GEDABEK CONTRACT AREA (“GEDABEK”)

Main objectives of the 2019 Gedabek Exploration Programme:

  • Continued exploration of the copper potential at the Gedabek open pit
  • Exploration of the mineralisation potential at Gedabek underground
  • Expand drilling at Gadir to test lateral and down-dip extents
  • To rank all ZTEM targets and commence exploration work over those considered ‘high-priority’

Overview of Exploration Activity in H1 2019

Gedabek open pit

Nine diamond drill-holes were completed at the Gedabek open pit area during H1 2019 totalling 1,085 metres. Eight of the drill-holes were to increase the data density around zones to provide continuity confidence of copper mineralisation and their location focused around the north-western and south-eastern margins of the open pit. The results will be utilised in the next Gedabek Mineral Resource update. Notable intersections include:

An additional diamond drill-hole was completed for geotechnical assessment in preparation for construction of the ventilation shaft (which is now complete), this will allow for continued tunnelling below the open pit and exploration drilling to take place.

A total of 63 reverse circulations (“RC”) drill-holes were also completed during H1 2019 proximal to the open pit, for grade control and near-mine exploration purposes. These were focused around regions where modelling of the copper ore body required constraining, in preparation for the next Mineral Resource Estimation and mine planning.

Gadir underground mine

A total of 101 diamond drill-holes were completed:

  • three deep exploration drill-holes from surface targeting lateral extensions of the deposit;
  • 33 underground exploration drill-holes of either HQ (63.5 millimetre) or NQ (47.6 millimetre) diameter, which targeted previously untested areas; and
  • 65 shorter underground drill-holes producing BQ-sized (36.5 millimetre) core, designed to increase confidence around sites due for stoping.

In-house geological wireframe modelling of the results has commenced. Notable intersections include:

ZTEM Study

Significant progress has been made with the ZTEM targeting, primary ranking was completed during H1 2019 with exploration work starting over the region. Targets currently under study include Korogly, Zehmet and Gyzyljadag/Yagublu (ZS8 and ZS9). Gyzyljadag and Yagublu are being evaluated concurrently due their close proximity to each other.

Over each target, detailed field mapping is ongoing in tandem with outcrop sample collection. At all targets, a total of 443 field outcrop samples were collected and have been assayed. Trenching has commenced at Zehmet, with 506 samples collected during H1 2019. Samples are being submitted to the AIMC laboratory where they will be assayed for gold, silver, copper and zinc. Positive field observations have included jasperoid-bearing veins found on surface and malachite found within both quartz vein and volcanic samples.

The Company has received results for all outcrop samples with excellent results from Korogly and Zehmet including one sample showing strong limonitic alteration with a grade of 95.40 grammes per tonne as previously reported. Follow-up work is being completed at all areas by way of further outcrop sampling, trenching or ground based magnetic surveying.

Exploration planned in H2 2019

  • Near-mine exploration is continuing around the Gedabek open pit and peripheral deeper drilling to help further explore the underground prospects.
  • Further lateral and down-dip drilling will continue around the Gadir orebody.
  • Remote sensing satellite imagery (WorldView-3) will be obtained over the Almalytala region; this will cover the Almalytala Shallow (ZS3), Almalytala Deep (ZD1) and Hachagaya (M1) ZTEM anomalies and will test the capabilities of this procedure over high relief and densely vegetated terrain. If successful, WorldView-3 will be used in the future over other regions within Gedabek and possibly Gosha.
  • A ground-based magnetometer survey over Korogly to define discrete anomalies over the region.

A detailed report on the H1 2019 exploration activities at Gedabek can be found here.

 

GOSHA CONTRACT AREA (“GOSHA”)

Main objectives of the 2019 Gosha Exploration Programme

  • To assess the potential depth extensions of mineralisation beneath current development at the underground Gosha mine.
  • Increase data collection around Asrikchay (including outcrop sampling, potential further diamond drilling) in order to establish a mineralisation model and further geological understanding of the area.
  • To identify potential new areas of mineralisation and drill targets for drilling in 2019 through mapping and outcrop sampling.

Overview of Exploration Activity in H1 2019

Near mine exploration

A total of nine diamond drill-holes were planned at the Gosha near-mine area during 2019. The aim of this drill programme is to test the Gosha vein system at depth below an existing adit development (“Zone 5”). One drill-hole (GSHDDA01) was completed early, in Q4 2018, and the results have been previously reported. During H1 2019, a further six drill-holes were completed and the two remaining drill-holes are currently in progress.

During H1 2019, a total of 1,896 metres of core was drilled and assayed at the Gedabek laboratory. Significant drill-hole intersections include the following:

Preliminary analysis of these latest drilling results confirms the dominance of gold mineralisation around the vicinity of Gosha, with minor elevated silver and rare copper grades also intersected.

Asrikchay

No further drilling has been conducted during H1 2019 at Asrikchay, however interpretation of the drill results is in progress.

The target has been divided into two adjacent areas – “QS” and “ASKL”. 19 and 8 outcrop samples were obtained during H1 2019 from areas QS and ASKL, respectively. Some notable grades were obtained from the QS area as follows:

Due to grades obtained, exploration will now focus on the QS area.

Khatinca

Exploration commenced in H1 2019. Khatinca is a target one kilometre from the village of Khatyndzhan and approximately 4 kilometres from the existing Gosha mine. Khatinca has been selected for its favourable geology which is similar to the Gosha mine and its easy surface conditions. 22 outcrop samples were obtained during H1 2019 but none returned notable grades. Further work at Khatinca is planned.

