drilling during H2 2016. In H1 2016, 4 core drill holes (HQ size core) with a total of 441 metres had been completed. These drill holes were designed to confirm and extend mineralisation at Gadir. This drilling yielded positive results with the more significant intercepts being 3.5 metres at 5.1 grammes per tonne of gold; 8 metres at 2.6 grammes per tonne of gold; 4 metres at 4.7 grammes per tonne of gold and 3.4 metres at 4.6 grammes per tonne of gold, with narrower zones up to 14.5 grammes per tonne of gold over 1 metre. An additional 60 drill holes (BQ size core) with a total of 1,435 metres were drilled to define ore zone geometry.

c. Bittibulag mineral occurrence

The Bittibulag mineral occurrence is approximately 6 kilometres north-west along strike from the Gedabek open pit. A surface mapping exercise was completed over the Bittibulag area covering an area of 0.8 square kilometres that included taking 320 outcrop samples for analysis. This was followed up by a soil geochemical sampling programme over an area of 2.8 square kilometres from which 648 samples were taken and which are currently being prepared for assaying. A total of 56 metres of trenches were excavated and mapped from which 60 samples were taken. On the basis of the positive results it is planned to carry out historical adit rehabilitation, diamond drilling and metallurgical test work drilling in H2 2016.

Exploration work also continued at the Ordubud contract licence area in the Nakhichevan region of Azerbaijan. During H1 2016, 42 linear metres of trenching was completed. Access was gained by 2,000 metres of road cleaning to reach exploration adits at the Pyazbashi deposit which were developed during the Soviet era. 360 metres of underground rehabilitation was completed, plus portal support infrastructure that allowed 583 metres of channel sampling from which 740 samples were taken that confirmed the presence of gold mineralisation in the quartz-kaolin vein system.

3. Ugur gold deposit exploration and development

a. Discovery and development

Anglo Asian’s in-house exploration team defined a new mineral occurrence in 2016 named “Ugur” (meaning “good luck” or “success” in the Azeri language) from geological mapping. Ugur is located three kilometres north-west from the Company’s processing facilities at its Gedabek Licence.

The Ugur deposit is a significant surface alteration rock assemblage with the presence of barite, barite-haematite, and limonite in gossan-style zones along with vuggy silica in brecciated volcanic rocks. These findings were established by 500 chip samples taken from outcrop, many of which contained gold. This alteration zone extends over an area of 1,000 metres (east-north-east by west-south-west) by 500 metres (north-west by south-east) and was been initially explored via five excavator trenches to a depth of 1.5 metres over a total length of 210 metres. This yielded good assay results for gold (zone thicknesses between 5 to 10 metres contain gold with ranges 0.3 to 2.0 grammes per tonne and silver between 1.0 to 15.0 grammes per tonne).

Since the discovery of Ugur, the Company has been extensively exploring the deposit to define its resource and reserves and constructing the required infrastructure, including road access between the Ugur deposit and the Company’s processing facilities, to enable mining to commence. Pre-stripping of the top soil is planned to commence in late July 2017 with mining by conventional shovel and truck haulage commencing in Q4 2017. Metallurgical test-work has confirmed the amenability of the Ugur gold ore to both heap and agitation leaching.

b. Drilling and geological evaluation

55 “phase one” RC drill holes totalling 1,842 metres, 50 core drill holes totalling 6,355 metres, and 33 infill RC drill holes totalling 2,766 metres have now been drilled at Ugur, which has resulted in confirmation of an oxide gold-rich zone to a depth varying between 50 to 60 metres. The area covered by this drilling and proposed open pit outline is 350 metres (east-north-east) by 250 metres (north-north-west).

