updated mineral resources - anglo asian mining mineral resources - gedabek... · the updated...

CAE Mining 8585 Cote-de-Liesse Saint-Laurent Quebec H4T 1G8 Canada

March 2012

Updated Mineral Resources Gedabek Mineral Deposit, Republic of Azerbaijan

Azerbaijan International Mining Company Limited

Prepared by CAE Mining

Updated Mineral Resources | Gedabek Mineral Deposit __________________________________________________________________________________________

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Executive Summary

CAE Mining was requested, by the Azerbaijan International Mining Company Limited, to update the mineral resources estimation of the Gedabek Mineral Deposit located in the Republic of Azerbaijan. This update is an extension of the previous mineral resources estimations done by SRK Consulting Incorporated (SRK, 2007) and SGS Canada Incorporated (SGS, 2010) in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The Joint Ore Reserves Committee, 2004).

The updated mineral resources estimation was done by taking into consideration the information of the previous (2006) and most recent (2010 and 2011) exploration drilling campaigns. The main objectives of the recent exploration drilling campaign consisted in increasing the level of geological knowledge and confidence of the quantity (tonnage) and quality (gold, copper and silver grades) of:

Mineral resources and ore reserves within the current economic open pit limit

This objective was reached by the Phase I of the intensive exploration drilling campaign that consisted of 60 drillholes with 5,452.22 meters drilled, 4,626 samples prepared and assayed

Mineral resources around the current economic open pit limit as a probable expansion of it in future

This objective was reached by the Phase II of the intensive exploration drilling

campaign that consisted of 56 drillholes with 9,058.48 meters drilled, 4,080 samples prepared and assayed

In addition, other aim of the intensive exploration drilling campaign consisted in assessing the technical and economic feasibility of future mineral processing alternatives of the oxide and sulphide mineralisation. The objective of this assessment consists in increasing the gold, copper and silver recovered metal content and economic value of the expected final products.

The updated mineral resources also considered a much better understanding of the geological and structural geology setting of the mineral deposit. This knowledge was obtained by a recent re-interpretation of the information taking into account surface and open pit geological and structural geology mapping.

The Gedabek Mineral Deposit has the style of mineralisation and type of porphyry gold deposit (Robert, Poulsen and Dube, 1997), which is confirmed by the extensive analysis, interpretation and processing of the previous and recent source of geological and chemical information.



The statement is also supported by the geological and structural geology cross sections with the spatial distribution of the gold, copper and silver mineralisation located under or immediate to the geological contact between the andesitic and dacitic lavas and volcaniclastic tuffs and the dacitic quartz porphyry.

Based on an extensive analysis the 95.12 % of the drillholes composited with an interval length equal to 2 meters and gold grade greater than or equal to 0.3 g/t, intercepted the economic mineralisation. This information is confirming as well the hypothesis that the gold, copper and silver mineralisation is widely spread and disseminated in the geological contact between the andesitic and dacitic lavas and volcaniclastic tuffs and dacitic quartz porphyry.

The updated mineral resources of the Gedabek Mineral Deposit were spatially estimated by applying the ordinary kriging geostatistical algorithm. Additionally, by accessing the information of the updated, integrated and validated drillhole database.

The classification of these updated mineral resources was in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The Joint Ore Reserves Committee, 2004).

The updated mineral resources were constrained with both the original surface topography and the open pit surface topography dated on December 30th, 2011.

For comparison purposes with the previous mineral resources estimation done by SRK Consulting Incorporated (SRK, 2007) and SGS Canada Incorporated (SGS, 2010), the updated measured, indicated and inferred mineral resources of the oxide and sulphide mineralisation together based on a cut-off grade of 0.3 g/t of gold is described in the following table.

Classification Tonnage

Au Cu Ag Au Cu Ag

t g/t % g/t Oz t Oz

Measured 22,349,562 1.028 0.255 8.249 738,958 57,069 5,927,487

Indicated 14,762,015 0.665 0.167 5.649 315,424 24,696 2,681,064

Measured and Indicated 37,111,577 0.884 0.220 7.215 1,054,382 81,765 8,608,551

Inferred 11,027,402 0.626 0.119 4.787 222,040 13,125 1,697,102

Grades Products



Contents

Section 1 | Introduction ..... 8

Section 2 | Exploration Drilling ..... 9

2.1 Collar Information ..... 10 2.2 Survey Information ..... 11 2.3 Geology Information ..... 11 2.4 Assay Information ..... 12 2.5 Drillhole Database ..... 12

Section 3 | Mineral Deposit ..... 16

3.1 Geology ..... 16 3.2 Structural Geology ..... 21

Section 4 | Estimation ..... 25

4.1 Composites ..... 25 4.2 Statistical Analysis ..... 26 4.3 Geostatistical Analysis ..... 31 4.4 Geological Database ..... 32 4.5 Interpolation ..... 32 4.6 Validation ..... 33

Section 5 | Mineral Resources ..... 34

5.1 Mineral Resources Classification Criteria ..... 34 5.1.1 Measured Mineral Resources ..... 34 5.1.2 Indicated Mineral Resources ..... 35 5.1.3 Inferred Mineral Resources ..... 35 5.2 Mineral Resources of the Oxide Mineralisation ..... 36 5.3 Mineral Resources of the Sulphide Mineralisation ..... 36 5.4 Mineral Resources of the Mineralisation ..... 38

Section 6 | Recommendations ..... 46

Section 7 | References ..... 48

Section 8 | Competence and Responsibility ..... 49



List of Tables Table 2.1 Exploration Drilling Campaigns .... 10 Table 4.1 Descriptive Statistics of the Drillhole Core Intervals Length [m] by Exploration Drilling Campaigns .... 27 Table 4.2 Descriptive Statistics of the Bulk Density [t/m3] by Lithology and Mineralisation Types .... 27 Table 4.3 Descriptive Statistics of the Drillhole Composites based on a Cut-Off Grade of 0.3 g/t of Gold by Lithology and Mineralisation Types .... 28 Table 4.4 Descriptive Statistics of the Drillhole Composites based on a Cut-Off Grade of 0.3 g/t of Gold by Combining Lithology and Mineralisation Types .... 29 Table 4.5 Parameters of the Variograms Modelled by Structural Domain .... 31 Table 4.6 Descriptive Statistics of the Drillhole Composites and Blocks based on a Cut-Off Grade of 0.3 [g/t] of Gold .... 33 Table 5.1 Mineral Resources of the Oxide Mineralisation based on a Cut-Off Grade of 0.3 [g/t] of Gold .... 36 Table 5.2 Mineral Resources of the Sulphide Mineralisation based on a Cut-Off Grade of 0.3 [g/t] of Gold .... 38 Table 5.3 Mineral Resources of the Mineralisation based on a Cut-Off Grade of 0.3 [g/t] of Gold .... 38 Table 5.4 Mineral Resources of the Oxide Mineralisation .... 39



List of Tables Continuation Table 5.5 Mineral Resources of the Sulphide Mineralisation .... 40 Table 5.6 Mineral Resources of the Mineralisation .... 41



List of Figures Figure 2.1 Location Map of the GDDD's Exploration Drilling Campaign .... 13 Figure 2.2 Location Map of the Previous and GDRC's Exploration Drilling Campaigns .... 13 Figure 2.3 Location Map of the Previous and GDRD's Exploration Drilling Campaigns .... 14 Figure 2.4 Location Map of the Previous and SGSDD's Exploration Drilling Campaigns .... 14 Figure 2.5 Location Map of the Previous and AIMCDD's Exploration Drilling Campaigns .... 15 Figure 2.6 Location Map of the GDDD's, GDRC's, GDRD's, SGSDD's and AIMCDD's Exploration Drilling Campaigns .... 15 Figure 3.1 Geological Cross Sections of the Lithological Contact and Spatial Distribution of Gold Mineralization by Indicators .... 18 Figure 3.2 Geological Cross Sections of the Lithological Contact and Spatial Distribution of Copper Mineralization by Indicators .... 19 Figure 3.3 Geological Cross Sections of the Lithological Contact and Spatial Distribution of Silver Mineralization by Indicators .... 20 Figure 3.4 Geological Cross Sections of the Lithological Contact and Mineralisation Surface Boundary .... 22 Figure 3.5 Location Map of the Mapped and Interpreted Faults Sets .... 23 Figure 3.6 Location Map of the Mapped and Interpreted Faults Sets, Exploration Drilling Campaigns and Structural Domains .... 23



List of Figures Continuation Figure 3.7 Northeast Perspective View of the Exploration Drilling Campaigns and Spatial

Modelling of the Sets of Faults and the Geological Contact between the Andesitic and Dacitic Lavas, Volcaniclastic Tuffs and Dacitic Quartz Porphyry .... 24

Figure 4.1 Box and Whisker Diagram of the Drillhole Core Intervals Length [m] by Exploration Drilling Campaigns .... 25 Figure 4.2 Box and Whisker Diagram of the Bulk Density [t/m3] by Lithology and Mineralisation Types .... 26 Figure 4.3 Box and Whisker Diagram of the Gold [g/t], Copper [%] and Silver [g/t] Grades of the Drillhole Composites by Lithology and Mineralisation Types .... 30 Figure 5.1 Plan Perspective View of the Updated Measured, Indicated and Inferred Mineral Resources of the Gedabek Mineral Deposit .... 37 Figure 5.2 Cross Sections of the Updated Measured, Indicated and Inferred Mineral Resources of the Gedabek Mineral Deposit .... 37 Figure 5.3 Tonnage-Cut-Off Grade-Average Grade Plots of the Updated Measured Mineral Resources by Type of Mineralisation .... 42 Figure 5.4 Tonnage-Cut-Off Grade-Average Grade Plots of the Updated Indicated Mineral Resources by Type of Mineralisation .... 43 Figure 5.5 Tonnage-Cut-Off Grade-Average Grade Plots of the Updated Inferred Mineral Resources by Type of Mineralisation .... 44 Figure 5.6 Tonnage-Cut-Off Grade-Average Grade Plots of the Updated Measured, Indicated

and Inferred Mineral Resources by Type of Mineralisation .... 45



Section 1 | Introduction

CAE Mining was requested, by the Azerbaijan International Mining Company Limited, to update the mineral resources estimation of the Gedabek Mineral Deposit located in the Republic of Azerbaijan. This update is an extension of the previous mineral resources estimations done by SRK Consulting Incorporated (SRK, 2007) and SGS Canada Incorporated (SGS, 2010) in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The Joint Ore Reserves Committee, 2004).

