Independent Technical Report of the Pakrut Gold Project in Vahdat Region, Republic of Tajikistan

Report Prepared for

Kryso Resources plc

Prepared by

SHK161

June 2013

SRK Consulting China Ltd Independent Technical Report – Pakrut Gold Project Page i

Independent Technical Report of the Pakrut Gold Project in Vahdat Region, Republic of Tajikistan

Kryso Resources plc

Akara Building 24 De Castro Street Wickhams, Cay I Road Town, Tortola British Virgin Islands

SRK Consulting China Limited B1205, COFCO Plaza No. 8 Jianguomennei Dajie Dongcheng District Beijing, 100005, China Telephone No: +86 10 6511 1000

Dr Anshun Xu, [email protected] SHK161

June 2013

Signed by CP:

Dr Anson Xu, FAusIMM Principal Consultant (Geology)

Authors: Hong Gao, Qiuji Huang, Andrew Lewis, Richard Kosacz, Dr Yuanhai Li, Yonggang Wu, Pengfei Xiao and Dr Anson Xu

Peer Reviewers: Dr Yonglian Sun, Romeo Ayoub and Mike Warren

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Executive Summary

Kryso Resources plc (“Kryso”) commissioned SRK Consulting China Limited (“SRK”) to undertake a technical review of the Pakrut Gold Project (“Pakrut Project” or the “Project”) operations located in Vahdat Region, Republic of Tajikistan. SRK was required to provide an Independent Technical Report (“ITR” or “Report”) for the shareholders and potential investors so that they may review the Project and for inclusion in a prospectus, offering circular, web proof information package and/or circular to shareholders in relation to a proposed new listing of Kryso Resources Corporation Limited on the Main Board of the Stock Exchange of Hong Kong Limited (“HKEx”).

Summary of Principal Objectives

The objective of this Report is to provide shareholders of Kryso and the HKEx with an ITR of the Project. Kryso intends to include this ITR with documents it plans to submit to the HKEx.

Outline of Work Program

The work program involved four phases:

 Phase 1: After reviewing the provided information, SRK conducted a site visit to the Pakrut Project in Vahdat Region, Republic of Tajikistan in August 2011, where they conducted a data verification program and re-estimated the mineral resources of the Project;  Phase 2: SRK’s technical team conducted a second site visit in November 2011, held discussions with Kryso’s technical staff and collected and reviewed technical documents;  Phase 3: SRK analysed the provided data, wrote a draft report, reviewed additional data and finalised the report; and  Phase 4: SRK re-visited the project site from 3 - 8 November 2012; SRK updated the report based on new exploration and mine construction.

Results

Overall

Kryso holds an exploration permit for the Pakrut Project and obtained a mining licence for the Pakrut and Eastern Pakrut projects. Previous exploration work discovered several gold mineralization zones within the permit area and defined mineral resources in the Project area. Having carried out a data verification program, SRK estimated that eight (8) mineralized zones of the Pakrut Gold project currently contain resources of about 18.57 million tonnes (“Mt”) of Measured Resource averaging 3.16 grams per tonne (“g/t”) of gold, approximately 10.02 Mt of Indicated Resource averaging 2.05 g/t of gold and about 41,19 Mt of Inferred Resource averaging 1.64 g/t of gold, at a cut-off grade of 0.5 g/t of gold. The Resource estimate is considered by SRK to comply with Joint Ore Reserves Committee (“JORC”) Code (2004). More exploration has recently been conducted in the Project area and the latest resource estimate dated 28 February 2013 is based on the data dated 30 November 2012 as provided by Kryso.

At a gold cut-off of 1.0 g/t, the JORC Code compliant Proved Ore Reserves were estimated at 15,721 thousand tonnes (“kt”) averaging 3.1 g/t of gold. The JORC Code compliant Probable Ore Reserves were estimated at 2,787 kt averaging 2.5 g/t of gold.

A feasibility study (“FS”) has been carried out by Beijing General Research Institute of Mining and Metallurgy (“BGRIMM”) on developing the resources of Ore Bearing Zones 1 and 3 and construction is in progress on the underground mine and the associated ore processing plant. The FS proposed an operation mining 4,000 tonnes per day (“tpd”) or 1.32 million tonnes per annum

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(“Mtpa”) of ore in two phases. Phase I is expected to achieve 2,000 tpd production by April 2014 and Phase II is designed to reach 4,000 tpd by December 2016. Mine development is planned for the joint application of a ramp and auxiliary shaft system, where the height between two adjacent levels’ bottoms is 60m. The two main mining methods proposed are upward horizontal slice cut- and-fill stoping and section cut-and-dry-fill open stoping. The mined-out stopes are planned to be filled with tailings and/or waste paste fill. The mining loss is anticipated at 5% and the mining dilution rate is anticipated at 8%. The FS proposed a processing flowsheet consisting of gravity separation plus flotation plus gravity/flotation concentrate cyanide-in-leaching (“CIL”). The designed recovery rate is 82.99% and the annual gold production is expected to reach 3,297 kilograms (“kg”) at full capacity, as designed. The designed cyanide plant is located 92 km away from the mining area. SRK believes that the development schedule can be technically achieved.

A total of about US$255.8 million is budgeted for the capital cost of the 4,000 tpd project, including US$177.5 million in Phase I, US$46.5 million in Phase II and US$32.7 million during the production period. The projected operating cash cost per tonne of ore is US$38.65 and US$32.77 for Phases I and II, respectively. SRK opines that these costs are reasonable and achievable.

It is SRK’s opinion that the Pakrut Gold Project is a development project which has good potential for an increase of mineral resources, that the designated 4,000 tpd production capacity is appropriate for the overall project and that the Project is technically and economically feasible and viable.

Geology

The Pakrut deposit is located in the axial zone and on the southern slopes of the Hissar range, one of the most geologically complicated parts of Central Tajikistan and tectonically belongs to the Zeravshan-Hissar structural-facial zone of southern Tien-Shan.

The Pakrut ore field strikes northwesterly and is part of the sub-latitudinal Pakrut-Rufigar belt, part of the Pasrud-Yagnob metallogenic zone of the Zeravshan-Hissar structural formation.

The gold bearing zones and ore bodies are correlated with zones of crushing, cataclasm and mylonitization developed along and down the wide Rufigar and Graphitovy tectonic zones and which comprise a series of steeply dipping, sub-parallel reverse faults with small amplitudes and northwestern orientations.

The Pakrut deposit area consists of metamorphic rocks from the Razskaya suit of the Upper Ordovician, rare dykes of Lower-Middle Triassic alkaline gabbro-basaltic rock and hydrothermal- metasomatic formations. Much of the basement geology is overlain by unconsolidated Quaternary sediments. The ore bearing zones enclose ore bodies which have no clearly defined contours and whose limits are determined based on analytical results. Generally, the gold occurs in its native form, forming a paragenesis with quartz, carbonate and other rock-forming minerals and rarely sulphides. Gold distribution within the ore bodies is irregular. The gold occurrences can be divided into two main groups: fine-grained occurrences with grain sizes less than 0.001 mm and visible occurrences with grain sizes of 0.001 mm to 1 mm.

Only eight of the numerous mineralized zones are currently of economical value, namely Ore Bearing Zones (“OBZs”) 1, 3, 5, 6 and 7 in the Pakrut area and OBZs 14, 15 and 16 in Eastern Pakrut.

Exploration

Exploration of the Pakrut deposit area has a long and multistage history. Two main stages can be distinguished: the first from 1975 to 1981 and the second from 2004 to the present. The first stage

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On the surface the deposit was investigated with cuts, ditches and trenches; to access underground, five adits accompanied by drifts and cross-cuts were excavated; and surface and underground drilling programs were also executed.

All exploration activities were accompanied by the collection of an extensive range of samples, from grab samples to technological samples, all of which were examined for their petrographic, mineralogical and geochemical composition as well as for their technological characteristics.

All samples were analysed using atomic absorption spectrometry (“AAS”) as well as fire assays for determining grades of gold, silver and arsenic; fluoroscopic X-ray analysis was used for determining grades of 13 other elements.

After acquisition of the mining licence, Kryso conducted exploration activity over the Pakrut gold deposit area. From 2009 to the present, the exploration drilling has been targeting the deeper levels of this deposit.

The first two years of exploration by Kryso focused on logistics while at the same time the deposit was explored on the surface with trenches and underground with additional drifts and drillings. All collected channel and core samples were analysed using aqua-regia digestion and AAS.

Mineral Resources

Prior to SRK’s resource estimation, the resource had been estimated by Snowden Consultants (“Snowden”) in April 2011 and then updated in May 2012 for the Pakrut and Eastern Pakrut deposits using cut-off grades of >0.0 g/t gold (Au), 0.5 g/t Au, 1.0 g/t Au, 3.0 g/t Au and 5.0 g/t Au. At a gold cut-off grade of 0.5g/t Au, Snowden estimated that Pakrut and Eastern Pakrut Mineral Resource as of April 2012 comprises 18.2 million tonnes (Mt) of Measured Resources with an average grade of 3.00 g/t Au, 7.6 Mt of Indicated Resources with an average grade of 1.83 g/t Au and 41.6 Mt of Inferred Resources with an average grade of 2.10 g/t Au.