Exploration planned for H2 2019

Key projects that will be completed during H2 2019 include:

  • Completion of the drill programme at the Gosha underground mine – once results are returned, modelling of the mineral system at depth will commence
  • Further work (predominantly diamond drilling) is planned at Asrikchay once validation and modelling of the current dataset is complete
  • Further exploration work (outcrop sampling and mapping where possible) over untested regions around the Contract Area

A detailed report on the H1 2019 exploration activities at Gosha can be found here.

 

ORDUBAD CONTRACT AREA (“ORDUBAD”)

Ordubad was subjected to Soviet era exploration and geological studies. There are fifteen known mineral deposits and occurrences within Ordubad, six of which have resources classified according to the Soviet resource system. These six gold- and copper-bearing deposits were studied in more detail following the Soviet exploration by the mining consultant group Behre Dolbear. Their Competent Person’s Report (“CPR”) was included as Part IV in the 2005 Initial Public Offering (“IPO”) document of Anglo Asian Mining. This IPO document can be found here.

According to the CPR: “The Soviets completed extensive technology reports on several properties. In general, the Soviets only completed technology reports on properties they considered should be developed into mining operations.

The Ordubad Contract Area is 462 square kilometres in the Nakhchivan region and contains numerous deposits, six of which have been studied by Behre Dolbear: Shakardara, Piyazbashi, Misdag, Agyurt, Shalala and Diakhchay. These deposits lie within a 5 kilometre radius. The Ordubad Contract Area also contains other significant properties with Soviet era defined resources in Yashiling, Goyhundur, Keleki and Kotam. Porphyry copper deposits of the Ordubad ore region were localised within the western part of the Megri-Ordubad granitoid massif, where the Paragachay, Diakhchay, Misdag, Gey-gel, Geydag, Goyhundur, Shalala and other deposits were found.

In conclusion Behre Dolbear believes that thorough exploration will reveal significantly more potentially economic mineralization than is presently known, especially in the Ordubad and Gedabek Contract Areas [sic]”

An extract from the CPR of the Soviet resources table for Ordubad is shown below. Earlier attempts by the Company to replicate some of the original Soviet results correlated poorly. However, it is believed that the check sampling methodology and the locations for duplication were incorrect. The tonnages of Piyazbashi and Agyurt however were broadly confirmed in previous work by the Company.

Ordubad Resources (Soviet Classified), extracted from Behre Dolbear CPR (2005)

The Company believes these figures are not fully defined and intends to carry out further work to review the source reports and then validate with follow-up field work. However, the figures indicate the presence of potentially extensive mineralisation which justifies further work.

Exploration targeting cannot however rely solely on historical Soviet data. For example, two of the Company’s three operating mines, namely Gadir and Ugur, were not part of the Soviet deposit inventory. However, modern exploration techniques and processing facilities and contemporary industry economics create a different environment today for exploration.

Main objectives of the 2019 Ordubad Exploration Programme

  • To assess the extent of the copper, gold and associated mineralisation potential of Ordubad
  • To bring new mineral occurrence targets into the resource and reserve development pipeline
  • To identify potential new areas of mineralisation and drill targets for drilling in 2019
  • To determine the logistical requirements for future production

Overview of Exploration Activity in H1 2019

Dirnis (copper and silver prospect)

The Dirnis prospect is located approximately 2.5 kilometres west of the village of Dirnis. A diamond drill programme was completed in H1 2019. 18 drill-holes totalling 3,642 metres were completed ahead of schedule. Assaying is being conducted at the AIMC laboratory and data for some drill-holes have been returned. Significant intersections are as follows:

Results for the remainder of the holes will be reported once available.

Keleki (gold prospect)

A drill programme was completed at Keleki in H1 2019. Ten diamond drill-holes totalling 1,765 metres were completed. The programme was due to commence during H2 2019, however rig availability due to the early completion of the Dirnis drilling allowed acceleration of the Keleki programme. The entire programme was finished by June of 2019. Assaying is being conducted at the AIMC laboratory and data is expected to be available during Q3 2019.

Destabashi

A small-scale surface geochemical sampling campaign was completed during Q1 2019 in the southwest of Ordubad. The total area covered was 4.2 square kilometres, spread over two zones. In total, 244 samples were collected, and detailed geological mapping was completed of the sampling area. 82 samples were collected from ‘Zone 1’ (approximately 2 kilometres southeast of the village of Khanagha) whilst 162 samples were obtained from ‘Zone 2’ (adjacent to the village of Desta). Samples were collected 100 metres apart along profile lines spaced 200 metres apart. All samples have been forwarded to Baku for sample preparation. Once complete, the material will then be shipped to the ALS Minerals “OMAC” laboratory in Ireland.

Exploration Outlook for H2 2019

Key items of work remaining from the year-plan and budget of $1.84 million include:

  • Remote sensing utilising the latest satellite technology (WorldView-3); planned for September
  • Follow-up fieldwork alongside the Natural History Museum team including mapping, geochemical data interpretation, drill core interpretation and additional field sampling
  • Surface geological mapping and sampling, with undergraduate geology student mapping projects, encouraging collaboration with Azerbaijani Universities (subject to availability)
  • In-house, detailed interpretation of the data from the 2018 geochemical study completed over Shakardara, Dirnis and Keleki (5,504 samples).

The potential for an extension of the 2018 geochemical study area is being considered, due to the positive grades returned along the eastern margin.

A detailed report on the H1 2019 exploration activities at Ordubad can be found here.