The objective of this document consists in reporting the estimation of the updated mineral resources of the Gedabek Mineral Deposit, which was based on the source of information from previous (2006) and recent (2010 and 2011) exploration drilling campaigns. In addition, this document is enhancing and complementing specific sections of the previously published reports of SRK Consulting Incorporated (SRK, 2007) and SGS Canada Incorporated (SGS, 2010). The specific sections were enhanced and complemented throughout of an extensive validation, analysis, interpretation and processing of the up to date, integrated and validated source of information from the whole exploration drilling campaigns.

Based on a comprehensive review of the previously published reports by SRK Consulting Incorporated (SRK, 2007) and SGS Canada Incorporated (SGS, 2010), the other sections of both reports still remaining as a good source of information regarding to the mineral resources estimation of the Gedabek Mineral Deposit.

Additionally, the technical audits carried out by the Competent Person in the Gedabek Mining and Mineral Processing Operation during the second half of 2011, confirmed that the exploration geologists were implementing and improving the best practices and developing systematic quality assurance and quality control activities regarding to the:

Drillhole coordinates and elevation surveyed, computed and recorded

Drillhole core recovered, handled, photographed and stored

Downhole measurements surveyed and recorded

Geological drillhole core logged, coded and recorded

Drillhole core sample prepared, assayed and recorded

Drillhole database integrated, validated and recorded

The following sections of this document describe the contribution and results of the analysis, interpretation and processing of the information from the previous (2006) and recent (2010 and 2011) exploration drilling campaigns done in the Gedabek Mineral Deposit.



Section 2 | Exploration Drilling

An intensive exploration drilling campaign identified as SGSDD's was carried out in the Gedabek Mining and Mineral Processing Operation during the second half of 2010 and the whole 2011. The main objectives of this intensive exploration drilling campaign consisted in increasing the level of geological knowledge and confidence of the quantity (tonnage) and quality (grades) of:

Mineral resources and ore reserves within the current economic open pit limit

This objective was reached by the Phase I of the intensive exploration drilling campaign that consisted of 60 drillholes with 5,452.22 meters drilled, 4,626 samples prepared and assayed

Mineral resources around the current economic open pit limit as a probable expansion of it in future.

This objective was reached by the Phase II of the intensive exploration drilling

campaign that consisted of 56 drillholes with 9,058.48 meters drilled, 4,080 samples prepared and assayed.

In addition, other aim of the intensive exploration drilling campaign consisted in assessing the technical and economic feasibility of future mineral processing alternatives of the oxide and sulphide mineralisation. The objective of this assessment consists in increasing the gold, copper and silver recovered metal content and economic value of the expected final products. The mineral processing assessment was based on statistically representatives and spatially unbiased drillhole core samples of the oxide and sulphide mineralisation within the deposit.

In November of 2011, another more intensive exploration drilling campaign identified as AIMCDD's was defined, approved and started. This AIMCDD's drilling campaign was defined based on the analysis, interpretation and processing of the results of the previous (GDDD's. GDRC's and GDRD's) and recent (SGSDD's) drilling campaigns. The most important purpose of this exploration drilling campaign consists in increasing the mineral resources mainly in the South and Southeast zones of the Gedabek Mineral Deposit.

The Figures 1 - 6 are the location maps of the GDDD's, GDRC's, GDRD's, SGSDD's and AIMCDD's exploration drilling campaigns, which are shown in a progressive order the implemented exploration strategies. The spatial distribution of the exploration drilling campaigns is confirming these exploration strategies, which were based on the next criteria:


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Increasing the level of geological knowledge and confidence of the mineral resources

This objective is being reached by defining a 20 meters drilling grid spacing

pattern

Increasing the mineral resources

This objective is being reached by defining a 80 meters drilling grid spacing pattern

The Table 2.1 summarises the type, diameter, number and percent of drillholes drilled in the different exploration drilling campaigns. In addition, the number and percent of meters drilled, the drillhole core average recovery, the number of samples prepared and assayed considered in the previous and this mineral resources estimations.

Table 2.1 - Exploration Drilling Campaigns

The fundamental information for the development of the mineral resources estimation was verified an validated in the technical audits carried out by the Competent Person in the Gedabek Mining and Mineral Processing Operation during the second half of 2011. This fundamental information is regarding to the collar, survey, geology, assays and drillhole database of the previous (2006) and recent (2010 and 2011) drilling campaigns.

The following sections describe the results obtained of the verification and validation processes done by the Competent Person.

2.1 Collar Information

The information of the coordinates and elevation surveyed, computed and recorded of the previous and recent exploration drilling campaigns were verified, validated and recorded in the up to date and integrated drillhole database.

Name Recovery

Type Diameter Number Percent Number Percent Percet Number Percent

GDDD's DD HQ-NQ 53 17.85 6,100.90 17.46 92.05 3,580 16.60

GDRC's RC 33 11.11 2,832.00 8.11 2,864 13.28

GDRD's RC-DD PQ-HQ-NQ 83 27.95 9,479.30 27.13 97.35 4,687 21.74

SGSDD's DD PQ-HQ-NQ 116 39.06 14,510.70 41.53 92.97 8,800 40.81

AIMCDD'S DD HQ-NQ 12 4.04 2,013.30 5.76 97.61 1,633 7.57

Total 297 100.00 34,936.20 100.00 94.38 21,564 100.00

DD - Diamond Drilling RC - Reverse Circulation Drilling

Meters Samples and AssaysDrillholes


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The coordinates and elevation of each drillhole is surveyed, computed and recorded by the Topography Department and by applying the same standard operating procedure as was stated in the mineral resources report of SGS Canada Incorporated (SGS, 2010).

The digital information recorded regarding to the coordinates and elevation surveyed of each drillhole is being directly transferred to the up to date, integrated and validated drillhole database.

2.2 Survey Information

A downhole deviation measurements surveying procedure was implemented in the last quarter of 2011. The Reflex EZ-Trac instrument was acquired and implemented by the Exploration Department to measure systematically the downhole azimuth and dip of each exploration drillhole.

In the previous exploration drilling campaigns, the downhole deviation of the 22.89 % (19 out of 83) of the GDRD's drillholes were measured by the Flexit instrument. In the case of the recent exploration drilling campaigns, the downhole deviation of the 9.48 % (11 out of 116) and 91.67 % (11 out of 12) of the SGSDD's and AIMCDD's drillholes respectively were measured by the Reflex EZ-Trac instrument.

The number of downhole deviation measurements of the GDRD's drillholes were 89 and in the case of the SGSDD's and AIMCDD's drillholes were 180. The average downhole deviation measurements interval was 20 meters of the previous and recent exploration drilling campaigns.

The minimum, maximum and average of the 269 downhole deviation measurements carried out of the GDRD's, SGSDD's and AIMCDD's drillholes are correspondingly 0°, 5.10° and 0.33°. The results of the downhole measurements surveying are confirming that these and the rest of the drillholes were considered as vertical in this mineral resources estimation process.

The digital information recorded about the downhole deviation measurements surveyed by the Reflex EZ-Trac instrument of each drillhole is being directly transferred to the up to date, integrated and validated drillhole database.

2.3 Geology Information

The geological information considered in the mineral estimation comes from the geological core logging process. The geological information logged is recorded in a previously structured form and based on defined codes. These codes are related to the lithological, alteration and mineralisation attributes regarding to the Gedabek Mineral Deposit.


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The whole geological information recorded in the drillhole database from the previous and recent exploration drilling campaigns was verified and validated during the last quarter of 2011. This process was carried out throughout the geological and structural geology interpretation of systematic geological cross sections of the Gedabek Mineral Deposit.

The inconsistencies and errors in the codes were fixed and the integrated and validated drillhole database was updated with reliable source of geological information.

2.4 Assay Information

The drillhole core sampled, prepared, shipped, assayed and recorded procedures are still being the same as were described in detail in the reports of SRK Consulting Incorporated (SRK, 2007) and SGS Canada Incorporated (SGS, 2010).

Additionally, the quality assurance and quality control processes and results based on duplicate, blank and standard samples are consistent in the GDDD's, GDRC's, GDRD's, SGSDD's and AIMCDD's exploration drilling campaigns. In fact, the sample preparation and analytical method applied by the OMAC Laboratory are kept the same.

The digital information provided by OMAC Laboratory is being directly transferred to the up to date, integrated and validated drillhole database.

2.5 Drillhole Database

The up to date drillhole database was structured and integrated with collar, survey, geology and assay information from the GDDD's, GDRC's, GDRD's, SGSDD's and AIMCDD's exploration drilling campaigns as is shown in Table 2.1.

Throughout the analysis, interpretation and processing activities carried out for the development of the mineral resources estimation process, the drillhole database was verified and validated. In addition, the process confirmed that the drillhole database is reliable and consistent with the style of the mineralisation and type of the Gedabek Mineral Deposit.


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Figure 2.1 - Location Map of the GDDD's [red colour dots] Exploration Drilling Campaign.