SRK conducted data verification programs on the exploration work and then performed geological modelling and resource estimation (under the guidelines of the JORC Code), using MineSight and Surpac software. The input to the software was sourced from a geological database provided by Kryso. A total of eight (8) mineralized zones were defined in the Pakrut and Eastern Pakrut areas, namely #1, #3, #5, #6 and #7 in Pakrut and #14, #15 and #16 in Eastern Pakrut. As of 28 February, 2013 the resource of both deposits estimated by SRK is summarized as follows:

Summary of Mineral Resources as of February 28, 2013

Measured Indicated Measured + Indicated Cut-off (g/t Au) Au Au Au Au Au Au Mt Mt Mt (g/t) (koz) (g/t) (koz) (g/t) (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 2.79 534 20.90 3.40 2,283 3.0 6.55 5.47 1,152 1.80 4.18 243 8.36 5.19 1,395 5.0 2.49 8.24 659 0.26 7.87 65 2.74 8.21 724

Inferred Cut-off (g/t Au) 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

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Inferred Cut-off (g/t Au) Mt Au (g/t) Au (koz) 3.0 2.87 4.37 403 5.0 0.56 8.64 154

The information in this report which relates to Mineral Resource is based on information compiled by Richard Kosacz and Dr Anshun Xu, who are full time employees of SRK China. Mr Kosacz is a professional geologist registered in British Columbia, Canada and Dr Xu is a Fellow of the AusIMM. Both Mr Kosacz and Dr Xu have sufficient experience which is relevant to the style of mineralization and the type of deposits under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 edition of the JORC Code. Mr Kosacz and Dr Xu consent to the reporting of this information in the form and context in which it appears.

Exploration Potential

Considerable exploration work in the Pakrut Project was completed in 2012. The recent drilling in Pakrut completed in 2012 has reached nearly 900 m down dip, intersecting gold mineralisation around 1,480 m above sea level (“ASL”) which is likely associated with the interpreted Mineralised Zone #1. Some new drilling was designed to gradually explore the less discovered gap between Pakrut and Eastern Pakrut. During SRK’s latest site visit to the Project in November 2012, the ongoing drilling in Pakrut and Eastern Pakrut was observed.

Another exploration target for the Project is the Rufigar deposit, which is located about 8 km to the north of Pakrut and is also hosted in the Ordovician greenschist. The Rufigar deposit comprises four separate mineralised zones and/or occurrences. Though the data is insufficient to allow a Mineral Resource estimate, geological interpretations completed based on the findings of 12 diamond drillholes, 26 adit tunnels and 103 trench samples, reveal positive gold and silver mineralisation in the Rufigar area.

Four mineralized zones were distinguished in the Sulfidnoye area, while there is not sufficient exploration work done for a resource estimate. SRK believes that the exploration potential to discover gold-silver deposits is good in the area.

Reserves

The combined recovery of processing and metallurgy applied to the ore reserve estimate is 82.99%. The Ore Reserves were reported at a gold cut-off of 1.0 g/t. A summary of the Ore Reserves estimate as of February 28, 2013 is shown in the table below.

At a gold cut-off of 1.0 g/t, the Proved Ore Reserves are estimated at 15,721 kt averaging 3.1 g/t of gold. The Probable Ore Reserves are estimated at 2,787 kt averaging 2.5 g/t of gold.

Summary of Ore Reserves as of February 28, 2013 High Grade Economic Total (Au≥1.6g/t) (1.0g/t≤Au＜1.6g/t) Zone No. Tonnes Au Au Tonnes Au Au Tonnes Au Au (kt) (g/t) (kg) (kt) (g/t) (kg) (kt) (g/t) (kg) Proved 1 11,805 3.6 42,623 3,236 1.3 4,190 15,041 3.1 46,813 3 271 3.3 902 409 1.2 485 680 2.0 1,387 Subtotal 12,076 3.6 43,525 3,645 1.3 4,676 15,721 3.1 48,200 Probable 1 2,161 2.8 6,106 620 1.3 799 2,781 2.5 6,906 3 - - - 6 1.1 7 6 1.1 7 Subtotal 2,161 2.8 6,106 627 1.3 806 2,787 2.5 6,913 Proved + Probable 1 13,966 3.5 48,729 3,856 1.3 4,990 17,822 3.0 53,719

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High Grade Economic Total (Au≥1.6g/t) (1.0g/t≤Au＜1.6g/t) Zone No. Tonnes Au Au Tonnes Au Au Tonnes Au Au (kt) (g/t) (kg) (kt) (g/t) (kg) (kt) (g/t) (kg) 3 271 3.3 902 416 1.2 492 686 2.0 1,394 Total 14,237 3.5 49,631 4,272 1.3 5,482 18,508 3.0 55,113

The information in this report which relates to Ore Reserve is based on information compiled by Dr. Anshun Xu, Mr Qiuji Huang and Mr. Yonggang Wu who are full time employees of SRK China. Dr. Xu is a Fellow of AusIMM and Mr. Huang is a Member of AusIMM. They have sufficient experience which is relevant to the style of mineralisation and the type of deposits 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”, the JORC Code. Dr. Xu and Mr. Huang consent to the reporting of this information in the form and context in which it appears.

SRK notes that there are Inferred Resources in the mineralized zones and more resources are likely to be defined at depth and may be found in other targets. Once the resource estimate has been upgraded, it is possible that these resources could be converted into ore reserves after considering the modifying factors and if so, the mine life could be extended.

Mining

Kryso commissioned BGRIMM to complete the FS for the Tajikistan Pakrut Gold Mine 4000 tpd Project, which BGRIMM submitted on August 2012. This FS is aimed at the development of the two mining zones, Nos. 1 and 3 - of the Pakrut deposit. The proposed mining method is underground mining where the Ore Reserve estimate is 18.5 Mt. The planned mining production capacity for Phase I is 660 thousand tonnes per year (“ktpa”) (equal to 2000 tpd) and the capacity is planned to be increased to 1.32 Mtpa (4000 tpd) in Phase II; the life of mine (“LOM”) is estimated at 19 years. The mine is planned to be developed by the joint application of a ramp and auxiliary shaft, where the height between two adjacent levels’ bottoms is 60 m. The principal mining methods to be used are upward horizontal slice cut-and-fill stoping and section cut-and-dry-fill open stoping. After mining, the stopes are planned to be backfilled with tailings and/or waste paste fill. The estimated mining loss is 5% and the estimated mining dilution is 8%.

It is SRK’s opinion that the FS has been completed to a high standard and that the arrangements of the mine development and resource exploitation are technically reasonable. The scope and level of the FS are adequate for the mine construction and potential financing.

Ore Processing

The FS proposed the following appropriate processing flowsheet: gravity separation + flotation + gravity/flotation concentrate cyanide-in-leaching (“CIL”). The designed recovery rate is 82.99% and the annual gold production is expected to reach 3,297.36 kg with full designed capacity.

The processing plant is planned to be completed in two stages. In the first stage the designed capacity of the plant is to reach 2000 tpd and 4000 tpd in the second stage. The graded coarse flotation tailings will be used to backfill the mined out area, while the fine tailings will be dried and stockpiled in the tailings storage facility after thickening and pressing/filtering. The designed cyanide plant is located 92 km away from the mining area. The cyanide plant tailings will also be dried and stockpiled in the tailings dam.

After a thorough review of the FS, SRK concludes that it has been completed to a high standard and the processing flowsheet and related technical parameters are reasonable and viable. In general, the FS meets the requirements of mine design and potential financing.

Capital Cost

The feasibility study produced by BGRIMM forecasts the capital costs as summarized in the table below.

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Capital Cost Estimation of Pakrut Project (in US$1000) Items Phase I Phase II Production Total Direct Investment 147,604 40,025 32,734 220,363 Indirect Investment 6,339 820 7,159 Owner’s cost 6,534 1,422 7,956 Reserve fund 16,048 4,227 20,274 Grand Total 176,525 46,494 32,734 255,752

The project is planned to be constructed in two phases. During Phase I the facilities for a production capacity of 2,000 tpd will be constructed and Phase II will increase the total production capacity to 4,000 tpd. The direct investment includes the capital costs of the engineering projects, including mining, ore processing, metallurgical (cyanide plant), tailings and supportive and public facilities. During the production period, direct investment will mainly be used for equipment and maintaining the tailings storage facilities (“TSF”).

The construction of Phase I of the Project began in May 2012 and is scheduled to be completed in April 2014. Commissioning is plnned to be carried out between May 2014 and October 2014. Phase I will be put into production when all commissioning is complete. Phase II is planned to start in May 2014 and to be completed in December 2016 prior to the beginning of full production in May 2017; there will be a commissioning period between December 2016 and May 2017.

SRK believes that the proposed capital costs and the Project schedule are reasonable.

Operational Cost

The FS estimated the operating costs per tonne of ore for mining and processing and per tonne of gold concentrate for metallurgy/cyaniding. The tables below give the operating cash costs for Phases I and II, respectively. The study shows that the concentrate is about 3.3% of the ore processed. SRK has converted the metallurgy costs into US$ per tonne of ore, as shown in the tables.

Operating Cost Budget for Phase I (in US$/t) Phase I Items Mine Process Metallurgy Metallurgy Total US$/t ore US$/t ore US$/t Conc US$/t ore US$/t ore Support materials 11.12 4.34 0.79 0.03 15.49 Reagents 0.83 39.92 1.32 2.15 Power 4.15 2.55 5.98 0.20 6.90 Salary and welfare 1.89 1.01 9.28 0.31 3.21 Repair and maintenance 3.02 2.4 20.77 0.69 6.11 fees Administration 1.32 0.82 7.57 0.25 2.39 Sales costs 19.13 0.63 0.63 Other 1.07 0.6 5.17 0.17 1.84 Total 22.48 12.56 108.61 3.60 38.64 Note: Conc=concentrate Source: BGRIMM, 2012

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Operating Cost Budget for Phase II (in US$/t) Phase II Items Mine Process Metallurgy Metallurgy Total US$/t ore US$/t ore US$/t Conc US$/t ore US$/t ore Support materials 11.05 4.34 0.79 0.03 15.42 Reagents 0.83 39.92 1.32 2.15 Power 3.85 2.16 4.26 0.14 6.15 Salary and welfare 1.37 0.66 5.89 0.20 2.23 Repair and maintenance 1.88 1.21 10.94 0.36 3.45 fees Administration 0.7 0.46 4.11 0.14 1.30 Sales costs 15.05 0.50 0.50 Other 0.94 0.48 4.05 0.13 1.55 Total 19.8 10.16 85.01 2.81 32.77 Note: Conc=concentrate Source: BGRIMM, 2012

SRK is of the opinion that the operating costs as estimated are reasonable and appropriate.

