Tokhtazan Gold Project

Location of the Tokhtazan Gold Project

The Tokhtazan deposit is located at 410 34' north, 720 21' east in mountainous terrain in Jalal-Abad Oblast, western Kyrgyzstan. Access to the deposit is via the main Bishkek-Osh bitumen road for some 400km then 14km up a variably graded track along a steep sided valley following Kurpsai stream.

The nearest town and railway station, Tash-Kumyr, is located 31km from the Tokhtazan deposit, whilst the Kurpsai hydro-power station on the Naryn River is situated approximately 18km by road from the deposit.

Table 1 Licence details

Historic Exploration

The Tokhtazan gold deposit was discovered in 1974, although it was not until 1987-1992 that significant geological mapping and trenching were undertaken by a State expedition.

The majority of exploration works on the Tokhtazan deposit were carried out from 1995-1999 by “Tien-Shan Gold Company”, a JV between Canadian company Cameco and the state mining group Kyrgyzaltyn. The exploration comprised re-sampling of trenches and bulldozer cuts, diamond drilling, geophysics, mineralogical investigations and metallurgical testwork. A total of 51 holes were drilled and 8,000 trench samples collected. A non-JORC or 43-101 compliant resource of approximately 1 million ounces was estimated as a result of the work.

Regional Geology and Tectonic Setting

The regional geological setting of the Tokhtazan area is characterised by the presence of two contrasting age formations comprising part of the Central Tien Shan Belt to the west of the Talas-Ferghana Fault. The basement is comprised of Upper Proterozoic – Lower Palaeozoic aged, subduction-related ophiolite, metabasalt and greenstone formations of the Maylisuyskaya Suite that are over lain by Devonian- Carboniferous aged complex of calcareous-terrigenous formations of the Souktyubinskaya Suite. The Tokhtazan mineralisation is located on the thrust contact that separates the two blocks, within what appears to be a series of splays off the western side of the Talas-Ferghana Fault.

Geology of the Tokhtazan deposit

In the immediate Tokhtazan deposit setting, the Devonian-Carboniferous sequence has been thrust over the ophiolite-metabasalt formations whilst both suites have been overprinted by metamorphism. The entire sequence has subsequently been intruded by later Carboniferous-Permian age granodiorites, quartz-diorites, monzonite-porphyries and quartz-syenite-porphyries of the Akdzhol Complex. Mineralisation at Tokhtazan is localized along the gently dipping thrust contact between the underlying lower-Palaeozoic metavolcanics and the overlying Carboniferous sediments. The deposit can be classified as an Intrusion Related Gold Deposit.

Mineralisation

At Tokhtazan, the gently southward dipping thrust zone, which separates the Upper Proterozoic-Lower Palaeozoic schist from the overlying Devonian-Carboniferous sediments is the principal structural control on mineralisation. The bulk of the mineralisation occurs as blanket like bodies up to 60m thick in places, comprised of as many as seven sub parallel zones from 1 to 20m thick. Linear steeply dipping stockwork zones of quartz-pyrite veinlets occur within the Upper Proterozoic – Lower Palaeozoic sequence. The deposit is divided into a northern and southern section, the latter carrying the majority of mineralisation. The gold mineralisation in the south part of the deposit has been exposed by trenches and bulldozer over a length of approximately 450m, whilst the mineralisation in the north zone is exposed at surface over about 175m.

The mineralisation is largely oxidised in the upper parts of the deposit. Zones of brecciation, cataclasites and mylonites within thrust zones acted as pathways for intrusion sourced hydrothermal fluids and subsequently for migrating meteoric fluids. In the lower parts of the deposit (70-100m below surface), partially oxidised low-sulphide (<5%), gold-pyrite type ores have been encountered. In the upper parts of the orebody, the vein minerals are represented by quartz, sericite, carbonates, iron hydroxides and barite. Primary mineralisation comprises chalcopyrite, arsenopyrite and gold with rarer galena, stibnite and scheelite.

The alteration intensity is moderate and is represented by quartz-sericite-carbonate metasomatites, often with a stockwork of the quartz-carbonate-feldspar veinlets.

The deposit is strongly affected by faulting. The Kurpsai Fault cuts through the central part of the area and divides it into two blocks, with primarily intrusive rocks to the northwest and terrigenous to the southeast. The fault trends northeast and is seen as a thick, steeply dipping schistose zone, dipping to the northwest at between 60-80o. It bounds the mineralisation to the northwest. Younger, northwest trending faults displace the deposit.

Table 2 Significant intersections from Cameco drilling

Table 3 Cameco 1999 Tokhtazan resource estimate

Other Licences

Kurpsai

The Kurpsai licence is located 3km southwest of Tokhtazan on the west bank of Kurpsai stream at elevations between 1,700-1,800m. The deposit was subject to detailed geological mapping, geochemical sampling and extensive trenching by the Soviet expeditions during the 1960’s, but no drilling or underground sampling has taken place.

Mineralisation at Kurpsai comprises a series of NW striking steeply dipping structures within a sequence of Upper Proterozoic schists that have been over-thrust by Palaeozoic terrigenous sediments that have subsequently been intruded by diorite. The mineralisation is predominantly hosted by the intrusive rocks. The mineralisation at Kurpsai typically occurs in a series of 1-3m wide, NW striking steeply dipping quartz veins with gold grades at 1-3 g/t within a 1000 x 150m metasomatic aureole. It is possible that the mineralisation at Kurpsai is also thrust controlled and as such increases the exploration potential of the prospect.

Table 4 Significant trench intersections from the Kurpsai Prospect

Akdjol

The Akdjol gold exploration licence is located approximately 3km north of Tokhtazan at an elevation of between 2,700-2,800m. The prospect is geologically similar to the Tokhtazan deposit with Palaeozoic sediments thrust over Proterozoic metavolcanics and intruded by diorite however Akdjol contains significant silver grade.

The mineralisation occurs in a 400m long, NNW striking thrust zone. Individual ore bodies are 2-5m wide and occur within zones of intensive brecciation and silicification with pyrite and minor galena, sphalerite, malachite and gold. Oxidation is estimated to exceed 80m depth. Five ore bodies have been delineated by a programme of trenching, pitting and the excavation of short adits. Significant gold intersections from historical trenches include: 6.1m at 7.7g/t, 8.9m at 9.1g/t, 2.4m at 26.9g/t and 2.6m at 13.2g/t.