Figure 2.2 - Location Map of the Previous [red colour dots] and GDRC's [blue colour dots] Exploration Drilling Campaigns.

566,500 567,000 567,500 568,000

4,491,500

4,492,000

4,492,500

4,493,000

4,493,500

4,494,000

4,491,500

4,492,000

4,492,500

4,493,000

4,493,500

4,494,000

566,500 567,000 567,500 568,000

566,500 567,000 567,500 568,000

4,491,500

4,492,000

4,492,500

4,493,000

4,493,500

4,494,000

4,491,500

4,492,000

4,492,500

4,493,000

4,493,500

4,494,000

566,500 567,000 567,500 568,000


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Figure 2.3 - Location Map of the Previous [red colour dots] and GDRD's [blue colour dots] Exploration Drilling Campaigns.

Figure 2.4 - Location Map of the Previous [red colour dots] and SGSDD's [blue colour dots] Exploration Drilling Campaigns.

566,500 567,000 567,500 568,000

4,491,500

4,492,000

4,492,500

4,493,000

4,493,500

4,494,000

4,491,500

4,492,000

4,492,500

4,493,000

4,493,500

4,494,000

566,500 567,000 567,500 568,000

566,500 567,000 567,500 568,000

4,491,500

4,492,000

4,492,500

4,493,000

4,493,500

4,494,000

4,491,500

4,492,000

4,492,500

4,493,000

4,493,500

4,494,000

566,500 567,000 567,500 568,000


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Figure 2.5 - Location Map of the Previous [red colour dots] and AIMCDD's [blue colour dots]

Exploration Drilling Campaigns.

Figure 2.6 - Location Map of the GDDD's, GDRC's, GDRD's, SGSDD's and AIMCDD's [red colour dots] Exploration Drilling Campaigns.

566,500 567,000 567,500 568,000

4,491,500

4,492,000

4,492,500

4,493,000

4,493,500

4,494,000

4,491,500

4,492,000

4,492,500

4,493,000

4,493,500

4,494,000

566,500 567,000 567,500 568,000

566,500 567,000 567,500 568,000

4,491,500

4,492,000

4,492,500

4,493,000

4,493,500

4,494,000

4,491,500

4,492,000

4,492,500

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566,500 567,000 567,500 568,000


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Section 3 | Mineral Deposit

A concise explanation regarding to the regional and local geology and structural geology setting of the Gedabek Mineral Deposit can be founded in the report of SRK Consulting Incorporated (SRK, 2007). However, the main statement is that the Gedabek Mineral Deposit is product of a tectonic and magmatic cycle with progressive development from oceanic magmatism in the Jurassic to continental magmatism in the Tertiary. This magmatic episode generated the most important metallogenic belt in the middle East region called Tethyan and subsequently the development of a range of types of hydrothermal mineral deposits such as the Gedabek Mineral Deposit.

This section describes the major aspects of the geology and structural geology of the Gedabek Mineral Deposit as an essential background and component for the subsequent mineral resources estimation process.

3.1 Geology

The Gedabek Mineral Deposit belongs to a structurally complex zone called Somkhit-Agdam (SRK, 2007). This zone is constituted by volcanics rocks of the Jurassic and dioritic to granitic intrusives rocks from the Jurassic to Tertiary. The volcanics rocks includes andesitic and dacitic lavas and volcaniclastic tuffs. The sequence of volcanic rocks are cuts by a set of faults that allowed emplacement of intrusives stocks such as the dacitic quartz porphyry of the Oligocene, which hosts the gold, copper and silver mineralisation.

The volcanics rocks, andesitic and dacitic lavas and volcaniclastic tuffs are grey to light-greenish grey colour, principally bedded, locally hornfelsed and propylitised are on top of the dacitic quartz porphyry. The dacitic quartz porphyry of light gray colour contains 5% to 20% quartz phenocrystals, which is variable altered and fractured with mineralised stockworks. In addition, a quartz diorite-granodiorite intrusive and its contact of a not mineralised skarn of garnet-vesuvianite-wollastonite is also located in the East of the dacitic quartz porphyry. The most important alteration in the Gedabek Mineral Deposits is the silicification located in the upper part of the dacitic quartz porphyry, which consists of a fine grained, vuggy silica, sericite, alunite, pyrite and clay minerals (SGS, 2010). These extrusive and intrusive igneous rocks and the silicification alteration were drilled, identified and logged during the previous and recent exploration drilling campaigns.

A petrography study from drillhole core and outcrops samples was carried out by SGS Lakefield Research Limited (Grammatikopoulos, ,Prout and Morton, 2010), confirming the mineralogical and textural characteristics of the extrusive and intrusive igneous rocks, which hosts the gold, copper and silver mineralisation.


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In regards to the economic mineralisation, the Gedabek Mineral Deposit exhibits many types of distinctive mineralogical and textural features identified during the different exploration drilling campaigns (SRK, 2007).

Currently, there is not a detailed understanding about the genesis of the Gedabek Mineral Deposit. However, due to the extensive analysis, interpretation and processing of the previous and recent source of geological and chemical information, the Gedabek Mineral Deposit has the main characteristics of a porphyry gold deposit (Robert, Poulsen and Dube, 1997). This statement is also supported by the geological cross sections showing the spatial distribution of the gold, copper and silver mineralisation by indicators in Figures 3.1, 3.2 and 3.3 respectively. The geological cross sections show that the mineralisation is located under or immediate geological contact between the tuff (andesitic and dacitic lavas and volcaniclastic tuffs) and the quartz porphyry (dacitic quartz porphyry). Additionally, the results of the exploration drilling campaigns indicated that the 79.80 % (237 out of 279) of the drillholes intercepted the economic mineralisation.

The gold, copper and silver mineralisation has been affected over time by a weathering process and an oxide zone has been identified and located in some upper part of the Gedabek Mineral Deposit. This process transformed and concentred the mineralogical and textural characteristics of the economic and non economic mineralisation. During the geological core logging process of the exploration drilling campaigns, these mineralogical and textural characteristics has been also identified, logged, coded and recorded.

The oxide, transition and sulphide mineralisation zones have been identified and mapped during the exploration and the open pit exploitation processes. These mineralisation zones have an important economic impact in the Gedabek Mining and Mineral Processing Operation. Currently, the gold, copper and silver mineralisation located in the oxide zones is being treated by heap leaching process. In the case of the sulphide mineralisation, a technical and financial analysis of mineral processing alternatives are being researched.

A precise and accurate estimation of the mineral resources in both oxide and sulphide mineralisation was required. The surface boundary of the oxide and sulphide mineralisation was spatially modelled by applying implicit modelling methodology. This surface boundary was also generated by combining the geological and chemical source of information of the up to date, integrated and validated drillhole database. The analysis, interpretation and processing of the information carried out for the generation of the surface boundary resulted in the following chemical criteria:

Oxide Mineralisation

S < 1 % Fe / S Ration ≥ 3


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Figure 3.1 - Geological Cross Sections [567,150 East] of the Lithological Contact [black colour

lines] and Spatial Distribution [blue color dots] of Gold Mineralization by Indicators

Percentile 95 % Au ≥ 5.310 g/t

Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


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lines] and Spatial Distribution [blue color dots] of Copper Mineralization by Indicators

Percentile 95 % Cu ≥ 1.123 %

Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


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lines] and Spatial Distribution [blue color dots] of Silver Mineralization by Indicators

Percentile 95 % Ag ≥ 42.832 g/t

Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


Quartz Porphyry

Tuff


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Sulphide Mineralisation

S ≥ 1 % Fe / S Ration < 3

Additional geological and chemical information is required for the generation of a reliable surface boundary of the oxide and sulphide mineralisation. However, the surface boundary generated is considered as the best source of information at this time period. The Figure 3.4 display the geological cross sections of the lithological contact between the tuff (andesitic and dacitic lavas and volcaniclastic tuffs) and the quartz porphyry (dacitic quartz porphyry). The same Figure 3.4 shows as well the mineralisation surface boundary between the oxide (top) and sulphide (bottom) zones.

3.2 Structural Geology

The Gedabek Mineral Deposit is located within a structural complex identified as Somkhit-Agdam zone (SRK, 2007) and several sets of faults have been identified and mapped during the exploration and the open pit exploitation processes. In fact, several faults were also recognised during the geological and structural geology interpretation of systematic cross sections of the exploration drilling campaigns. These mapped and interpreted sets of faults that cuts the sequence of extrusive and intrusive igneous rocks were grouped according to the following orientations:

NE 20° - 30° SW

NE 60° - 75° SW

NW 10° - 45° SE

NW 70° - 85° SE

The Figure 3.5 displays these four sets of faults that displaced the andesitic and dacitic lavas and volcaniclastic tuffs and also the dacitic quartz porphyry, which is mainly associated with the gold, copper and silver mineralisation.

Three structural domains have been defined and generated by taking into account the four sets of faults as is shown in Figure 3.6. These structural domains displaced the trend of the mineralisation and subsequently the orientation and inclination of it alos change. The main purpose of these structural domains consists in constraining the spatial estimation of the gold, copper and silver grades within the Gedabek Mineral Deposit.

A perspective view of the spatial modelling of the geology and structural geology of the Gedabek Mineral Deposit is shown in Figure 3.7. The spatial distribution of the exploration drilling campaigns, sets of faults and geological contact between the extrusive and intrusive igneous rocks are shown in Figure 3.7 as well.


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Figure 3.4 - Geological Cross Sections of the Lithological Contact [black colour lines] and Mineralisation Surface Boundary [red colour lines].