Environmental Aspect

The significant environmental aspects for the Pakrut Project that are reviewed in this Report, are associated with the planned mining and mineral processing activities at the Pakrut Project site. The environmental / social review identified the most significant current and potential environmental management and legislative compliance liabilities that relate to operation and further development of the Project and defines gaps in operational management as relates to industry best practices.

SRK notes that at the time of SRK’s site visit the project was at an initial stage of development, with exploration being the main activity at the time. SRK observed during the site inspection that environmental aspects and potential liabilities were being reasonably addressed and the associated risks were being fairly well managed within the Pakrut Project area of influence. It was observed that the Pakrut Project development activities were operating for the most part in compliance with Tajikistan legislative requirements, but the Company needs to improve the operational environmental management of the project to further conform to international best practices.

Kryso has undertaken a range of project assessment and feasibility studies to support the planned development of the project. The FS for the Pakrut Project is based on a production rate of 4,000 tpd. The FS was prepared by BGRIMM in August 2012. SRK notes that the FS engineering designs follow Chinese domestic standards with reference to standards of Tajikistan. SRK has been informed by Kryso that the FS is acceptable to Tajik administering authorities although SRK has no confirmation of this. Recognized industry standards acknowledge that projects need first be compliant with local legislative requirements and statutory standards.

An Environmental and Social Impact Assessment (“ESIA”) conducted for a production rate of 2,000 tpd for the Pakrut Project was produced in November 2011. SRK has not been provided with a governmental approval for this ESIA although it has been superseded by an updated ESIA conducted at the production rate of 4,000 tpd.

SRK was subsequently provided with the updated ESIA for a production rate of 4,000 tpd completed in October 2012 that is in line with the FS. The updated ESIA was prepared by Pakrut Limited Liability Company, the subsidiary of Kryso. The updated ESIA included assessment of modifications to the original design.

The Committee on Environmental Protection of the Government of the Republic of Tajikistan’s “Conclusion of the State Ecological Expert Committee” approval for the 4,000 tpd ESIA was also provided to SRK for review. The document reference number is 681-15 and was issued on 30 October 2012.

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SRK at the time of the review was not provided with other environmental assessments, approvals or permits for review.

The sources of inherent environmental risk are project activities that may result in potential environmental impacts. SRK found environmental risks at the Pakrut Project sites to be reasonably identified, assessed and managed.

In summary the most significant environmental risks for the Pakrut Project, currently identified as part of the SRK’s project assessment, are:

 Surface water management and discharges (i.e., stormwater runoff, erosion control measures);  Groundwater management and discharges (i.e., mine dewatering and seepage from the waste rock dump);  Storage and handling of hazardous materials (cyanide, reagents, explosives and hydrocarbons);  Dust generation and gas emissions management and monitoring;  Rehabilitation of the waste rock stockpiles and other disturbed areas;  Waste generation and management of industrial and domestic wastes;  Limited geochemical characterisation/acid rock drainage assessment of waste rock;  No assessment of potential contaminated sites; and  No developed structured closure planning process.

The environmental risks associated with surface and ground water management, hazardous materials management, dust generation, waste rock disposal and land rehabilitation can be generally managed if Tajikistan National environmental standards and regulatory requirements are met. SRK observed that these aspects within the Pakrut Project were being reasonably considered and managed during the site inspection.

The environmental risks associated with the potential for generating contaminated sites and other site closure liabilities can be effectively managed through the adoption of relevant recognised international industry practices.

The above inherent environmental risks are categorised as acceptable/tolerable risks (i.e. requiring risk management measures) as shown below in table 16.17.1. Based on the review of the information provided and the site visit observations, it is SRK’s opinion that the environmental risks for the Pakrut Project are generally being managed in accordance with Tajikistan National requirements, but could be improved to meet best industry practices.

Social Aspect

Kryso stated that the population of the surrounding area is predominately Tajiki communities and no ethnic minorities are present in the area. Kryso also reported that there are no significant cultural heritage sites, burial sites or nature reserves, within or surrounding any of the Project sites.

The Pakrut Project site is located more than30 kilometres (km) from any protected areas. The nearest protected territory is Ramit Reserve, located approximately 30 km downstream from the Pakrut mine site. The ESIA reports the status of the ecosystems in the Ramit Reserveas not being considered satisfactory. While the Pakrut Project is unlikely to directly cause any impact on the Ramit Reserve due to being 30 km away, indirect impacts are potentially possible. Therefore, Kryso should endeavour to ensure the project and workers avoid causing any impact upon the area.

The ESIA reports, a general archaeological and historical study of the project site was conducted in agreement with the Institute of History and Archaeology of the Academy of Sciences of the Republic of Tajikistan. Studies have examined the remains of a small village within and around the existing camps. The village was abandoned in the mid-20th century. In accordance with the

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Kryso stated the positive effects to the surrounding local communities are mainly direct employment of local contractors and use of local suppliers and service providers where practical. Kryso provided SRK with minimal information except for that presented in the 2,000 tpd ESIA regarding the development of social development measures amongst local communities including water and electricity supplies and the development of local infrastructure, medical clinics and the like.

The ESIA reports that local communities are already taking advantage of the Pakrut Project and are recognized as interested parties under the impact of the Project. These mainly relate to maintenance to keep the local road open through winter months and the construction of a bridge over the Sardi- Mienna River. Kryso provided a small hydro generator for Pichev village, a hydro power plant which provides enough electricity for lighting and satellite TV connections to a village, which in the past had no power supplies.

It is SRK’s opinion that the social situation in the surrounding communities has the potential to lead to conflicts with these communities if Kryso does not further their “social licence”, meaning community and stakeholder support, to operate within and around these villages. Additionally, Kryso stated they have not formalized a social dispute resolution mechanism.

Public participation/community consultation programs were confirmed as being undertaken for each section of Project operations as part of their ESIA. SRK, though, observed that the program could be improved upon.

No non-compliance notice or other notice of any breach of environmental or social conditions for the Pakrut Projects from the Local or Provincial governments has been sighted as part of this review. Kryso reported to SRK that none had been received. Kryso also stated to SRK that they maintain a healthy relationship with local, provincial and national governments along with the local police department.

Project Risk Analysis

The Pakrut Gold Project is a development project with some exploration. Risks exist in different areas. SRK considered various technical aspects which may affect the feasibility and potential future cash flow of the Project, in particular for the 4,000 tpd production and conducted a risk assessment which has been summarized in the following table.

Pakrut Gold Project Risk Assessment Table Risk Issue Likelihood Consequence Overall Geology and Resource Lack of Significant Resource Unlikely Moderate Low Lack of Significant Reserve Unlikely Major Medium Unexpected Groundwater ingress Possible Moderate Medium Mining Significant Production Shortfalls Unlikely Major Medium Significant Geological Structures Possible Moderate Medium Excessive Surface Subsidence Unlikely Minor Low Poor Underground Condition Unlikely Moderate Low Poor Mine plan Possible Moderate Medium Poor Road Transportation/safety Unlikely Moderate Low Ore Processing

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Risk Issue Likelihood Consequence Overall Lower Production Rate Unlikely Moderate Low Lower Recovery Unlikely Major Medium Higher Production Cost Possible Moderate Medium Low Plant Reliability Unlikely Moderate Low Environmental and Social Surface water management and discharges Likely Moderate Medium (i.e. stormwater runoff, erosion control) Groundwater management and discharges Possible Moderate Medium (mine dewatering and seepage from the WRD) Inadequate storage and handling of hazardous materials Possible Moderate Medium Rehabilitation of the waste rock stockpiles and other disturbed Likely Moderate Medium areas Dust generation / gas emissions management and monitoring. Possible Minor Low Waste generation / management (industrial and domestic wastes). Possible Moderate Medium No geochemical characterisation/ ARD assessment of waste rock. Likely Moderate Low No developed structured closure planning process Likely Moderate Medium Capital and Operating Costs Project Timing Delay Unlikely Moderate Low Poor Mine Management-Plan Possible Minor Low Capital Cost Increases Possible Minor Low Higher Capital Costs- ongoing Unlikely Minor Low Operating Cost Underestimated Possible Moderate Medium

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Table of Contents

Executive Summary ...... ii Disclaimer ...... xviii List of Abbreviations ...... xix

1 Introduction and Scope of Report ...... 1

2 Program Objectives and Work Program ...... 2 2.1 Program Objectives ...... 2 2.2 Purpose of the Report ...... 2 2.3 Reporting Standard ...... 2 2.4 Work Program ...... 2 2.5 Project Team ...... 2 2.6 Competent Person Statement ...... 5 2.7 Statement of SRK Independence ...... 6 2.8 Representation ...... 7 2.9 Indemnities ...... 7 2.10 Consents ...... 7 2.11 SRK Experience ...... 7 2.12 Forward-Looking Statements ...... 8

3 Project Location and Geography ...... 9 3.1 Regional Location and Access ...... 9

4 Operational Licences and Permits ...... 11 4.1 Business Licences ...... 11 4.2 Exploration Licences ...... 11 4.3 Mining Licences ...... 11 4.4 Other Operational Permits ...... 12 4.4.1 Land Use Permit ...... 12 4.4.2 Water Use Permit (including water discharge) ...... 12 4.4.3 Discharge Permit (Air Emission) ...... 13

5 Geological Description ...... 16 5.1 Regional Geology ...... 16 5.2 Local Geology ...... 16 5.2.1 Local Stratigraphy ...... 16 5.2.2 Local Magmatism ...... 17 5.2.3 Local Structure ...... 18 5.2.4 Metallogeny ...... 18 5.3 Deposit Geology ...... 18 5.3.6 Mineralized Zones ...... 22 5.3.7 The Eastern Pakrut Area ...... 26 5.3.8 The Sulfidnoye Occurrence ...... 27 5.3.9 The Rufigar Occurrence ...... 28 5.4 Exploration Review ...... 28 5.4.1 Exploration History of 1975-1981 ...... 28 5.4.2 2004 to Present ...... 29 5.4.3 Sampling Techniques ...... 29 5.4.4 Sample Preparation ...... 30 5.4.5 Assaying ...... 31 5.4.6 Reporting of Exploration Results ...... 31 5.5 Quality Assurance and Quality Control Protocol and SRK Verification ...... 32 5.5.1 Sampling ...... 32 5.6 Mineral Resource Estimation ...... 37 5.6.1 Previous Resource Estimate ...... 37

