Pakrut Gold Project

Pakrut Gold Project Mining Licence

​In January 2012, the Ministry of Energy and Industry of the Republic of Tajikistan formally announced the issuance of a Mining Licence to LLC Pakrut for the Pakrut Gold Project. The mining licence is valid until 2nd November 2030 and the amount of ore that can be mined is variable depending on the mine plan. The mine plan submitted to the Ministry envisages an initial processing capacity of 660,000 tons of ore per annum, increasing to 1,320,000 tons per annum from 2017.

Pakrut Gold Project Resource

The reserves of the Pakrut project under the Russian classification system, which total 1,257,454oz Au at a cut off grade of 0.5g/t, were approved by the State Committee for Reserves (GKZ) of the Republic of Tajikistan on the 15th December 2008. This approval gave CNG the exclusive right to a full mining licence valid for 20 years, which was subsequently granted in January 2012.

Kryso's latest JORC Code-compliant resource estimate was completed by SRK Consulting China Ltd in June 2013. A Total JORC Code-compliant resource of 4,720,000oz Au, assuming a 0.5g/t cut-off grade, has been defined at the Pakrut Gold Project. The Pakrut deposit remains open and is expected to yield further JORC Code-compliant resources over time. Over 42,000 metres of drilling has been carried out to date, including 7,730 metres in 2012. This latest drilling is highly encouraging and we are awaiting drill results leading to further JORC revisions.

Resource and drilling highlights are set out below.

Pakrut Gold Project BFS

A revised Bankable Feasibility Study (BFS) for the Pakrut Gold Project was completed by the Beijing General Research Institute of Mining & Metallurgy (BGRIMM). BGRIMM is a highly reputable Chinese consulting group active in the fields of mining engineering, mineral processing and metallurgy, and has completed substantial work for well known international companies including Kazakhmys, El Dorado Gold, SinoGold, ArcelorMittal and Griffin Mining. BGRIMM is ISO9000 certified.

BGRIMM built on work previously completed by other consultants to CNG including GeoLogix Mineral Resource Consultants (resources), GBM Minerals Engineering Consultants (metallurgical test work review and preliminary process design), Prime Resources (social and environmental), Scott Wilson Group (tailings dam design), SGS Group (metallurgical test work) and Turgis Mining Consultants (mining and infrastructure).

BFS highlights are set out below.

Resources & Reserves

Pakrut Gold Project

JORC Code-Compliant Resource Estimate Highlights

Completed by SRK Consulting China Ltd in June 2013

​Total JORC Code-compliant resources of 4,720,000oz Au, assuming a 0.5g/t cut-off grade, have been defined at the Pakrut gold project. The Pakrut deposit remains open and is expected to yield further JORC Code-compliant resources over time.

Summary of Mineral Resources as of 28 February 2013

Cut-Off (g/t Au) Measured Indicated Measured + Indicated
Mt Au  (g/t) Au (koz) Mt Au  (g/t) Au (koz) Mt Au  (g/t) Au (koz)
0.5 18.57 3.16 1,889 10.02 2.05 660 28.59 2.77 2,549
1.0 18.06 3.23 1,874 7.91 2.39 608 25.97 2.97 2,482
1.5 14.93 3.64 1,748 5.97 2.49 534 20.90 2.40 2,283
3.0 6.55 5.47 1,152 1.80 4.18 243 8.36 5.19 1395
5.0 2.49 8.24 659 0.26 7.87 65 2.74 8.21 724

Cut-Off (g/t Au) Inferred
Mt Au (g/t) Au (koz)
0.5 41.19 1.64 2,171
1.0 30.16 1.96 1,902
1.5 18.14 2.45 1,428
3.0 2.87 4.37 403
5.0 0.56 8.64 154

Summary of Mineral Resources as of 28 February 2013

In the latest version of the study the revised life of the mine is 19 years, (comprising 1 years' ramp up and 18 years of full production) with an expected construction period of one and a half years.

Gold revenues have been estimated over that period at a price of US$1,500 per ounce in year 1, US$1,400 per ounce in year 2, US$1,300 per ounce in year 3 and US$1,250 per ounce from year 4 onwards, which was based on external sources of information. The calculation assumes a mining capacity of 2,000 tonnes of ore daily ("Phase I") increasing to 4,000 tonnes per day after 3 years ("Phase II").

The total cost per ounce including depreciation and amortisation is US$576, after taking into account external information available and adjusted according to prevailing market prices and forecasts over the period of production. Royalties have been calculated at 6% of sales revenues and corporate income tax at 15%, according to the relevant laws in Tajikistan.

The expected capital expenditure cost of Phase I which includes construction, working capital and allowances for cost overruns is $176.53 million. For Phase II the additional capital expenditure is expected to be $46.5 million, which will be funded from operating cashflow. In addition, the BGRIMM study outlines required sustaining capital expenditure costs throughout the Project's 19 year mine life of $32.7 million. This cost will be funded from operating cash flow from the Project once in production. A discount rate of 10% has been utilised.

Based on the calculations, the net present value after tax (NPV) of the Pakrut Gold Project is US$263,863,220. The internal rate of return after tax is 29.26% and the payback period is 3.36 from the start of production.

Pakrut Drilling Highlights

Hole ID From (m) To (m) Intercept (m) Grade (g/t)
PKDD-78 104.5 228.2 123.7 6.1
Including 142.2 228.2 86.0 8.4
PKDD-57 122.0 172.0 50.0 5.7
PKDD-55 81.2 122.7 41.5 4.1
PKDD-67 55.1 85.1 30.0 13.2
PKDD-76 132.7 139.2 6.5 37.9
PKDD-23 38.0 78.0 40.0 8.6
PKDD-87 215.7 234.5 18.8 5.4
PKDD-82 169.5 177.0 7.5 26.3
PKDD-88 250.0 284.5 34.5 4.9
PKDD-97 266.7 292.2 25.5 7.5
PKDD-101 415.1 436.1 22.5 6.1
PKDD-102  446.6 489.0 42.4 5.4
PKDD-100 194.5 208.0 13.5 7.5

By the beginning of 2013, over 42,000m of drilling had been completed by CNG at Pakrut, Eastern Pakrut and Rufigar. A total of 7,729.5 metres were drilled in 2012, which comprised of 18 new diamond drill holes.

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Metallurgical Testwork

​Initial metallurgical testwork was carried out by Tajik Geology with reported gold recoveries, using rudimentary gravity recovery methods, of 47% to 98%. Consistently high gold recoveries of between 80% and 90% were attained using a combination of gravity methods and cyanidation. Further metallurgical testwork has been carried out by SGS Lakefield and BGRIMM which has confirmed the results of the work carried out by Tajik Geology.



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