Quartz Porphyry

Tuff

567,000 East

Quartz Porphyry

Tuff

567,100 East

Quartz Porphyry

Tuff

567,200 East

Quartz Porphyry

Tuff

567,300 East

Quartz Porphyry

Tuff

567,400 East

Quartz Porphyry

Tuff

567,500 East

Quartz Porphyry

567,600 East


March 2012 23 | P a g e

Figure 3.5 - Location Map of the Mapped and Interpreted Faults Sets [red, orange, yellow and green colour lines].

Figure 3.6 - Location Map of the Mapped and Interpreted Faults Sets [red, orange, yellow and green colour lines], Exploration Drilling Campaigns [blue colour dots] and Structural

Domains [red, orange and yellow area].

NE 20° - 30° SW NE 60° - 75° SW

NW 10° - 45° SE NW 70° - 85° SE

Domain 1

Domain 3Domain 2


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Figure 3.7 - Northeast Perspective View of the Exploration Drilling Campaigns [white colour lines] and Spatial Modelling of the Sets of Faults [red, orange, yellow and green colours surfaces] and the Geological Contact [purple colour surface] between the Andesitic and

Dacitic Lavas, Volcaniclastic Tuffs and Dacitic Quartz Porphyry.


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Section 4 | Estimation

The objective of this section consists in describing the ordered sequence of stages that were applied for the spatial estimation of the gold, copper and silver grades of the mineralisation. The spatial estimation of the economic mineralisation was based on the source of information contained in the up to date, integrated and validated drillhole database. In addition, taking into consideration the geological and structural geology spatial modelling of the Gedabek Mineral Deposit.

4.1 Composites

The drillhole core intervals that intercepted the gold, copper and silver mineralisation of the Gedabek Mineral Deposit were sampled, prepared and assayed during the development of the Exploration Drilling Campaigns.

The descriptive statistics of the drillhole core intervals length integrated in the exploration drillhole database are shown in both the Table 4.1 and the box and Whisker diagram in Figure 4.1.

Table 4.1 - Descriptive Statistics of the Drillhole Core Intervals Length [m] by Exploration Drilling Campaigns

The univariate statistical analysis indicated that 99.40 % (21,435 out of 21,564) of the drillhole core intervals are less than or equal to 2 meters length. Based on the analysis, the information integrated in the drillhole database was composited to 2 meters interval length taking into account the lithological and mineralisation types. The number of composites computed were 12,476 and this subset of source of information was used in the subsequent stages of the spatial estimation process.

Other statistic computed was that 95.12 % (235 out of 247) of the drillholes composited with an interval length equal to 2 meters and gold grade greater than or equal to 0.3 g/t, intercepted the economic mineralisation.

Name

Samples Minimum Maximum Range Mean

First Second Third

GDDD's 3,580 0.10 0.50 1.00 2.00 4.80 4.70 1.20

GDRC's 2,864 0.10 1.00 1.00 1.00 2.50 2.40 1.10

GDRD's 4,687 0.05 1.00 1.50 2.00 4.00 3.95 1.42

SGSDD's 8,800 0.03 1.00 1.00 1.10 2.90 2.87 1.09

AIMCDD'S 1,633 0.10 1.00 1.00 1.00 2.00 1.90 0.91

Total 21,564 0.03 1.00 1.00 1.50 4.80 4.77 1.17

Quartile

Descriptive Statitistics


March 2012 26 | P a g e

This information is also supporting the hypothesis that the gold, copper and silver mineralisation is widely spread and disseminated along and below the geological contact between the andesitic and dacitic lavas and volcaniclastic tuffs and dacitic quartz porphyry.

4.2 Statistical Analysis

The bulk density measurement of the mineralisation were based on the water immersion method and they were done during the GDDD's and GDRD's exploration drilling campaigns, which are described in the report of SRK Consulting Incorporated (SRK, 2007). The descriptive statistics of the bulk density measurements are shown in Table 4.2 and the box and whisker diagram is displayed in Figure 4.2. The analysis demonstrated that there is not a significant difference between the median and the mean of the bulk density and the standard deviations and the variation coefficient are very small.

Table 4.2 - Descriptive Statistics of the Bulk Density [t/m3] by Lithology and Mineralisation Types

On other hand, the descriptive statistics of the gold, copper and silver grades from the drillhole composites and based on a cut-off grade of 0.3 g/t of gold by lithology and mineralisation types is described in Table 4.3. The Table 4.4 summarises the descriptive statistics by combining lithology and mineralisation types. The results of the analysis of this information highlighted that the average gold grade of the andesitic and dacitic lavas and volcaniclastic tuffs is 0.769 g/t greater than the dacitic quartz porphyry. Additionally, that the average gold grade of the oxide mineralisation is 0.878 g/t greater than the sulphide mineralisation.

The univariate statistics computed for the gold, copper and silver grades associated with the lithology and mineralisation types are graphically represented by the box and Whisker diagram in Figure 4.3. This information is demonstrating that the economic mineralisation is located up and below the geological contact between the andesitic and dacitic lavas and volcaniclastic tuffs and dacitic quartz porphyry.

Name

Samples Minimum Maximum Range Mean

First Second Third

Tuff 135 1.79 2.53 2.76 2.85 3.56 1.77 2.69

Porphyry 922 1.83 2.62 2.69 2.75 3.69 1.86 2.67

Oxide 261 1.79 2.43 2.62 2.75 3.39 1.61 2.57

Sulphide 796 1.90 2.65 2.71 2.76 3.69 1.79 2.71

Total 1,057 1.79 2.62 2.70 2.76 3.69 1.90 2.67

Descriptive Statitistics

Quartile


March 2012 27 | P a g e

Figure 4.1 - Box and Whisker Diagram of the Drillhole Core Intervals Length [m] by Exploration Drilling Campaigns

Figure 4.2 - Box and Whisker Diagram of the Bulk Density [t/m3] by Lithology and Mineralisation Types

GDDD's GDRC's GDRD's SGSDD's AIMCDD's Total0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

Dri

llho

le C

ore

Inte

rval

s Le

ngt

h [

m]

Tuff Quartz Porphyry Oxide Sulphide Total1.90

2.10

2.30

2.50

2.70

2.90

3.10

3.30

Bu

lk D

en

sity

[t/

m3

]


March 2012 28 | P a g e

Table 4.3 - Descriptive Statistics of the Drillhole Composites based on a Cut-Off Grade of 0.3 [g/t] of Gold by Lithology and Mineralisation Types

Element Composites Minimum Maximum Range Mean Standard Variation

First Second Third Deviation Coefficient

Au 336 0.300 0.440 0.824 2.298 46.560 46.260 2.413 4.726 1.959

Cu 336 0.004 0.029 0.110 0.239 2.991 2.987 0.204 0.316 1.547

Ag 336 0.250 2.695 7.034 17.625 195.633 195.383 14.879 22.524 1.514



Au 2,356 0.300 0.470 0.795 1.535 46.780 46.480 1.644 2.910 1.770

Cu 2,356 0.002 0.065 0.167 0.397 6.712 6.710 0.366 0.603 1.646

Ag 2,356 0.250 3.349 6.600 14.185 200.250 200.000 13.140 20.248 1.541



Au 870 0.300 0.460 0.840 2.100 46.560 46.260 2.334 4.399 1.885

Cu 870 0.003 0.044 0.127 0.255 3.971 3.969 0.233 0.365 1.568

Ag 870 0.250 3.500 8.035 19.300 200.250 200.000 17.530 27.485 1.568



Au 1,822 0.300 0.470 0.780 1.450 46.780 46.480 1.456 2.382 1.636

Cu 1,822 0.002 0.070 0.184 0.439 6.712 6.710 0.400 0.648 1.620

Ag 1,822 0.250 3.250 6.075 12.475 160.800 160.550 11.364 15.849 1.395



Au 2,692 0.300 0.465 0.800 1.611 46.780 46.480 1.740 3.203 1.841

Cu 2,692 0.002 0.060 0.161 0.379 6.712 6.710 0.346 0.578 1.669

Ag 2,692 0.250 3.293 6.600 14.404 200.250 200.000 13.357 20.554 1.539

Quartile


Quartile


Quartile

Andesitic and Dacitic Lavas and Volcaniclastic Tuffs

Quartile

Dacitic Quartz Porphyry

Quartile

Lithology and Mineralisation


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Table 4.4 - Descriptive Statistics of the Drillhole Composites based on a Cut-Off Grade of 0.3 [g/t] of Gold by Combining Lithology and Mineralisation Types



Au 310 0.300 0.441 0.843 2.391 46.560 46.260 2.503 4.887 1.953

Cu 310 0.004 0.028 0.103 0.226 2.991 2.987 0.197 0.312 1.581

Ag 310 0.250 2.600 6.858 17.711 195.633 195.383 15.003 22.968 1.531



Au 26 0.320 0.396 0.668 1.183 6.861 6.541 1.337 1.610 1.204

Cu 26 0.016 0.091 0.186 0.293 1.671 1.656 0.286 0.350 1.224

Ag 26 0.250 4.135 8.352 11.800 73.403 73.153 13.400 16.258 1.213



Au 336 0.300 0.440 0.824 2.298 46.560 46.260 2.413 4.726 1.959

Cu 336 0.004 0.029 0.110 0.239 2.991 2.987 0.204 0.316 1.547

Ag 336 0.250 2.695 7.034 17.625 195.633 195.383 14.879 22.524 1.514



Au 560 0.300 0.470 0.837 1.969 44.705 44.405 2.241 4.101 1.830

Cu 560 0.003 0.056 0.139 0.274 3.971 3.969 0.252 0.390 1.545

Ag 560 0.250 3.900 9.030 19.663 200.250 200.000 18.929 29.598 1.564



Au 1,796 0.300 0.472 0.782 1.450 46.780 46.480 1.457 2.391 1.641

Cu 1,796 0.002 0.070 0.184 0.442 6.712 6.710 0.402 0.651 1.621

Ag 1,796 0.250 3.249 6.050 12.514 160.800 160.550 11.335 15.841 1.398



Au 2,356 0.300 0.470 0.795 1.535 46.780 46.480 1.644 2.910 1.770

Cu 2,356 0.002 0.065 0.167 0.397 6.712 6.710 0.366 0.603 1.646

Ag 2,356 0.250 3.349 6.600 14.185 200.250 200.000 13.140 20.248 1.541

Quartile

Quartile



Mineralisation



Mineralisation

Andesitic and Dacitic Lavas and Volcaniclastic Tuffs

Quartile

Quartile

Quartile

Dacitic Quartz Porphyry

Quartile


March 2012 30 | P a g e

Figure 4.3 - Box and Whisker Diagram of the Gold [g/t], Copper [%] and Silver [g/t] Grades of the Drillhole Composites by Lithology and Mineralisation Types


1.00

2.00

3.00

4.00

5.00

6.00

Au

[g/

t]


0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

Cu

[%

]


5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

Ag

[g/t

]


March 2012 31 | P a g e

4.3 Geostatistical Analysis

The geostatistical analysis consisted in searching the spatial correlation of the bulk density and grades of the mineralisation within the Gedabek Mineral Deposit taking into account the information of the drillhole composites. Directional experimental variograms of the bulk density, gold, copper and silver were computed and modelled for each lithology and mineralisation types and constrained by the structural domains described in the Mineral Deposit Section.