A summary of the drilling is as follows:

Name of drill-hole Type Start date Finish date Number of drill holes Length (metres)
Reverse circulation Reverse circulation 23 Sept. 2016 14 Nov. 2016 56 1,842
Core Diamond 4 October 2016 25 June 2017 50 6,355
Geotechnical Diamond 16 April 2017 27 April 2017 2 164
Reverse circulation – Reserve and resource Reverse circulation 19 March 2017 9 July 2017 33 2,766
Condemnation drilling Diamond 25 June 2017 6 July 2017 3 373
TOTAL DRILLING 144 11,500

Maps showing the location of the core diamond drill holes and reverse circulation drill holes are as follows:

Location of diamond core drill-holes.

Location of reverse circulation drill-holes

The full results of the drilling programme are set out below in section f.

External quality assurance and quality control assaying is nearing completion. Independent check assaying of 760 samples and full multi-element analysis are being undertaken by western consultants. These assays will provide a check of the grades of mineralisation as assayed and analysed by the Company’s laboratories. Extensive in-house quality assurance and control assaying is also being carried out by Anglo Asian. External quality assurance and control data is now being received by the Company and compared to in-house laboratory results. The data will form part of the JORC resource and reserve report. Extensive specific gravity tests have also been completed for ore tonnage calculations.

Condemnation drilling to prove the absence of mineralisation below proposed areas of infrastructure, including the waste dump areas, soil storage areas and lay down area for office facilities and mechanical workshops has commenced. Three condemnation drill holes with a total of 373 metres have been completed and a further nine drill holes will be undertaken. The work is planned to be completed by the end of August 2017.

c. Geotechnical and environmental assessment studies

Independent geotechnical studies have been completed by the environmental engineering company, CQA International Limited, to assess rock mass strength and structural geological relationships for mine design parameters. Two geotechnical drill holes (76 metres and 164 metres in length) from the position of the “ore” in the proposed open pit area into the preliminary designed backwall have been completed and geo-technically assessed. Independent rock strength tests, which showed good rock competency, are complete and will be utilised in the open pit wall design.

Independent environmental impact assessments have been completed and hydrogeological baseline monitoring will be established.

d. Resources and reserves

The drilling and assaying of drill samples from Ugur for the purpose of resource estimation is completed. A sectional resource and reserve estimate made by Anglo Asian to Azeri standards resulted in an in-situ resource of 195,000 ounces of gold.

Three-dimensional geological modelling of Ugur is complete. An independent JORC resource estimation and reserve calculation report is being prepared, and it is anticipated it will be published in Q3 2017.

e. Road construction and other surface infrastructure development

The construction of a 4.6 kilometre road between the Ugur deposit and the Company’s processing facilities commenced in May 2017. Road access from the processing facilities to the proposed pit is now complete. Culvert construction is to be completed and an estimated 25 per cent. of top sheeting remains to be completed to finish the road. Safety berms and windrows are 80 per cent constructed along the full length of the road, and road delineators are being installed every 50 metres. It is estimated that the road will be fully completed by the end of July 2017.

A schematic plan of the road layout showing the extent of the completed road and photographs of the road construction are as follows:

Plan of the Ugur road construction

Construction of the safety berms (windrow) of the Ugur road

View of the road showing the installation of culvert piping

View of completed road showing installed safety mirror

Infrastructure sites for soil storage area, waste dump and equipment laydown and workshop areas have been delineated. Containers for office, emergency workshop and maintenance facilities, hygiene and other facilities are being fitted out in preparation for production.

f. Full results of the Ugur drill programme

Core drill holes (drill holes 7 to 50)
 

Depth of drill hole

   

Drill-hole

number

From (metres)

To (metres)

Interval (metres)

 Gold (g/t)

 Silver (g/t)