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5.6.2 Topography Model ...... 37 5.6.3 Exploration Dataset ...... 37 5.6.4 Mineralized Zones Interpretation ...... 37 5.6.5 Weathering Surface ...... 38 5.6.6 Bulk Density ...... 38 5.6.7 Compositing and Statistical Analysis ...... 38 5.6.8 Block Model ...... 38 5.6.9 Grade Interpolation and Resource Classification ...... 38 5.6.10 Mineral Resource Reporting ...... 39

6 Mining Assessment ...... 41 6.1 Mining Conditions of the Deposit ...... 41 6.1.1 Hydrogeology ...... 41 6.1.2 Geotechnical Condition ...... 41 6.1.3 Geological Resource and Reserve Condition ...... 42 6.2 Mine Development ...... 42 6.2.1 Mining Method and Mining Scope ...... 42 6.2.2 Mine Development Plan ...... 42 6.2.3 Mine Auxiliary Operation Systems ...... 45 6.3 Mining Method ...... 45 6.3.1 Mining Method Selection ...... 45 6.3.2 Mining Methods ...... 46 6.3.3 Main Technological Targets ...... 49 6.3.4 Main Mining Equipment ...... 50 6.4 Mining Schedule ...... 51 6.4.1 Mining Capacity and Life of Mine ...... 51 6.4.2 Mining Schedule ...... 51 6.4.3 Mining Production Plan ...... 51 6.5 Conclusions ...... 51

7 Ore Reserve Estimate ...... 53 7.1 Previous Work ...... 53 7.2 High Grade Cut-off and Economic Cut-off ...... 53 7.3 Reserve Block Model ...... 55 7.3.1 Selective Mining Unit ...... 55 7.3.2 Model Limits and Items ...... 55 7.3.3 Items Assignment ...... 56 7.4 Mining Objects and Layout of Levels ...... 57 7.5 Layout of Mining Cells/Panels ...... 57 7.6 Net Revenue Estimate and Mineable Analysis ...... 59 7.7 Ore Reserves Classification ...... 59 7.8 Ore Reserves Statement ...... 60 7.9 Conclusions and Recommendations ...... 62

8 Mineral Processing Assessment ...... 63 8.1 Mineral Processing Test ...... 63 8.2 Ore Properties ...... 63 8.2.1 Chemical Composition ...... 63 8.2.2 Mineral Composition ...... 63 8.2.3 Gold Chemical Phase Analysis ...... 64 8.2.4 Gold Occurrence ...... 64 8.2.5 Physical Properties of the Ore ...... 65 8.3 Processing Test Result ...... 65 8.3.2 Test Product Analysis ...... 68 8.3.3 Previous Processing Tests ...... 69 8.3.4 Processing Test Assessment ...... 69 8.4 Feasibility Study ...... 69 8.5 Flowsheet to be Used ...... 69 8.5.1 Grinding Process ...... 69

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8.5.2 Separation Process ...... 70 8.5.3 Concentrate Drying ...... 71 8.6 Designed Index ...... 72 8.7 Designed Capacity ...... 72 8.8 Main Equipment ...... 73 8.9 Workshop Distribution ...... 74 8.10 Main Reagents ...... 74 8.11 Assay Laboratory ...... 74 8.12 Production Supervision ...... 74 8.13 Water and Power Supply ...... 74 8.13.1 Water Supply ...... 74 8.13.2 Power Supply ...... 75 8.14 Maintenance ...... 75 8.14.1 Machine Repair Components and Tasks ...... 75 8.14.2 General Repair Workshop ...... 75 8.14.3 Maintenance Facilities in the Cyaniding Plant ...... 75 8.15 Heating and Ventilation ...... 75 8.16 Engineering Works in the Processing Plant ...... 76 8.17 Tailings Storage Facilities ...... 77 8.17.1 Introduction ...... 77 8.17.2 Flotation Tailings Dam ...... 77 8.17.3 Cyanide Tailings Dam ...... 77 8.17.4 Tailings Transport and Returning Water System ...... 77 8.18 Conclusion ...... 78

9 Occupational Health and Safety...... 79 9.1 Project Safety Assessment and Approval ...... 79 9.2 Occupational Health and Safety Procedures ...... 79 9.3 Historical Occupational Health and Safety Records ...... 79

10 Project Costs ...... 80 10.1 Capital Costs ...... 80 10.1.1 Project Schedule ...... 81 10.2 Operating Costs ...... 81 10.2.1 Forecast Operating Costs ...... 81

11 Project Infrastructure ...... 82 11.1 Road Access ...... 82 11.2 Power Supply ...... 82 11.3 Water Supply ...... 82 11.4 Workshops and Repair Facilities ...... 82

12 Workforce ...... 84 12.1 Workforce Numbers ...... 84 12.2 Assessment of Workforce ...... 84

13 Environmental Assessment ...... 85 13.1 Environmental Review Objective ...... 85 13.2 Environmental Review Process, Scope and Standards ...... 85 13.3 Status of Environmental Approvals ...... 85 13.4 Environmental Compliance and Conformance ...... 86 13.5 Land Disturbance ...... 86 13.6 Flora & Fauna ...... 87 13.7 Waste Rock and Tailings Management ...... 87 13.7.1 Waste Rock Management ...... 87 13.7.2 Tailings Management ...... 88 13.8 Water Aspects ...... 88

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13.9 Air Emissions ...... 89 13.9.1 Dust and Gas Emissions ...... 89 13.9.2 Greenhouse Gas Emissions ...... 89 13.10 Noise Emissions ...... 89 13.11 Hazardous Materials Management ...... 90 13.12 Waste Management ...... 90 13.12.1 Waste Oil ...... 90 13.12.2 Solid Wastes ...... 91 13.12.3 Sewage and Oily Waste Water ...... 91 13.13 Contaminated Sites Assessment ...... 91 13.14 Environmental Protection and Management Plan ...... 92 13.15 Emergency Response Plan ...... 92 13.16 Site Closure Planning and Rehabilitation ...... 92

14 Social Assessment ...... 94

15 Project Risk Analysis ...... 95

16 References ...... 97

Appendices ...... 98 Appendix 1: Business Licences ...... 99 Appendix 2: Mining Licences ...... 100 Appendix 3: Mining Licence ...... 102 Appendix 4: The Certificate for Land Use of Pakrut area ...... 103 Appendix 5: The Water Use Permit for Pakrut LLC ...... 104 Appendix 6: The Discharge Permit (Air Emission) for Pakrut LLC ...... 105 Appendix 7: The 4000tpd Safety Production Approval (Kryso Explanation Letter) 109 Appendix 7: The 4000tpd Environmental Impact Assessment Approval ...... 114 Appendix 8: Tajikistan Environmental Legislative Background ...... 121 Appendix 9: Equator Principles and Internationally Recognised Environmental Management Practices ...... 125

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List of Tables

Table 2-1: SRK Consultants and Their Responsibilities ...... 3 Table 2-2: Recent Reports to HKEx by SRK ...... 8 Table 4-1: Business Licence Detail for Pakrut LLC ...... 11 Table 4-2: Pakrut Exploration Area Limits ...... 11 Table 4-3: Pakrut Mining Area Limits ...... 12 Table 4-4: The Major Details of Water Use Permit for Pakrut LLC ...... 12 Table 4-5: Waste Water Discharges Quality Control Table ...... 13 Table 4-6: Measures for Water Use and Protection ...... 13 Table 4-7: The Major Details of Discharge Permit for Pakrut LLC ...... 14 Table 4-8: The list of Pollutants Permitted to be Discharged to Atmosphere ...... 14 Table 5-1: The Summary of Ore Mineralogy ...... 22 Table 5-2: SRK Random Check Samples in 2011 ...... 36 Table 5-3: Standard Sample Inserted by SRK in 2011 ...... 36 Table 5-4: Extent and Size of Block Model ...... 38 Table 5-5: Summary of Measured and Indicated Mineral Resources – 28 February 2013 ...... 39 Table 5-6: Summary of Inferred Mineral Resources – 28 February 2013 ...... 39 Table 5-7: Mineral Resources at Each Zone – 28 February 2013 ...... 40 Table 6-1: Groundwater Inflow Estimation ...... 41 Table 6-2: Characteristics of Main Development ...... 43 Table 6-3: Main Technological and Economical Targets ...... 50 Table 6-4: List of Main Mining Equipment ...... 50 Table 6-5: Mining Plan within the LOM ...... 51 Table 7-1: Parameters to Calculate High Grade and Economic Cut-off ...... 53 Table 7-2: Ore Reserve Model Limits ...... 55 Table 7-3: Model Items ...... 55 Table 7-4: MAT Assignment ...... 57 Table 7-5: Number of Mining Cells/Panels on Each Level ...... 58 Table 7-6: Mineable Cells/Panels on Each Level ...... 59 Table 7-7: Summary of Proved Ore Reserves on Each Level as of February 28 2013 ..... 60 Table 7-8: Summary of Probable Ore Reserves on Each Level as of February 28 2013 ...... 61 Table 7-9: Summary of Total Ore Reserves on Each Level as of February 28 2013 ...... 61 Table 7-10: Net Revenue Estimate ...... 62 Table 8-1: Ore Chemical Composition ...... 63 Table 8-2: Mineral Composition and Content ...... 64 Table 8-3: Gold Chemical Phase Analysis Result ...... 64 Table 8-4: Particle Size Statistics of Visible Native Gold ...... 64 Table 8-5: Ore Physical Properties ...... 65 Table 8-6: Processing Test Result and Flowsheet ...... 65 Table 8-7: Chemical Analysis Result of Concentrate from WOOCIL ...... 68 Table 8-8: Analysis Result of Concentrate from Flotation + Concentrate Cyaniding ...... 69 Table 8-9: Analysis Result of Concentrate from Gravity Separation + Flotation + Cyaniding ...... 69 Table 8-10: Designed Index of Processing Flowsheet (10 Year Average After Reaching Full Capacity) ...... 72 Table 8-11: Designed Index of Cyaniding Metallurgy (10 Year Average after Reaching Full Capacity) ...... 72 Table 8-12: List of Main Equipment in Processing Plant ...... 73 Table 8-13: List of Engineering Works in the Processing Plant ...... 76 Table 8-14: List of Main Buildings in Processing Plant ...... 76 Table 10-1: Capital Cost Budget for the Pakrut 4000 tpd Production (from BGRIMM, 2012) (in US$1000) ...... 80