The spatial correlation analysis of the bulk density based on the directional experimental variograms indicated that a pure nugget effect was identified in the horizontal plane. This plane was defined by taking into consideration the trend of the geological contact of the andesitic and dacitic lavas and volcaniclastic tuffs and dacitic quartz porphyry in each structural domain. An experimental spherical model in the vertical direction was identified, modelled and fitted in each structural domain. However, the parameters determined of the spherical model in the vertical direction were not enough to be considered in the estimation process.

In the case of the spatial correlation analysis of the gold, copper and silver grades of the mineralisation, directional experimental variograms were also constrained by isolated or combined structural domains, lithology and mineralisation types. In addition, by considering the trend of the geological and mineralisation contacts. This spatial analysis demonstrated that the structural domain 1 and 2 can be merged together and that the structural domain 3 must be estimated alone.

The parameters defined for the variograms models of the gold, copper and silver grades identified, modelled and fitted are described in the Table 4.5.

Table 4.5 - Parameters of the Variograms Modelled by Structural Domain

Parameters

Au Cu Ag Au Cu Ag

Variogram Model Spherical Spherical Spherical Spherical Spherical Spherical

First Angle 0 0 0 0 0 0

Second Angle -10 -10 -10 -15 -15 -15

Third Angle 0 0 0 0 0 0

First Axis Z Z Z Z Z Z Z

Second Axis X X X X X X

Third Angle Y Y Y Y Y Y

Nugget Effect 1.750 0.045 150.000 1.750 0.045 150.000

Range in X Direction 50 50 70 50 50 70

Range in Y Direction 50 50 70 50 50 70

Range in Z Direction 10 20 6 10 20 6

Sill 4.600 0.150 245.000 4.600 0.150 245.000

Element

Structural Domain 1 and 2

Element

Structural Domain 3


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4.4 Geological Database

The geological database of the Gedabek Mineral Deposit was constituted by a three dimensional block model without axis rotation. The block model consists of 4,950,724 blocks and sub-blocks, which were constrained by the original surface topography and the open pit surface topography dated on December 30th, 2011.

The limits of the block model and the block size defined were:

Model Limits Minimum East coordinate equal to 566,200 meters Maximum East coordinate equal to 568,800 meters Minimum North coordinate equal to 4,491,400 meters Maximum North coordinate equal to 4,493,600 meters Minimum Elevation equal to 1,200 meters Maximum Elevation equal to 1,900 meters

Block Size X direction equal to 10 meters Y direction equal to 10 meters Z direction equal to 2.5 meters

4.5 Interpolation

The ordinary kriging geostatistical algorithm was considered for the spatial interpolation of the gold, copper and silver grades of the mineralisation within the Gedabek Mineral Deposit. The interpolation was based on the style and type of the mineralisation and constrained by the trend of the geological contact between the andesitic and dacitic lavas and volcaniclastic tuffs and dacitic quartz porphyry. In addition, the estimation was controlled for the combined structural domains 1 and 3 and the isolated structural domain 3 as commented in the Geostatistical Analysis Section. A sensitivity analysis of the interpolation parameters was carried out during this estimation process to assess the impact of them in the spatial interpolation. A geological database constituted by the block model was generated with the following type of information:

Lithology and mineralization codes

Bulk density (t/m3)

Gold (g/t), copper (%) and silver (g/t) grades

Gold, copper and silver search volume codes


March 2012 33 | P a g e

In the case of the spatial distribution of the bulk density within the mineralisation, a constant value of 2.69 (t/m3) for the andesitic and dacitic lavas and volcaniclastic tuffs and 2.67 (t/m3) dacitic quartz porphyry were applied. It was due to a that this attribute was not interpolated because the lack of additional information of it.

4.6 Validation

An extensive validation process of the gold, copper and silver grades spatially estimated and integrated in the geological database was done by applying univariate and bivariate statistical analysis. Additionally, a visualisation process was also carried out, which consisted in reviewing in two and three dimension views and comparing the gold, copper and silver grades between the drillhole composites and blocks.

The descriptive statistics of the Table 4.6 is demonstrating that the information integrated in the geological database is acceptable for the estimation of the updated mineral resources of the Gedabek Mineral Deposit.

Table 4.6 - Descriptive Statistics of the Drillhole Composites and Blocks based on a Cut-Off Grade of 0.3 [g/t] of Gold

Element Composites Minimum Maximum Range Mean

Blocks First Second Third

Au-DDBC 3,186 0.300 0.466 0.825 1.660 64.480 64.180 1.882

Au-GDB 3,186 0.102 0.459 0.840 1.646 25.704 25.601 1.555

Cu-DDBC 3,186 0.002 0.060 0.163 0.369 5.591 5.589 0.335

Cu-GDB 3,186 0.003 0.078 0.169 0.368 2.934 2.930 0.289

Ag-DDBC 3,186 0.250 3.700 6.721 14.683 200.250 200.000 13.544

Ag-GDB 3,186 0.250 3.611 7.437 14.367 127.242 126.992 11.185

Quartile

Descriptive Statistics

DDBC - Drillhole Database Composited GDB - Geological Database


March 2012 34 | P a g e

Section 5 | Mineral Resources

The updated mineral resources of the Gedabek Mineral Deposit were spatially estimated by applying the ordinary kriging geostatistical algorithm. Additionally, by accessing the information of the up to date, integrated and validated drillhole database. The spatial estimation of the gold, copper and silver mineralisation was also based on the development of an ordered sequence of stages described in the previous Estimation Section.

The classification of these updated mineral resources of the Gedabek Mineral Deposit was in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The Joint Ore Reserves Committee, 2004).

This section reports the classification of the updated mineral resources of the gold, copper and silver mineralisation in the oxide, sulphide and combined zones. These updated mineral resources were constrained by the original surface topography and the open pit surface topography dated on December 30th, 2011.

5.1 Mineral Resources Classification Criteria

The mineral resources were classified by applying different criteria and essentially by taking into consideration the estimation attributes computed during the ordinary kriging geostatistical interpolation process. These estimation attributes were constrained based on the defined anisotropic range of the spatial correlation of the gold grades within the mineral deposit. This anisotropic range of the spatial correlation was defined in the geostatistical analysis of the estimation process.

The criteria applied in the classification of the updated mineral resources were also taking into consideration the sufficient experience and knowledge of the Competent Person relevant to the style of mineralisation and type of the Gedabek Mineral Deposit. These classification criteria of the updated measured, indicated and inferred mineral resources are described in the following sections.

5.1.1 Measured Mineral Resources

The measured mineral resources were classified specifically by taking into account the next criteria:

Anisotropic distance between the center of blocks and center of drillhole composite sample X direction less than or equal to 50 meters


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Y direction less than or equal to 50 meters Z direction less than or equal to 10 meters

Number of drillhole composite samples Minimum equal to 6 Maximum equal to 12

Number of octant

Minimum equal to 1

Number of drillhole composite samples per octant Minimum equal to 1 Maximum equal to 2

Number of drillhole composite samples per drillhole Maximum equal to 2

5.1.2 Indicated Mineral Resources

The indicated mineral resources were classified based on the next criteria:

Anisotropic distance between the center of blocks and center of drillhole composite sample X direction less than or equal to 100 meters Y direction less than or equal to 100 meters Z direction less than or equal to 20 meters

Number of drillhole composite samples Minimum equal to 4 Maximum equal to 12

Number of octant

Minimum equal to 1



5.1.3 Inferred Mineral Resources

The inferred mineral resources were classified according to the next criteria:

Anisotropic distance between the center of blocks and center of drillhole composite sample X direction less than or equal to 150 meters Y direction less than or equal to 150 meters Z direction less than or equal to 30 meters

Number of drillhole composite samples


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Minimum equal to 2 Maximum equal to 12

Number of octant

Minimum equal to 1



The Figures 5.1 and 5.2 are respectively the plan perspective view and cross sections of the classification criteria applied in the estimation of the updated measured, indicated and inferred mineral resources of the Gedabek Mineral Deposit.

5.2 Mineral Resources of the Oxide Mineralisation

The updated measured, indicated and inferred mineral resources specifically of the oxide mineralisation is described in Table 5.4. This table also describes the quantity (tonnage), quality (average grades) and metal content (ounces and tonnage) for different cut-off of gold grades. The purpose of this table consists in providing a much better understanding of the sensitivity of the mineral resources in the oxide mineralisation.