UGDD07

0.0

61.0

61.0

1.89

7.36

UGDD08

0.0

77.0

77.0

2.36

24.19

UGDD09

10.0

85.5

75.5

0.88

3.60

UGDD10

0.0

112.5

112.5

1.20

5.71

UGDD11

124.2

125.3

1.1

0.34

1.82

UGDD12

0.0

13.0

13.0

0.33

1.06

UGDD13

88.0

90.0

2.0

0.86

0.40

UGDD14

0.0

71.5

71.5

0.66

4.25

UGDD14

71.5

76.5

5.0

1.90

2.25

UGDD14

76.5

91.7

15.2

0.31

0.70

UGDD16

0.0

42.0

42.0

1.06

6.74

UGDD16

42.0

114.0

72.0

0.40

2.50

UGDD17

0.0

15.0

15.0

2.13

11.60

UGDD18

0.0

50.0

50.0

0.72

5.06

UGDD18

61.0

74.3

13.3

1.10

2.37

UGDD19

0.0

7.0

7.0

1.00

3.47

UGDD19

12.0

45.0

33.0

1.02

6.46

UGDD19

45.0

71.4

26.4

0.37

1.38

UGDD20

5.0

9.0

4.0

1.30

1.42

UGDD20

9.0

27.0

18.0

0.33

1.48

UGDD20

27.0

33.0

6.0

1.78

5.33

UGDD20

71.0

72.0

1.0

1.11

0.40

UGDD21

0.0

9.1

9.1

0.47

6.26

UGDD21

9.1

15.0

5.9

1.05

4.51

UGDD21

15.0

32.0

17.0

0.36

4.70

UGDD21

32.0

46.5

14.5

1.01

3.70

UGDD21

46.5

104.5

58.0

0.31

0.86

UGDD22

0.0

14.0

14.0

0.81

1.34

UGDD24

0.0

2.9

2.9

0.32

3.04

UGDD25

14.5

22.0

7.5

1.50

4.87

UGDD25

25.0

27.0

2.0

0.39

4.06

UGDD26

0.0

3.0

3.0

4.58

10.43

UGDD27

13.0

51.5

38.5

1.46

6.49

UGDD28

0.0

43.5

43.5

1.06

2.25

UGDD30

5.5

49.8

44.3

1.51

7.87

UGDD30

82.5

90.0

7.5

2.25

1.74

UGDD31

0.0

7.0

7.0

0.37

1.49

UGDD31

52.5

62.5

10.0

0.34

0.86

UGDD32

0.0

51.9

51.9

0.45

4.81

UGDD35

66.5

77.5

11.0

0.48

4.10

UGDD37

84.5

103.5

19.0

1.28

3.03

UGDD38

33.0

36.0

3.0

0.30

1.20

UGDD39

50.0

56.0

6.0

0.33

1.20

UGDD40

148.0

150.0

2.0

0.31

1.10

UGDD41

56.5

58.5

2.0

0.55

1.19

UGDD41

108.5

116.0

7.5

0.32

0.94

UGDD42

0.0

71.0

71.0

0.34

5.03

UGDD43

0.0

61.8

61.8

0.61

2.65

UGDD44

0.0

10.0

10.0

1.14

9.20

UGDD44

38.0

61.8

23.8

0.48

2.40

UGDD45

0.0

32.0

32.0

0.36

1.38

UGDD46

0.0

42.0

42.0

0.32

4.90

UGDD46

42.0

62.0

20.0

0.33

1.95

UGDD47

0.0

14.0

14.0

0.90

8.20

UGDD47

14.0

71.5

57.5

0.46

6.00

UGDD48

0.0

17.0

17.0

1.30

11.20

UGDD49

0.0

24.0

24.0

1.04

10.60

UGDD49

24.0

61.0

37.0

0.70

3.70

UGDD50

0.0

8.5

8.5

0.35

2.50

Reverse Circulation drill holes (RC holes 1 to 32)
Drill-hole number

Depth of drill hole

From

 (metres)

To (metres)

Interval (metres)

Gold (g/t)

 Silver (g/t)