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Table 10-2: Direct Investment into Engineering Facilities for the Pakrut 4000 tpd Production (from BGRIMM, 2012) (in US$1000) ...... 80 Table 10-3: Direct Investment in the Production Period for the Pakrut 4000 tpd Production (from BGRIMM, 2012) (in US$1000) ...... 80 Table 10-4: Operating Cost Budget for Phase I (BGRIMM, 2012) ...... 81 Table 10-5: Operating Cost Budget for Phase II (BGRIMM, 2012) ...... 81 Table 12-1: Workforce Required for the 4000 tpd Production ...... 84 Table 15-1: Project Risk Assessment of the Pakrut Gold Project ...... 95

List of Figures Figure 3-1: Project Location in Central Asia ...... 9 Figure 3-2: Project Location in Vahdat Region, Tajikistan ...... 9 Figure 3-3: Pakrut Creek Valley and Deposit Area ...... 10 Figure 5-1: Simplified Geological Map of the Project Area ...... 20 Figure 5-2: Horizontal Projection of the Pakrut Gold Deposit with Locations of the Bore Holes Drilled in 2010 and Proposed for 2011 ...... 23 Figure 5-3: Isometric View of Ore Bearing Zones (Azimuth: 135.0°, Dip: -5.0°) ...... 24 Figure 5-4: Typical Cross-section trough OBZ 1 ...... 25 Figure 5-5: Eastern Pakrut Ore Zone Locations and Boreholes Drilled in 2011 ...... 27 Figure 5-6: Mineralized Indications at Rufigar and Sulphidnoye ...... 28 Figure 5-7: Duplicate Sample Assays – SRK’s Check Results vs. the Original Results (2011) ...... 35 Figure 5-8: Duplicate Sample Assays - SRK’s Check Results versus the Original Results (2012) ...... 36 Figure 6-1: The Mine Development System ...... 44 Figure 6-2: The Opening Construction of the Ramp ...... 44 Figure 6-3: Overhand Cut and Fill Stoping ...... 47 Figure 6-4: Diagram of Sub-level Open Stoping Cut and Dry Fill ...... 48 Figure 6-5: Tridimensional Diagram of Sub-level Open Stoping Cut and Dry Fill ...... 49 Figure 7-1: Univariate Sensitivity Analysis of Economic Cut-off ...... 54 Figure 7-2: Layout of Mining Cells/Panels (Azimuth: 0°, Dip: 0°) ...... 58 Figure 8-1: Flowsheet for Whole Ore Cyanide in Leaching (“WOOCIL”) ...... 65 Figure 8-2: Flowsheet of WOOCIL + Leaching Slag Flotation + Fine Grinding & CIL ...... 66 Figure 8-3: Flowsheet of Flotation + Fine Grinding & CIL...... 67 Figure 8-4: Flowsheet of Gravity Separation + Flotation + Fine Grinding & CIL ...... 68 Figure 8-5: Simplified Flowchart of the Recommended Processing Flowsheet ...... 70

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Disclaimer

The opinions expressed in this Report have been based on the information supplied to SRK by Kryso. The opinions in this Report are provided in response to a specific request from Kryso to do so. SRK has exercised all due care in reviewing the supplied information. Whilst SRK has compared key supplied data with expected values, the accuracy of the results and conclusions from the review are entirely reliant on the accuracy and completeness of the supplied data. SRK does not accept responsibility for any errors or omissions in the supplied information and does not accept any consequential liability arising from commercial decisions or actions resulting from them.

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List of Abbreviations

Abbreviation Meaning ARD Acid Rock Drainage ASL Above Sea Level AusIMM Australasian Institute of Mining and Metallurgy bcm bank cubic metre BD Bulk Density BGRIMM Beijing General Research Institute of Mining and Metallurgy oC degrees Celsius CAPEX Capital Expenditure ITR Independent Technical Report dB decibel deposit Earth material of any type, either consolidated or unconsolidated, that has accumulated by some natural process or agent E East EIA Environmental Impact Assessment EPMP Environmental Protection and Management Plan ERP Emergency Response Plan g gram ha hectare HKEx The Stock Exchange of Hong Kong Limited IER Independent Expert Report IFC International Finance Corporation IPO Initial Public Offering ITR Independent Technical Review JORC Code Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC), December 2004. kg Kilogram km Kilometre km2 square kilometre Kryso Kryso Resources PLC kV kilovolt kW kilowatt L litre m metre M million m RL metres Reduced Level m3 cubic metre Mt million tonnes Mtpa million tonnes per annum MW Megawatt N North NPV Net Present Value OHS Occupational Health and Safety OPEX operating expenditure Pakrut Pakrut Gold Project PPE Personal Protective Equipment PRC People’s Republic of China QA/QC quality assurance/quality control RMB Renminbi ROM run of mine S South SAG Semi Autogenous Grinding SABC Semi Autogenous Ball milling Crushing SRK SRK Consulting (China) Limited T Tonne Tpa tonnes per annum Tpd tonnes per day TSF Tailings Storage Facility USD United States Dollars VALMIN Code Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and

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Abbreviation Meaning Securities for Independent Expert Reports W West WRD waste rock dump WSCP Water and Soil Conservation Plan > greater than < less than % percent

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1 Introduction and Scope of Report

Kryso Resources plc (“Kryso”) commissioned SRK Consulting China Limited (“SRK”) to undertake a technical review the Pakrut Gold Project (“Pakrut Project”) operations located in Vahdat Region, Republic of Tajikistan. SRK was required to provide an Independent Technical Report (“ITR” or “Report”) for the shareholders and potential investors so that they may review the Project and for inclusion in a prospectus, offering circular, web proof information and/or circular to shareholders in relation to a proposed new listing of Kryso Resources Corporation Limited on the Main Board of the Stock Exchange of Hong Kong Limited (“HKEx”).

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2 Program Objectives and Work Program

2.1 Program Objectives

The objectives of the program were to provide Kryso with both verbal feedback and a written report through the review of provided data and participation in site visits.

2.2 Purpose of the Report

The purpose of this Report is to provide shareholders of Kryso and the HKEx with an ITR. Kryso intends to include this ITR with documents which it plans to submit to the HKEx.

2.3 Reporting Standard

This Report has been prepared to the standard of and is considered by SRK to be, a Technical Assessment Report under the guidelines of the VALMIN Code. The VALMIN Code incorporates the Joint Ore Reserves Committee (“JORC”) Code for the reporting of Exploration Data, Mineral Resources and Reserves.

This report is also a competent person’s report (“CPR”) as defined in Chapter 18 of the listing rules of HKEx. It is not a Valuation Report (as defined in Chapter 18 of the listing rules) and does not express an opinion as to the value of Mineral Assets. Aspects reviewed in this report include the geology of the deposit, the integrity of the exploration data, resources, reserves, mining, processing, safety, capital costs, operating costs, infrastructure, significant contracts, environmental sustainability and socio-political issues. However, SRK does not express an opinion regarding the specific value of the assets involved.

In this Report, Resources and Reserves are described using categorizations in accordance with the JORC Code (2004) and are considered by SRK to comply with the JORC Code.

2.4 Work Program

The work program involved four phases:

 Phase 1: After reviewing the provided information, SRK conducted a site visit to the Pakrut Project in Vahdat Region, Republic of Tajikistan in August 2011, where they conducted a data verification program and re-estimated the mineral resources of the Project;  Phase 2: SRK’s technical report team conducted a second site visit in November 2011, held discussions with Kryso’s technical staff and collected and reviewed technical documents;  Phase 3: SRK analysed the provided data, wrote a draft report, reviewed additional data and finalised the report; and  Phase 4: SRK re-visited the project site from 3 - 8 November 2012; SRK updated the report based on new exploration and mine construction.

2.5 Project Team

The SRK team and their areas of responsibility are set out in Table 2-1; short biographies of each team member are provided in the following the table.

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Table 2-1: SRK Consultants and Their Responsibilities Consultants Title and disciplines Responsibilities Dr Anson Xu Principal Consultant / Geology Project leader & report compiling and Resource Mr Richard Kosacz Principal Consultant / Geology Project Manager for data verification and and Resource resource re-estimate Mr Pengfei Xiao Senior Geologist / Geology Geology review and resource estimation and Resource Mr Qiuji Huang Principal Consultant / Mining Mining and Reserve review Mr Yonggang Wu Senior Consultant / Mining and Ore Reserve conversion Reserve Mr Hong Gao Senior Consultant / Mineral Processing review Processing Mr Andrew Lewis Senior Consultant / Environmental social and permitting review Environment and Social Dr Yuanhai Li Senior Consultant / Assist with environmental social and permitting Environment and Social review Mr Muhui (Chris) Huang Project co-manager and Logistics, coordinates and translations coordinator Dr Yonglian Sun Principal Consultant Internal peer review and quality control Mr Mike Warren Corporate Consultant External peer review Mr Romeo Ayoub Principal Consultant External peer review

Anshun (Anson) Xu, PhD (Geology), FAusIMM, is a Principal Consultant (geology) who specializes in exploration of mineral deposits. He has more than 20 years experience in exploration and development of various types of mineral deposits including copper-nickel sulphide deposits related to ultra basic rocks, tungsten and tin deposits, diamond deposits and in particular, various types of gold deposits, vein-type, fracture-breccia zone type, alteration type, carlin type. He was responsible for resource estimations of several diamond deposits and review of resource estimations of several gold deposits. He recently completed several due diligence jobs for clients from both China and overseas including technical review projects such as Canadian NI43-101 reports and HKEx IPO technical reports. Dr Xu was the project manager and competent person of the Report.