The Table 5.1 summarises the classification of the mineral resources of the oxide mineralisation based on a cut-off grade of 0.3 g/t of gold. This table was created for comparison purposes with the previous mineral resources estimations done by SRK Consulting Incorporated (SRK, 2007) and SGS Canada Incorporated (SGS, 2010).

Table 5.1 - Mineral Resources of the Oxide Mineralisation based on a Cut-Off Grade of 0.3 [g/t] of Gold

5.3 Mineral Resources of the Sulphide Mineralisation

The quantity (tonnage), quality (average grades) and metal content (ounces and tonnage) of the classified mineral resources of the sulphide mineralisation based on different cut-off of gold grades are shown in Table 5.5.


Au Cu Ag Au Cu Ag

t g/t % g/t Oz t Oz

Measured 6,561,562 1.051 0.184 8.957 221,718 12,073 1,889,561

Indicated 6,877,499 0.851 0.241 8.139 188,170 16,575 1,799,669

Measured and Indicated 13,439,060 0.949 0.213 8.538 409,888 28,648 3,689,230

Inferred 4,666,845 0.842 0.209 8.326 126,336 9,754 1,249,254

ProductsGrades


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Figure 5.1 - Plan Perspective View of the Updated Measured [red colour area], Indicated [orange colour area] and Inferred [yellow colour area] Mineral Resources of the Gedabek

Mineral Deposit

Figure 5.2 - Cross Sections of the Updated Measured [red colour area], Indicated [orange colour area] and Inferred [yellow colour area] Mineral Resources of the Gedabek Mineral

Deposit

Quartz Porphyry

Tuff

567,250 East

Quartz Porphyry

4,492,450 North

Quartz Porphyry

Tuff

4,492,125 North


March 2012 38 | P a g e

The classification of the mineral resources of the sulphide mineralisation by taking into account a cut-off grade of 0.3 g/t of gold is shown in Table 5.2 and for comparison reasons with the previous mineral resources estimations done in 2007 and 2010.

Table 5.2 - Mineral Resources of the Sulphide Mineralisation based on a Cut-Off Grade of 0.3 g/t of Gold

5.4 Mineral Resources of the Mineralisation

The classified and updated mineral resources estimation of the oxide and sulphide mineralisation together are shown in Table 5.6. This table also describes the quantity (tonnage), quality (average grades) and metal content (ounces and tonnage) for different cut-off of gold grades.

The Table 5.3 shows the classification of the mineral resources of the oxide and sulphide mineralisation together based on a cut-off grade of 0.3 g/t of gold. This table was also generated for comparison with the previous mineral resources estimations done by SRK Consulting Incorporated (SRK, 2007) and SGS Canada Incorporated (SGS, 2010).

Table 5.3 - Mineral Resources of the Mineralisation based on a Cut-Off Grade of 0.3 g/t of Gold

The tonnage-cut-off grade-average grade plots of the measured, indicated, inferred and total mineral resources by type of mineralisation are shown respectively in Figures 5.3, 5.4, 5,5 and 5.6. These plots display the sensitivity of the quantity (tonnage) and quality (average grades) of the updated mineral resources based on different cut-off of gold grades.


Au Cu Ag Au Cu Ag

t g/t % g/t Oz t Oz

Measured 15,788,000 1.019 0.285 7.955 517,240 44,996 4,037,926

Indicated 7,884,516 0.502 0.103 3.477 127,254 8,121 881,395

Measured and Indicated 23,672,516 0.847 0.224 6.464 644,494 53,117 4,919,322

Inferred 6,360,557 0.468 0.053 2.190 95,704 3,371 447,848

Grades Products


Au Cu Ag Au Cu Ag

t g/t % g/t Oz t Oz

Measured 22,349,562 1.028 0.255 8.249 738,958 57,069 5,927,487

Indicated 14,762,015 0.665 0.167 5.649 315,424 24,696 2,681,064

Measured and Indicated 37,111,577 0.884 0.220 7.215 1,054,382 81,765 8,608,551

Inferred 11,027,402 0.626 0.119 4.787 222,040 13,125 1,697,102

Grades Products


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Table 5.4 - Mineral Resources of the Oxide Mineralisation

Cut-Off

Grade Tonnage Tonnage Tonnage

Au Au Cu Ag Au Cu Ag Au Cu Ag

g/t t g/t % g/t t g/t % g/t t g/t % g/t

0.00 30,963,000 0.286 0.072 3.153 58,814,000 0.152 0.065 1.838 45,048,000 0.132 0.054 1.835

0.10 13,819,000 0.593 0.126 5.781 16,255,000 0.460 0.152 4.693 10,264,000 0.478 0.140 4.831

0.20 9,042,991 0.830 0.158 7.483 9,801,951 0.670 0.199 6.542 6,384,070 0.682 0.175 6.750

0.30 6,561,562 1.051 0.184 8.957 6,877,499 0.851 0.241 8.139 4,666,845 0.842 0.209 8.326

0.40 5,086,609 1.255 0.205 10.111 5,110,415 1.026 0.281 9.700 3,467,697 1.015 0.242 10.083

0.50 4,123,398 1.444 0.219 11.024 4,065,385 1.175 0.321 10.760 2,895,443 1.126 0.264 11.177

0.60 3,361,188 1.647 0.233 11.942 3,401,487 1.297 0.345 11.731 2,423,624 1.239 0.292 12.535

0.70 2,844,846 1.829 0.241 12.720 2,811,714 1.433 0.379 12.857 2,041,076 1.350 0.313 13.785

0.80 2,377,204 2.041 0.251 13.578 2,313,186 1.580 0.419 13.972 1,640,776 1.499 0.339 15.207

0.90 2,029,399 2.246 0.261 14.368 1,970,784 1.707 0.456 15.022 1,426,194 1.595 0.352 16.084

1.00 1,745,118 2.457 0.268 15.126 1,725,408 1.815 0.481 15.871 1,286,956 1.665 0.366 16.878

1.10 1,523,529 2.662 0.275 15.843 1,430,658 1.973 0.502 16.960 1,133,522 1.748 0.373 17.554

1.20 1,343,012 2.866 0.283 16.532 1,232,817 2.106 0.499 17.862 982,842 1.838 0.378 18.363

1.30 1,199,610 3.059 0.292 17.248 1,049,270 2.254 0.471 18.769 729,407 2.036 0.359 19.411

1.40 1,083,740 3.242 0.295 17.941 934,522 2.365 0.485 19.751 624,252 2.153 0.375 20.784

1.50 986,548 3.419 0.300 18.535 802,701 2.515 0.520 21.241 521,394 2.292 0.401 22.232

1.60 910,461 3.575 0.302 19.008 731,752 2.611 0.540 21.917 449,800 2.412 0.424 23.606

1.70 844,089 3.727 0.303 19.445 671,384 2.698 0.556 22.748 257,853 2.976 0.560 30.176

1.80 784,600 3.877 0.308 19.955 607,043 2.799 0.577 23.560 246,554 3.033 0.573 30.816

1.90 722,896 4.050 0.309 20.434 557,527 2.884 0.592 24.013 229,559 3.122 0.581 31.775

2.00 672,369 4.207 0.313 20.974 509,926 2.972 0.616 24.883 226,869 3.137 0.582 31.711

IndicatedMeasured

Grades Grades


Inferred

Grades

Cut-Off


g/t Oz t Oz Oz t Oz Oz t Oz

0.00 284,708 22,293 3,138,760 287,419 38,229 3,475,500 191,179 24,326 2,657,680

0.10 263,465 17,412 2,568,447 240,401 24,708 2,452,611 157,738 14,370 1,594,207

0.20 241,313 14,288 2,175,599 211,144 19,506 2,061,646 139,982 11,172 1,385,455

0.30 221,718 12,073 1,889,561 188,170 16,575 1,799,669 126,336 9,754 1,249,254

0.40 205,241 10,428 1,653,535 168,576 14,360 1,593,745 113,161 8,392 1,124,144

0.50 191,432 9,030 1,461,455 153,579 13,050 1,406,388 104,820 7,644 1,040,474

0.60 177,983 7,832 1,290,509 141,840 11,735 1,282,906 96,544 7,077 976,744

0.70 167,288 6,856 1,163,421 129,541 10,656 1,162,256 88,590 6,389 904,601

0.80 155,991 5,967 1,037,751 117,506 9,692 1,039,107 79,076 5,562 802,202

0.90 146,544 5,297 937,465 108,159 8,987 951,827 73,136 5,020 737,503

1.00 137,855 4,677 848,672 100,684 8,299 880,415 68,892 4,710 698,354

1.10 130,392 4,190 776,031 90,752 7,182 780,104 63,703 4,228 639,730

1.20 123,751 3,801 713,833 83,473 6,152 707,978 58,079 3,715 580,255

1.30 117,981 3,503 665,227 76,038 4,942 633,169 47,746 2,619 455,207

1.40 112,961 3,197 625,119 71,058 4,532 593,430 43,211 2,341 417,139

1.50 108,445 2,960 587,898 64,906 4,174 548,175 38,421 2,091 372,679

1.60 104,647 2,750 556,402 61,427 3,951 515,627 34,881 1,907 341,376

1.70 101,144 2,558 527,700 58,238 3,733 491,027 24,672 1,444 250,164

1.80 97,799 2,417 503,374 54,628 3,503 459,818 24,042 1,413 244,275

1.90 94,129 2,234 474,919 51,695 3,301 430,431 23,042 1,334 234,515

2.00 90,943 2,105 453,398 48,724 3,141 407,944 22,881 1,320 231,300


Measured Indicated Inferred


March 2012 40 | P a g e

Table 5.5 - Mineral Resources of the Sulphide Mineralisation

Cut-Off




0.00 65,017,000 0.317 0.136 2.580 114,580,000 0.108 0.048 0.838 80,388,000 0.110 0.034 0.835