RGRC01

0.0

6.0

6.0

 no sample

 no sample

RGRC01

6.0

7.0

1.0

0.16

2.12

RGRC01

7.0

24.0

17.0

2.28

11.79

RGRC01

24.0

33.0

9.0

0.57

1.18

RGRC01

33.0

60.0

27.0

1.36

2.71

RGRC01

60.0

84.0

24.0

0.70

1.03

RGRC03

1.0

32.0

31.0

0.22

0.61

RGRC03

32.0

102.0

70.0

1.35

3.18

RGRC03

102.0

119.0

17.0

0.39

1.94

RGRC05

0.0

111.0

111.0

0.19

0.56

RGRC07

9.0

57.0

48.0

2.45

4.42

RGRC07

57.0

113.0

56.0

0.33

1.49

RGRC09

0

57

57

1.37

9.96

RGRC09

57

81

24

0.36

1.70

RGRC10

0

4

4

0.32

7.33

RGRC10

4

15

11

10.79

19.10

RGRC10

15

54

39

1.73

10.30

RGRC11

0

50

50

1.42

11.20

RGRC11

50

68

18

0.91

2.50

RGRC12

5

22

17

1.80

10.10

RGRC12

22

26

4

6.50

17.80

RGRC12

26

42

16

2.04

12.00

RGRC12

42

69

27

0.36

1.90

RGRC13

0

5

5

0.43

1.70

RGRC13

5

14

9

1.00

8.60

RGRC13

14

33

19

0.58

5.60

RGRC13

33

50

17

0.50

5.20

RGRC16

0

7

7

0.76

6.20

RGRC16

7

72

65

1.58

9.70

RGRC17

0

6

6

0.31

0.90

RGRC17

6

9

3

3.11

22.80

RGRC17

9

29

20

0.41

4.70

RGRC17

29

33

4

1.37

8.70

RGRC17

33

75

42

1.10

10.80

RGRC18

0

21

21

0.35

3.70

RGRC18

21

29

8

1.36

11.00

RGRC18

29

48

19

0.82

8.60

RGRC18

48

60

12

0.56

5.40

RGRC18

60

66

6

1.46

16.00

RGRC19

0

15

15

1.20

11.00

RGRC19

15

48

33

0.71

8.50

RGRC19

48

61

13

0.33

3.10

RGRC19

61

71

10

0.99

7.50

RGRC19

71

87

16

0.80

6.80

RGRC20

0

42

42

1.68

6.08

RGRC20

42

64

22

0.60

7.50

RGRC20

64

75

11

1.14

12.70

RGRC21

0

3

3

0.30

2.90

RGRC21

3

31

28

2.70

17.20

RGRC21

31

67

36

1.95

10.80

RGRC21

67

82

15

0.64

5.80

RGRC21

82

91

9

0.19

0.80

RGRC22

0

34

34

2.30

15.20

RGRC22

34

52

18

8.30

12.20

RGRC22

52

69

17

0.83

2.50

RGRC23

0

41

41

0.35

2.15

RGRC23

41

64

23

0.94

3.10

RGRC23

64

79

15

0.77

1.94

RGRC24

0

47

47

1.53

13.40

RGRC25

0

14

14

0.58

1.60

RGRC25

14

38

24

1.20

11.70

RGRC25

38

78

40

0.52

1.20

RGRC26

0

61

61

2.00

11.50

RGRC27

0

71

71

1.10

9.50

RGRC27

71

80

9

0.37

1.20

RGRC28

34

40

6

0.78

2.60

RGRC29

11

47

36

1.65

10.70

RGRC29

59

70

11

0.70

2.80

RGRC29

70

84

14

0.40

1.20

RGRC30

0

13

13

0.47

4.30

RGRC30

13

16

3

1.70

7.80

RGRC31

7

15

8

1.20

2.70

RGRC31

26

34

8

0.41

0.90

RGRC32

0

7

7

0.30

1.10

RGRC32

17

21

4

0.78

4.70

RGRC32

35

40

5

0.73

0.90

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