Richard Kosacz, M.Sc.Eng (P.Geo) MAusIMM, is a Principal Consultant-Geology with more than 30 years of geological experience including mine geological services, scientific research and international geological consulting at multiple different mineral deposits for planning, managing and conducting regional as well as target-scale mineral exploration from the grass-roots stage to the definition drillings. His portfolio of geological research and services includes precious (Au-Ag, Pt- Pd) and base (Cu, Zn and Pb) metals as well as other nonferrous metal deposits in different geological environments, worldwide. He also has extensive experience in the field of field data management (geological and geochemical) as well as high level skills in their interpretation and geological modelling. Richard was the project manager for data verification programs and resource re-estimation.

Pengfei Xiao, M.Sc. MAusIMM, graduated from the Institute of Geology and Geophysics at the Chinese Academy of Science and is now a geologist at SRK Consulting China. In the past few years, Pengfei has participated in a number of training courses on petrology, tectonics and geophysical exploration; he has also taken part in geological mapping. He has been a primary participant in geophysical explorations and geological surveys in various metal minerals and coal projects, including a key project sponsored by National Nature Science Foundation of China. Pengfei assisted Richard in the data verification and resource estimation.

Qiuji Huang, B.Eng. MAusIMM, Mining Association of the Chinese Society for Metals Member, China Association of National Gold Member, is a Senior Consultant (mining). Prior to joining SRK, he was the technical department manager of gold mines in Southwest China, responsible for mine development and mining design. Later he joined the Gold Administration Bureau of Guangxi province and Guangxi Branch of National Gold, in charge of review, purchase, planning and production management. Qiuji has nearly 30 years of mining experience, including deposit

HG/QH/RK/AL/YL/YW/PX/AX/YS/RA/MW SRK_Report_for_Kryso_Pakrut Gold_Final June 2013 SRK Consulting China Ltd Independent Technical Report – Pakrut Gold Project Page 4 development and planning, open-pit mining, underground mining, mine design and consultation. The commodities involved range from precious metals (Au, Ag), non-ferrous metals (Cu, Zn, Pb, W, Mo), ferrous metals (Fe, Mn) to other metal deposits as well as non-metallic deposits formed under different conditions (such as U, K, S, coal and stone). Other experience includes mine technology, review, mine construction, production test and mine management. Since joining SRK, Qiuji has been involved in many due diligence studies in China, Asia, Africa and South America, including reviews for CNNC and CITIC DAMENG, who have been listed successfully in Hong Kong. Qiuji was the Competent Person for the ore reserve statement. He reviewed the mining section of the Project.

Yonggang Wu, M.Eng. is a Senior Consultant (Mining). He joined SRK after graduation from Jiangxi University of Science and Technology in 2007. He has accumulated considerable experience in resource/reserve estimation, pit limit optimization and design, underground mining design, long-term production planning, due diligence studies. Yonggang has expertise in geological and mining modelling and is proficient in using MineSight, AutoCAD and other mining software. Yonggang assisted Mr Qiuji Huang in reviewing the mining section and conversing ore reserves.

Hong Gao, B.Eng. MGSC, MCGA, MAusIMM, is a Senior Consultant (Processing). He has 30 years’ experience in mineral processing and mineral resources information collecting. He is proficient in mine development and construction processes and has specific expertise in separable experiments, concentrator design, equipment installation, production commissioning and on-site production management. He has been involved in separable experiments for dozens of mines in Xinjiang, for which he was also responsible for the concentrator designs, on-site installations and production commissioning. Since joining SRK, Hong Gao has been involved in many due diligence projects in China, including Hanking Mining’s Fe ore projects and fluorite projects for Shenzhou Mining, most of which have been listed successfully on the Hong Kong Stock Exchange. Hong was responsible for the ore processing review.

Andrew Lewis, B.Sc (Environmental Science), MAusIMM, is a Senior Consultant (Environmental) with SRK Consulting China. Andrew has worked extensively in China and the greater Asian region for 15 years as well as on projects in Australia, Africa (in Gabon, Eritrea, DR Congo and Zambia), Ecuador, Russia, Kazakhstan, Afghanistan and other countries. He has worked on a wide variety of projects ranging from technology transfer to environmental health and safety and community consultation programs. His current focus is on environmental compliance, permitting, auditing and impact assessments of mining, mineral processing, refining, smelting and infrastructure projects largely in China and Mongolia. He also works on environmental management systems, pollution prevention/mitigation, remediation of contaminated sites and site closure planning. Andrew conducted the review on the environmental and permitting aspects of the Project.

Yuanhai Li, PhD, is a Senior Consultant (Environmental) with SRK Consulting China. He is an environmental scientist with 11 years’ experience in environmental management for the hazardous waste treatment industries. This experience has been gained mainly from within United States and China. He has particular expertise in environmental due diligence reviews, phase II/III site investigations, environmental impact assessment, wetland and landfill rehabilitation and environmental risk assessment. In addition, he has extensive experience in environmental engineering with a thorough knowledge of dealing with various environmental hazardous waste/solid waste issues, including contaminated site assessment, Landfill closures/Brownfield redevelopment, contaminated site remedial designs. He also has deep understanding of water/wastewater treatment design, water distribution systems, storm water management systems, geographic information systems (GIS) and geotechnical issues through various projects. Furthermore he is also in AutoCAD/Microstation, ArcGIS and GMS. Dr Li assisted Andrew with the environmental and social impacts review.

Muhui Huang (Chris), Juris Master, is a Senior Business Development Supervisor with SRK China. He got his Master’s degree from China University of Political Science and Law and

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Bachelor’s degree from Beijing Foreign Studies University. With three years’ engineering consulting experience and three years’ mining project consulting experience, he has been in charge of project management, translation and logistic services for SRK projects including the HKSE IPOs of Citic Dameng Mn Project in Guangxi, China, Jiangxi Yinhai Pz-Zn Project, the HKSE Substantial Transaction for the Jiulong Mo Project– in Shanxi, China; Technical Reviews of Yindongpo Au & Ag Project in Henan, China, / Kalimantan Merge Coal Project in Kalimantan Indonesia; QA/QC for the Meulaboh Bara Coal Project Exploration in Aceh, Indonesia; and M&A Technical Reviews of the State Grid Cu Project in Kazakhstan and Tongling Non-Ferrous Cu Project in Ecuador. Chris was co-manager of the project and managed project coordinating and logistics, as well as translation.

Dr Yonglian Sun, BEng, PhD, MAusIMM, MIEAust, CPEng, is a principal consultant and the managing director of SRK China with over 20 years experience in geotechnical engineering, rock mechanics and mining engineering in five countries across four continents. He has extensive international mining experience with an emphasis in site investigation, analysis and modelling of geotechnical issues in open pits, underground mines and tunnels. He also has considerable experience in project management and project evaluation in assisting mines for fund-raising and overseas stock listings. He has recently coordinated and worked on a number of due diligence projects such as Lingbao Gold, China Coal and Yueda Holding’s Pb-Zn and Xinjiang Xinxin Cu- Ni projects. All have been successfully listed on the HKEx. Dr Sun was the internal peer reviewer of the report to ensure the quality of the project.

Mike Warren, B.Sc (Mining Eng), MBA, FAusIMM, FAICD, is a Corporate Consultant (Project Evaluations) and is based in Sydney. Mr Warren is a mining engineer with over 30 years experience in on-site management, as well as 5 years experience in investment banking. Mr Warren has led SRK teams to evaluate mining projects in Australia, New Zealand, Papua New Guinea, Canada, Brazil, Mongolia and China. He has been involved in some projects in China, including IPO of Fujian Zijin Mining in Hong Kong, listing of Aluminium Corporation of China both in Hong Kong and New York, IPO of Lingbao Gold in Hong Kong, IPO of Xinjiang Xinxin Mining in Hong Kong and listing of Sino Gold Mining in Hong Kong. Mike was the external peer reviewer of the report to ensure the quality of the project.

Romeo Ayoub, BE (Mining Eng), MBA, MAusIMM, is a Principal Consultant (Project Evaluations) and is based in Sydney. Romeo Ayoub is a mining engineer with over 20 years’ experience in both operational and advisory/ consulting services roles. He has intimate knowledge of technical aspects of mineral resource development, particularly coal asset development, including geology, mine planning and feasibility studies, asset optimisation and evaluation. Romeo has extensive experience in directing multi-disciplinary technical due diligence teams on numerous mineral asset evaluations for potential acquisition / investment / funding. With respect to business development, Romeo has successfully developed and implemented business growth strategies, identified new market opportunities, and is skilled in high-level client relationship management. His experience includes management of commercial and legal contractual matters, managing a mining consultancy’s market presence in China and being responsible for the administration of a junior exploration company. Romeo provided peer review of the report.