0.10 32,689,000 0.582 0.196 4.649 36,549,000 0.241 0.071 1.672 25,805,000 0.247 0.052 1.465

0.20 21,147,000 0.823 0.244 6.502 15,886,000 0.374 0.086 2.541 12,612,000 0.360 0.058 1.931

0.30 15,788,000 1.019 0.285 7.955 7,884,516 0.502 0.103 3.477 6,360,557 0.468 0.053 2.190

0.40 12,726,000 1.181 0.319 9.143 4,093,148 0.646 0.129 4.326 3,069,926 0.595 0.053 1.953

0.50 10,516,000 1.335 0.353 10.249 2,319,228 0.804 0.159 5.444 1,568,348 0.742 0.044 1.542

0.60 8,881,298 1.480 0.383 11.264 1,333,619 0.999 0.214 7.394 863,811 0.911 0.047 1.685

0.70 7,580,881 1.622 0.410 12.178 914,635 1.162 0.263 9.184 661,313 0.995 0.051 1.652

0.80 6,525,206 1.764 0.435 13.037 630,535 1.347 0.330 11.734 540,891 1.043 0.057 1.835

0.90 5,670,319 1.902 0.457 13.850 493,937 1.483 0.352 13.012 538,873 1.043 0.057 1.837

1.00 4,985,200 2.033 0.478 14.632 356,495 1.692 0.412 15.889 479,671 1.055 0.061 1.951

1.10 4,362,067 2.173 0.495 15.422 292,506 1.833 0.416 16.831 2,691 1.117 0.027 0.815

1.20 3,862,832 2.306 0.512 16.149 257,691 1.926 0.414 17.421 0 0.000 0.000 0.000

1.30 3,434,666 2.437 0.527 16.822 222,964 2.033 0.405 18.208 0 0.000 0.000 0.000

1.40 3,072,703 2.566 0.538 17.483 184,030 2.178 0.397 19.347 0 0.000 0.000 0.000

1.50 2,751,702 2.696 0.543 18.028 163,686 2.269 0.401 20.345 0 0.000 0.000 0.000

1.60 2,472,444 2.826 0.549 18.602 145,017 2.361 0.405 21.107 0 0.000 0.000 0.000

1.70 2,236,528 2.950 0.556 19.198 131,562 2.435 0.399 21.902 0 0.000 0.000 0.000

1.80 2,009,442 3.086 0.560 19.769 113,398 2.548 0.343 21.695 0 0.000 0.000 0.000

1.90 1,809,899 3.222 0.563 20.313 100,994 2.634 0.336 22.062 0 0.000 0.000 0.000

2.00 1,619,570 3.371 0.563 20.852 87,750 2.737 0.342 23.543 0 0.000 0.000 0.000

Measured Indicated

Grades Grades


Inferred

Grades

Cut-Off



0.00 662,639 88,423 5,393,090 397,854 54,998 3,087,052 284,299 27,332 2,158,086

0.10 611,668 64,070 4,885,986 283,194 25,950 1,964,730 204,924 13,419 1,215,437

0.20 559,551 51,599 4,420,657 191,019 13,662 1,297,808 145,975 7,315 782,992

0.30 517,240 44,996 4,037,926 127,254 8,121 881,395 95,704 3,371 447,848

0.40 483,207 40,596 3,740,862 85,012 5,280 569,292 58,727 1,627 192,762

0.50 451,360 37,121 3,465,159 59,950 3,688 405,931 37,414 690 77,753

0.60 422,600 34,015 3,216,327 42,834 2,854 317,031 25,300 406 46,796

0.70 395,332 31,082 2,968,156 34,170 2,405 270,066 21,155 337 35,124

0.80 370,070 28,385 2,735,035 27,307 2,081 237,873 18,138 308 31,911

0.90 346,744 25,913 2,524,924 23,551 1,739 206,636 18,070 307 31,826

1.00 325,845 23,829 2,345,186 19,393 1,469 182,113 16,270 293 30,088

1.10 304,750 21,592 2,162,839 17,238 1,217 158,283 97 1 71

1.20 286,389 19,778 2,005,592 15,957 1,067 144,332 0 0 0

1.30 269,111 18,101 1,857,604 14,573 903 130,523 0 0 0

1.40 253,494 16,531 1,727,140 12,887 731 114,471 0 0 0

1.50 238,513 14,942 1,594,924 11,941 656 107,068 0 0 0

1.60 224,641 13,574 1,478,690 11,008 587 98,409 0 0 0

1.70 212,123 12,435 1,380,452 10,300 525 92,641 0 0 0

1.80 199,371 11,253 1,277,177 9,290 389 79,096 0 0 0

1.90 187,487 10,190 1,182,006 8,553 339 71,636 0 0 0

2.00 175,529 9,118 1,085,771 7,722 300 66,420 0 0 0




March 2012 41 | P a g e

Table 5.6 - Mineral Resources of the Mineralisation

Cut-Off




0.00 95,980,000 0.307 0.115 2.765 173,394,000 0.123 0.054 1.177 125,436,000 0.118 0.041 1.194

0.10 46,508,000 0.585 0.175 4.985 52,804,000 0.308 0.096 2.602 36,069,000 0.313 0.077 2.423

0.20 30,189,991 0.825 0.218 6.796 25,687,951 0.487 0.129 4.068 18,996,070 0.468 0.097 3.551

0.30 22,349,562 1.028 0.255 8.249 14,762,015 0.665 0.167 5.649 11,027,402 0.626 0.119 4.787

0.40 17,812,609 1.202 0.286 9.419 9,203,562 0.857 0.213 7.310 6,537,623 0.818 0.153 6.265

0.50 14,639,398 1.366 0.315 10.467 6,384,613 1.040 0.262 8.829 4,463,791 0.991 0.187 7.792

0.60 12,242,486 1.526 0.342 11.450 4,735,107 1.213 0.308 10.510 3,287,435 1.153 0.228 9.684

0.70 10,425,727 1.678 0.364 12.326 3,726,349 1.366 0.351 11.955 2,702,390 1.263 0.249 10.816

0.80 8,902,410 1.838 0.386 13.181 2,943,721 1.530 0.400 13.493 2,181,667 1.386 0.269 11.892

0.90 7,699,719 1.993 0.405 13.987 2,464,721 1.662 0.435 14.619 1,965,067 1.444 0.271 12.177

1.00 6,730,318 2.143 0.424 14.760 2,081,903 1.794 0.469 15.874 1,766,627 1.499 0.283 12.825

1.10 5,885,596 2.300 0.438 15.531 1,723,164 1.949 0.487 16.938 1,136,213 1.747 0.372 17.514

1.20 5,205,845 2.450 0.453 16.248 1,490,508 2.075 0.484 17.786 982,842 1.838 0.378 18.363

1.30 4,634,276 2.598 0.466 16.932 1,272,234 2.215 0.459 18.671 729,407 2.036 0.359 19.411

1.40 4,156,443 2.742 0.475 17.602 1,118,552 2.334 0.471 19.685 624,252 2.153 0.375 20.784

1.50 3,738,250 2.887 0.479 18.162 966,386 2.473 0.500 21.089 521,394 2.292 0.401 22.232

1.60 3,382,905 3.028 0.483 18.711 876,769 2.570 0.518 21.783 449,800 2.412 0.424 23.606

1.70 3,080,616 3.163 0.487 19.266 802,946 2.655 0.530 22.609 257,853 2.976 0.560 30.176

1.80 2,794,041 3.308 0.489 19.821 720,440 2.759 0.540 23.266 246,554 3.033 0.573 30.816

1.90 2,532,795 3.458 0.491 20.348 658,521 2.846 0.553 23.714 229,559 3.122 0.581 31.775

2.00 2,291,938 3.616 0.490 20.888 597,676 2.937 0.576 24.686 226,869 3.137 0.582 31.711

Measured Indicated

Grades Grades

Mineralisation

Inferred

Grades

Cut-Off



0.00 947,348 110,716 8,531,850 685,273 93,228 6,562,552 475,478 51,658 4,815,766

0.10 875,133 81,482 7,454,434 523,594 50,657 4,417,340 362,661 27,788 2,809,644

0.20 800,864 65,887 6,596,256 402,163 33,168 3,359,454 285,957 18,487 2,168,447

0.30 738,958 57,069 5,927,487 315,424 24,696 2,681,064 222,040 13,125 1,697,102

0.40 688,447 51,023 5,394,397 253,588 19,640 2,163,037 171,888 10,019 1,316,906

0.50 642,791 46,152 4,926,614 213,529 16,737 1,812,319 142,234 8,334 1,118,227

0.60 600,582 41,847 4,506,835 184,674 14,589 1,599,938 121,845 7,483 1,023,540

0.70 562,619 37,938 4,131,577 163,711 13,062 1,432,323 109,745 6,726 939,725

0.80 526,061 34,351 3,772,787 144,812 11,773 1,276,980 97,213 5,871 834,113

0.90 493,288 31,210 3,462,389 131,710 10,725 1,158,463 91,206 5,327 769,329

1.00 463,699 28,506 3,193,858 120,077 9,768 1,062,527 85,162 5,003 728,442

1.10 435,141 25,782 2,938,870 107,990 8,399 938,388 63,800 4,229 639,801

1.20 410,139 23,578 2,719,424 99,430 7,219 852,310 58,079 3,715 580,255

1.30 387,091 21,604 2,522,831 90,612 5,845 763,692 47,746 2,619 455,207

1.40 366,455 19,728 2,352,259 83,944 5,263 707,901 43,211 2,341 417,139

1.50 346,958 17,901 2,182,822 76,847 4,830 655,243 38,421 2,091 372,679

1.60 329,289 16,323 2,035,092 72,435 4,539 614,037 34,881 1,907 341,376

1.70 313,266 14,993 1,908,152 68,537 4,258 583,668 24,672 1,444 250,164

1.80 297,170 13,669 1,780,551 63,917 3,892 538,914 24,042 1,413 244,275

1.90 281,616 12,423 1,656,925 60,248 3,640 502,067 23,042 1,334 234,515

2.00 266,473 11,223 1,539,170 56,446 3,441 474,364 22,881 1,320 231,300


Mineralisation


March 2012 42 | P a g e

Figure 5.3 - Tonnage-Cut-Off Grade-Average Grade Plots of the Updated Measured Mineral

Resources by Type of Mineralisation.

0.01

0.10

1.00

10.00

100.00

0

20

40

60

80

100

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00

Cut-Off Grade Au [g/t]

Avera

ge G

rad

e A

u [

g/t

], C

u [

%] an

d A

g [

g/t

]

To

nn

ag

e [

t]

Mil

lio

ns

Oxide MineralisationMeasured Mineral Resources

Tonnage Au Cu Ag

0.10

1.00

10.00

100.00

0

25

50

75

100

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00


Avera

ge G

rad

e A

u [

g/t

], C

u [

%]

an

d A

g [

g/t

]

To

nn

ag

e [

t]

Mil

lio

ns

Sulphide MineralisationMeasured Mineral Resources

Tonnage Au Cu Ag

0.10

1.00

10.00

100.00

0

25

50

75

100

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00


Avera

ge G

rad

e A

u [

g/t

], C

u [

%] an

d A

g [

g/t

]

To

nn

ag

e [

t]

Mil

lio

ns

MineralisationMeasured Mineral Resources

Tonnage Au Cu Ag


March 2012 43 | P a g e

Figure 5.4 - Tonnage-Cut-Off Grade-Average Grade Plots of the Updated Indicated Mineral Resources by Type of Mineralisation.

0.01

0.10

1.00

10.00

100.00

0

50

100

150

200

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00


Avera

ge G

rad

e A

u [

g/t

], C

u [

%] an

d A

g [

g/t

]

To

nn

ag

e [

t]

Mil

lio

ns

Oxide MineralisationIndicated Mineral Resources

Tonnage Au Cu Ag

0.01

0.10

1.00

10.00

100.00

0

50

100

150

200

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00


Avera

ge G

rad

e A

u [

g/t

], C

u [

%] an

d A

g [

g/t

]

To

nn

ag

e [

t]

Mil

lio

ns

Sulphide MineralisationIndicated Mineral Resources

Tonnage Au Cu Ag

0.01

0.10

1.00

10.00

100.00

0

50

100

150

200

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00


Avera

ge G

rad

e A

u [

g/t

], C

u [

%] an

d A

g [

g/t

]

To

nn

ag

e [

t]

Mil

lio

ns

MineralisationIndicated Mineral Resources

Tonnage Au Cu Ag


March 2012 44 | P a g e

Figure 5.5 - Tonnage-Cut-Off Grade-Average Grade Plots of the Updated Inferred Mineral Resources by Type of Mineralisation.

0.01

0.10

1.00

10.00

100.00

0

35

70

105

140

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00


Avera

ge G

rad

e A

u [

g/t

], C

u [

%] an

d A

g [

g/t

]

To

nn

ag

e [

t]

Mil

lio

ns

Oxide MineralisationInferred Mineral Resources

Tonnage Au Cu Ag

0.01

0.10

1.00

10.00

100.00

0

35

70

105

140

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00


Avera

ge G

rad

e A

u [

g/t

], C

u [

%] an

d A

g [

g/t

]

To

nn

ag

e [

t]

Mil

lio

ns

Sulphide MineralisationInferred Mineral Resources

Tonnage Au Cu Ag

0.01

0.10

1.00

10.00

100.00

0

35

70

105

140

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00


Avera

ge G

rad

e A

u [

g/t

], C

u [

%] an

d A

g [

g/t

]

To

nn

ag

e [

t]

Mil

lio

ns

MineralisationInferred Mineral Resources

Tonnage Au Cu Ag


March 2012 45 | P a g e

Figure 5.6 - Tonnage-Cut-Off Grade-Average Grade Plots of the Updated Measured, Indicated and Inferred Mineral Resources by Type of Mineralisation.

0.01

0.10

1.00

10.00

100.00

0

100

200

300

400

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00


Avera

ge G

rad

e A

u [

g/t

], C

u [

%] an

d A

g [

g/t

]

To

nn

ag

e [

t]

Mil

lio

ns

Oxide MineralisationMeasured, Indicated and Inferred Mineral Resources

Tonnage Au Cu Ag

0.01

0.10

1.00

10.00

100.00

0

100

200

300

400

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00


Avera

ge G

rad

e A

u [

g/t

], C

u [

%] an

d A

g [

g/t

]

To

nn

ag

e [

t]

Mil

lio

ns

Sulphide MineralisationMeasured, Indicated and Inferred Mineral Resources

Tonnage Au Cu Ag

0.01

0.10

1.00

10.00

100.00

0

100

200

300

400

0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 2.00


Avera

ge G

rad

e A

u [

g/t

], C

u [

%] an

d A

g [

g/t

]

To

nn

ag

e [

t]

Mil

lio

ns

MineralisationMeasured, Indicated and Inferred Mineral Resources

Tonnage Au Cu Ag


March 2012 46 | P a g e

Section 6 | Recommendations

CAE Mining recommends that the Azerbaijan International Mining Company Limited continue in the implementation and improvement of the best practices in the exploration and estimation processes of the Gedabek Mineral Deposit. Additionally, the development and implementation of several activities are recommended that will contribute in:

Understanding the geological and structural geology settings of the deposit

Enhancing the mineral resources estimation process of the deposit

The recommended activities are described as follow:

Development and implementation of an inclined exploration drilling campaign, which objective will consist in the:

Confirmation of the presence of feeder zones of the mineralisation Confirmation of the presence and measurement of the direction and inclination

of the interpreted faults sets Determination of the true thickness of the mineralisation

Development and implementation of continue petrological, mineralogical and textural studies from exploration drillhole core samples. Where, these samples should be statistically representatives and spatially unbiased of the different lithological, alteration and mineralisation zones. These studies will provide information for several purposes, such as:

Definition of the geological setting of the deposit Identification of mineral exploration guidelines Generation of lithological, alteration and mineralisation libraries required for

standardising the geological drillhole core logging, coding and recording processes

Identification of the abundance of magnetic minerals and assessing their impact in the measurements of the downhole surveying of the exploration drilling campaigns based on the Reflex EZ-Trac instrument

Identification of mineralogical and textural characteristics of the deposit that could impact in the mineral processing performance and the environment

Development and implementation of continue and systematic measurements of the bulk density from exploration drillhole core of the different lithological, alteration and mineralisation zones. These measurements will contribute in a precise and accurate estimation of the quantity (tonnage) of the mineral resources


March 2012 47 | P a g e

Implementation of drillhole core cutting saw- equipments principally for safety reasons and for obtaining representative drillhole split equally core samples of the mineralisation

Development and implementation of continue and systematic submissions of a specific percentage of previous exploration drillhole core samples prepared and assayed to another certified laboratory. This activity is an essential component of the quality assurance and quality control processes and to confirm the results of chemical analysis used for the mineral resources estimation process

Development and implementation of continue and systematic quality assurance and quality control activities particularly for the verification and validation of the information from the exploration drilling campaigns regarding to the:

Drillhole coordinates and elevation surveyed, computed and recorded Drillhole core recovered, handled, photographed, weighted and stored Downhole measurements surveyed and recorded Geological drillhole core logged, coded and recorded Bulk density measurements computed and recorded Drillhole split equally core sampled, weighted and recorded Drillhole core samples prepared, shipped, assayed and recorded Drillhole database integrated, validated and recorded

Development and implementation of continue and systematic validations, analysis, interpretation and processing of the geological, structural geology and chemical information integrated and validated drillhole database. The purpose of this activity will consist in increasing the level of geological knowledge and confidence of the estimation of the mineral resources of the Gedabek Mineral Deposit


March 2012 48 | P a g e

Section 7 | References

Cukor, D., 2010, Technical Report, Resource Estimation Report, Gedabek Gold Deposit, Azerbaijan, SGS Canada Incorporated, Geostat Exploration Group, 54 p.

Grammatikopoulos, T., Prout, S. and Morton, N., 2010, Mineralogical Characterization of 28 Drill Core Samples from the Gedabek Mineral Deposit, Azerbaijan, SGS Lakefield Research Limited, Advanced Mineralogy Facility, 69 p.

Robert, F., Poulsen, K. H. and Dube, B. 1997, Gold Deposits and Their Geological Classification. Procedding of Exploration 97: Fourth Decennial International Conference on Mineral Exploration. p. 209-220.

SRK Consulting (US) Incorporated, 2007, Resource Report, Azerbaijan Properties and Gedabek Deposit.

The Joint Ore Reserves Committee, 2004, The JORC Code, Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Mineral Council of Australia, 2004 Edition, 20 p.


March 2012 49 | P a g e

Section 8 | Competence and Responsibility

The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Guillermo Turner-Saad, who is a Fellow of The Australasian Institute of Mining and Metallurgy.

Guillermo Turner-Saad is a full-time employee of the company CAE Mining and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Guillermo Turner-Saad consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Guillermo Turner-Saad Executive Geometallurgical Consultant CAE Mining

Competent Person and Fellow of The Australasian Institute of Mining and Metallurgy Membership 225310

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