2.6 Competent Person Statement

Statement of Qualification of the Competent Person, Dr Anson Xu:

As the main author of the report for Kryso on Pakrut Project located in Vahdat Region, Republic of Tajikistan, I, Anson (Anshun) Xu, do hereby certify that:

- I am employed by and carried out the assignment for, SRK Consulting China Limited, located at:

B1205 COFCO Plaza

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No. 8 Jianguomen Nei Dajie Beijing, People’s Republic of China 100005 Phone: 86-10-6511 1000 Fax: 86-10-8512 0385 Email: [email protected]

- I graduated with a Bachelor’s degree in Geology of Mineral Deposits from Nanjing University, China (B.Sc.) in 1982, a Master’s degree in Geology of Mineral Deposits from Chengdu University of Technology, China (M.Sc.) in 1988 and a Doctor’s degree in Geology from University of Nebraska-Lincoln, USA (Ph.D.) in 1996. - I am a Fellow in good standing of the Australasian Institute of Mining and Metallurgy (FAusIMM) (No. 224861). - I have been directly involved in geological research and mineral exploration for more than 25 years. - I have read the definition of “competent person” set out in the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the “Listing Rules”) and certify that by reason of my education, affiliation with professional associations (as defined in the Listing Rules) and past relevant work experience, I fulfil the requirements to be a “competent person” under the Listing Rules for the purposes of this technical report. - I visited the Pakrut Gold Mine Project sites in November 2011. - I am the primary author responsible for the preparation and compilation of the report and supervised Mr Pengfei Xiao and Mr Yonggang Wu to prepare the resource section and the reserve conversion section. - I have had no previous involvement with the Pakrut Project. I have no interest, nor do I expect to receive any interest, either directly or indirectly, in the Pakrut Project, nor in the securities of Kryso. - I am not aware of any material fact or material change with respect to the subject matter of the ITR that is not reflected in the Technical Report, the omission to disclose which makes the ITR misleading. - I am independent of the issuer applying all of the tests in sections 18.21 and 18.22 of the Listing Rules. - I consent to the filing of this ITR with HKEx and other regulatory authorities and any publication by them, including electronic publication in the public company files on their websites accessible by the public, of this ITR.

Mr Richard Kosacz, Mr Pengfei Xiao, Mr Qiuji Huang, Mr Hong Gao, Mr Andrew Lewis, Dr Yonglian Sun, Mr Romeo Ayoub and Mr Mike Warren are also independent competent persons on resource verification programs, resource estimate, mining, ore processing and environmental and social issues and overall quality control. Their qualifications have been outlined in the short biographical notes above.

2.7 Statement of SRK Independence

Neither SRK nor any of the authors of this Report have any material, present or contingent interest in the outcome of this Report, nor do they have any pecuniary or other interest in the Pakrut Project and the relevant companies that could be reasonably regarded as being capable of affecting their independence or that of SRK.

Neither SRK nor any of the authors of this Report have any direct or indirect interests in any assets which had been acquired, or disposed of by, or learned to any member of Kryso Resources Corporation Limited or any of Kryso Resources Corporation Limited or any of its subsidiaries within the two years immediately preceding the issue of this ITR.

SRK has no prior association with Kryso and its subsidiaries in regard to the mineral assets that are the subject of this ITR, within the two years immediately preceding the issue of this ITR. SRK has

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SRK’s fee for completing this Report is based on its normal professional daily rates plus reimbursement of incidental expenses. The payment of that professional fee is not contingent upon the outcome of the Report.

None of SRK or any authors of this Report have any shareholding, directly or indirectly, in any member of the Kryso Resources Corporation Limited or any right (whether legally enforced or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Kryso Resources Corporation Limited or its subsidiaries. None of the authors of this Report is an officer, employee, or proposed officer of the Kryso Resources Corporation Limited or its subsidiaries.

2.8 Representation

Kryso has represented verbally to SRK that full disclosure has been made of all material information and that, to the best of its knowledge and understanding, such information is complete, accurate and true.

2.9 Indemnities

As recommended by the VALMIN Code, Kryso has provided SRK with an indemnity under which SRK is to be compensated for any liability and/or any additional work or expenditure resulting from any additional work required:

 which results from SRK's reliance on information provided by Kryso or Kryso not providing material information; or  which relates to any consequential additional work resulting from queries or public hearings arising from this Report.

2.10 Consents

SRK consents to this Report being included, in full, in documents that Kryso proposes to submit to the HKEx in the form and context in which the technical assessment is provided and not for any other purpose.

SRK provides this consent on the basis that the technical assessments expressed in the Executive Summary and in the individual sections of this Report are considered with and not independently of, the information set out in the complete Report and the cover letter.

2.11 SRK Experience

The SRK group employs over 1,400 professionals internationally and has 50 permanently staffed offices in many countries on six continents. SRK in Australia has more than 160 staff in five offices in Perth, Sydney, Newcastle, Melbourne and Brisbane. SRK in China has its headquarters in Beijing and a satellite office in Nanchang. SRK has considerable experience in providing independent assessments for companies listed on stock exchanges in Australia, Britain, Canada, Hong Kong, South Africa and the US. In China, SRK has provided Independent Technical Review Reports for companies as shown in Table 2-2.

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Table 2-2: Recent Reports to HKEx by SRK

Company Year Nature of Transaction Yanzhou Coal Limited 2000 Sale of Jining III coal mine to the listed operating company Chalco (Aluminum Corporation of China) 2001 Listing on HKEx and New York Stock Exchange Fujian Zijin Gold Mining Group 2004 IPO Listing on HKEx Lingbao Gold Limited 2005 IPO Listing on HKEx Yue Da Holdings Limited 2006 Acquisition of shareholding in mining projects in Yunnan, China China Coal Energy Company Ltd (China Coal) 2006 IPO Listing on HKEx Sino Gold Mining Limited 2007 Dual Listing on HKEx Xinjiang Xinxin Mining Industry Co., Ltd 2007 IPO Listing on HKEx Kiu Hung International Holding Limited 2008 Acquisition of shareholding in coal projects in Inner Mongolia, China Hao Tian Resource Group Limited 2009 Very Substantial Acquisition of two coal mines in Inner Mongolia, China Green Global Resources Holdings Ltd 2009 Acquisition of shareholding in one iron project in Mongolia Ming Fung Jewellery Group Holdings Ltd 2009 Acquisition of shareholding in gold project in Inner Mongolia, China Continental Holdings Limited 2009 Acquisition of a gold project in Henan, China North Mining Shares Company Limited 2009 Acquisition of a molybdenum mining project in Shaanxi, China CNNC International Ltd 2010 Acquisition of an uranium mine in Africa Sino Prosper Mineral Products Ltd 2010 Acquisition of shareholdings in one gold project in Inner Mongolia, China New Times Energy Corporation Ltd 2010 Acquisition of shareholding in gold projects in Hebei, China United Company RUSAL Limited 2010 IPO Listing on HKEx Citic Dameng Holdings Limited 2010 IPO Listing on HKEx China Hanking Holdings Limited 2011 IPO Listing on HKEx China Daye Nonferrous Metaql Mining Ltd 2012 Very Substantial Acquisition on HKEx China Nonferrous Mining Corporation Ltd 2012 IPO Listing on HKEx 2.12 Forward-Looking Statements

Estimates of resources, reserves and mine production are inherently forward-looking statements, which being projections of future performance will necessarily differ from the actual performance. The errors in such projections result from the inherent uncertainties in the interpretation of geological data, in variations in the execution of mining and processing plans, in the inability to meet construction and production schedules due to many factors including weather, availability of necessary equipment and supplies, fluctuating prices, ability of the workforce to maintain equipment and changes in regulations or the regulatory climate.

The possible sources of error in the forward-looking statements are addressed in more detail in the appropriate sections of this Report. Also provided in this Report are comments on the areas of concern inherent in the different areas of the mining and processing operations.

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3 Project Location and Geography

3.1 Regional Location and Access

Administratively, the Pakrut deposit area is located in Vahdat Region, Republic of Tajikistan, about 80 km northeast (“NE”) in a straight line (112 km by road) from Dushanbe, the country’s capital city (see Figure 3-1 and Figure 3-2).

Figure 3-1: Project Location in Central Asia

Figure 3-2: Project Location in Vahdat Region, Tajikistan Access to the area is via 60 km of paved road from Dushanbe to the village of Ramit, from where approximately 50 km of dirt/gravel road along the Sardi-Mienna River leads to the site. The road is cut on steep slopes and is therefore exposed to landslides, rockslides and snow avalanches, as well as unexpected flooding from numerous tributaries. Due to the harsh conditions, during the winter the road is passable with careful driving and maintenance if necessary. As confirmed by SRK’s second site visit, during 2012 Kryso has upgraded the road to meet Tajikistan’s National Road

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Grade Five standards and can be used for transporting equipment and materials during construction and production, even in the winter. The nearest railroad station available is located about 90 km from the mine site in the towns of Orjonikidzeobad or the regional capital, Vahdat city (10 km east of Dushanbe). Vahdat city is the nearest, most economically-developed town comprising several small enterprises mainly occupied with processing rural products. There are several villages near Pakrut, namely Rufigar, Pichev, Guskef, Vistan and Kohu. The populations of these villages support themselves by raising livestock and farming; however, since the 1940s they have also participated in exploration and mining activities. The region is supplied with combustible fuel from the Sayed coal mine 75 km to the south, but the local population relies mostly on firewood.

The Pakrut area is located in a typical high mountain landscape with steep slopes of rocky ranges and deep narrow valleys. The absolute altitude varies from 2100 m to 3730 m above sea level (“ASL”) in the higher watersheds of the Kaltakul, Sardi-Mienna and Pakrut Rivers; in the lower parts of these rivers altitudes vary from 1000 m to 1600 m ASL. The accessibility of the region is very poor; and exposure of the ore is also poor due to the widely developed thick Quaternary overburden.

Subalpine conditions dominate in the region with the high diversity of flora and fauna characteristic of high mountainous domains in Tajikistan. Small groves of walnut, birch, poplar, mountain ash, wild cherries and various bushes and flowers along river and creek valleys dominate the landscape. On the upper parts of the valley slopes above 2000 m there are thin forests of rosebushes. Above 300 m there is a zone of subalpine meadows where trees are practically non-existent. These areas serve as high pastures for different types of livestock.

Large wild animals in the area include mountain goats, wild boars, snow leopards, bears and wolves and abundant rodents including hares, marmots and meadow mice. Snakes are abundant. Birds include mountain eagles, snow cocks, willow grouse and other small species.

Climactically the upper Sardi-Mienna area is part of the Asiatic continental zone, in which more precipitation falls during the cool seasons. In the catchment area of Pakrut creek at the bottom of the valley, summers are warm and winters are usually mild, with abundant snowfall; spring is characterized by plentiful rainfall. In the upper part of the catchment, summer is short and winter is long and severe, accompanied by excessive snowfall.

Figure 3-3: Pakrut Creek Valley and Deposit Area

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4 Operational Licences and Permits

4.1 Business Licences

According to the information shown on Kryso’s official website, Pakrut LLC is 100% owned by Kryso. SRK has sighted the original business licence (and the Chinese translation) of Pakrut LLC which was granted by the Justice Department of the Republic of Tajikistan. Details for the business licences are presented in Table 4-1. The original photocopy of the business licence is attached as Appendix 1.

Table 4-1: Business Licence Detail for Pakrut LLC Project/Company National Registration Licence for Pakrut LLC Business Licence No. 110001650 Issued To Pakrut LLC Issued By The Tax Bureau of Tajikistan Approved By The Justic Department of Tajikistan Issue Date 29 October, 2009 Expiry Date Licence Specification Registered economic entity, fulfilled social insurance

4.2 Exploration Licences

In 2004, Pakrut LLC, a wholly owned subsidiary of Kryso, was granted an exploration and trial mining licence (for 300 thousand tonnes of ore per year) over the Pakrut Licence Area, which comprises the Pakrut, Eastern Pakrut and surrounding 6300 hectares (63 square kilometres or “km2”) containing a number of other mineral deposits and potential occurrences. This licence is valid until 1 April 2014 (see Appendix 2)

The Pakrut exploration licence area of about 63 km2 is confined between the following vertices according to geographic coordinate grid (Table 4-2):

Table 4-2: Pakrut Exploration Area Limits

4.3 Mining Licences

On 2 November 2011, Pakrut LLC was granted Mining Rights in the Republic of Tajikistan Licence to the Pakrut Licence Area (No. 0004076), which comprises the Pakrut and Eastern Pakrut deposits. The date of expiry is 2 November 2030.

A copy of the Pakrut Mining Licence is included in Appendix 3.

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4.4 Other Operational Permits

4.4.1 Land Use Permit

On 2 October, 2010, Pakrut LLC was granted a land use permit covering the Pakrut deposit area. The licensed area covers 184.45 hectares (“ha”) and is confined between the coordinates shown in Table 4-3. A copy of the Land Use Permit is attached as Appendix 4.

Table 4-3: Pakrut Mining Area Limits

4.4.2 Water Use Permit (including water discharge)

On November 9, 2012, Pakrut LLC was granted a special water use permit covering the industrial water usage of the Pakrut Project. The permit specified the source, type, amount, pre/post treatment and recycling requirements. The major details of the water use permit are listed in Table 4-4, The discharge quality control and the measure of water use and protection are shown in Table 4-5 and Table 4-6. A copy of the permit is attached as Appendix 5.

Table 4-4: The Major Details of Water Use Permit for Pakrut LLC Licence/Permit Name Permit for the special water use to Pakrut LLC Water Use Permit No. 3416/K/d/ Issued To Pakrut LLC Issued By Department of supervision of the use and protection of water resources. Committee for Environmental Protection under the Government of the Republic of Tajikistan Issue Date 9 November, 2012 Expiry Date 9 November, 2015 Industrial Capacity Ore processing: 1,320,000 tonnes per year Amount of workers Population of camp: 648 people Working Days 330 days per year Area Nature Industrial area with arable and cultivated land Type of Water Source Surface Water (Sardai-Miena and Kafirnigan River) Sampling and Analysis of Not necessary Used Water Water Use Estimation 5,326.84 m3/day or 1,704,583.2 m3/year Water Reuse Estimation 27,080 m3/day or 8,936,400m3/year Waste water treated with 200 m3/day or 66,000 m3/year septic treatment

 The methods of waste water treatment and design capacity of treatment facilities:

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The production waste water used in the water recycling system in amount of 27,080m3/day or/and 8,936,000m3/year. Domestic sewage will be discharged in amount of 200m3/day or 66,000m3/year after septic treatment.

 Waste water discharges quality:

Table 4-5: Waste Water Discharges Quality Control Table Water quality Waste water Name of pollutant Waste water drainage discharge point # Monitoring dam in the discharge point Suspended substances BOD (Biochemical 1 Oxygen Demand) Mineralization Other

 Method of calculation of pumped and waste water and content of pollutants (harmful substances in the waste water):

Calculations by the working capacity of pumps, quality analysis for water and waste water will be undertaken in according to agreement.

 Types of water gauges and points of installation:

Water gauges are not installed.

 Availability and methods of laboratory quality control of treated water and operations of treatment facilities:

Quality control over treated water and operations of treatment facilities is undertaken in accordance with agreement.

 Measures for use and protection of water:

Table 4-6: Measures for Water Use and Protection Time of execution Anticipated improvement Prevention of pollution of water Continuous Funds Responsible resources allocated 2013 Continuous Rational use of water (somoni) Continuous (2012-2013) Prevention of environmental pollution Improvement and control of water Continuous quality Pakrut LLC 7000 Chlorination of drinking water and On regular basis treatment of waste water

4.4.3 Discharge Permit (Air Emission)

On 18 October 2011, Pakrut LLC was granted a special permit for the discharge of the harmful substances to atmosphere from the stationary source. The permit specified the source, type, amount and allowance of the estimate of air pollutant substances. The major details of the discharge permit are listed in Table 4-7 and the permitted pollutants are specified in Table 4-8. The original copy of the permit is attached in Appendix 5.

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Table 4-7: The Major Details of Discharge Permit for Pakrut LLC Licence/Permit Name Special permit for the discharge of the harmful substances to atmosphere from the stationary source to Pakrut LLC Water Use Permit No. 166/13-11 Issued To Pakrut LLC Issued By Department for supervision of usage and protection of atmospheric air. Committee for Environmental Protection under the Government of the Republic of Tajikistan Issue Date 18 October, 2011 Expiry Date 1 January, 2016 Industrial Capacity Ore processing: 1,320,000 tones per year Amount of workers Population of camp: 648 people Working Days 256 days per year Total Emission Discharge 23.493 tones/year in average Emission Treatment and See Table Reduction Method

Table 4-8: The list of Pollutants Permitted to be Discharged to Atmosphere MAC MAC* The name of Danger Discharge of Mg/m3 Mg/m3 substance Class pollutants Max/short time Max. average/day t/year g/sec Organic dust 0.05 0.15 3 0.471 0.088 Welder aerosol 0.03 0.002 3 0.0028 0.0037 Mn and its 0.002 0.001 3 0.0001 2.2*10-4 compounds Silica compounds 0.01 0.01 3 0.0028 2.6*10-4 Fluoride 0.002 0.001 3 0.00028 1.8*10-7 Hydrogen Fluoride 0.001 0.002 3 0.0002 1.8*10-4 Hydrocarbons 1 1.1 3 0.711 0.137 Emulsoid 0.000206 Abrasive metallic 0.1 0.15 3 0.43 0.23 dust Metallic dust 0.1 0.15 3 0.022 0.001 Carbon oxide 5 5 3 9.684 3.45 Nitrogen oxide 0.085 0.04 2 6.668 1.61 Hydrocarbons 1.1 1.1 4 5.5016 1.109

 Measures for short-term reduction of emissions of harmful substances to atmosphere in period of especially extreme weather conditions:

The rate of the discharge of harmful substances (pollutants) into atmosphere shall be reduced by enterprise under the order of hydro-meteorological or sanitary-epidemiological authorities in the case of extreme unfavorable weather conditions. Such conditions may include the elevated temperature inversion above the sources of emissions (i.e. pipes) and wind direction from the source to the residential areas. In such cases the concentrations of pollutants near the surface may increase by many times and exceed the values of Maximal Allowed Concentrations. Extremely unfavourable meteorological conditions (EUMC) may cause the serious pollution to the dangerous level for human health and enterprise managers shall take adequate measures, including partial or

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First hazard category -1st mode of enterprise operations- near the earth surface the high concentrations of pollutants are observed or anticipated (the concentrations of pollutants exceed approved short-time Maximal Allowed Concentrations by up to three times.

The second hazard category (the second mode of enterprise operations)- the observed or anticipated concentrations of harmful substances exceed approved short-time Maximal Allowed Concentrations by 3-5 times near the earth surface.

The third hazard category (the third mode of enterprise operations)- the observed or anticipated concentrations of harmful substances exceed approved short-time Maximal Allowed Concentrations by over 5 times near the earth surface.

For the first and second modes of the operations during EUMC the mainly logistical measures are required with additional actions with the purpose of temporarily reducing the emissions on the enterprise by 25-30%. For example it may be necessary to suspend work of several workshops (welding, painting, maintenance of engines).

The third hazard category (third mode of operation) requires the reduction of discharge by 60%. This requirement does not apply to the Pakrut because of its small contribution to the total pollution.

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5 Geological Description

5.1 Regional Geology

The Pakrut deposit is located in the axial zone and on the southern slopes of the Hissar range, one of the most geologically complicated parts of Central Tajikistan. Tectonically, according to regional metallogenic zoning, it belongs to the Zeravshan-Hissar structural-facial formation of southern Tien-Shan, which hosts numerous ore bearing zones and ore bearing belts.

Stratigraphical formations developed in this region are represented by three structural stages corresponding to three major tectonic-magmatic cycles, as follows:

 The lower stage, which is represented by terrigenous (less sedimentary-volcanic) geosynclinal facies formed during the Ordovician and Lower Triassic periods;  The middle stage, which is represented by terrigenous coal-bearing and terrigenous- carbonate structural-lithological complexes of Jurassic-Pleistocene (J-Р3²) formations corresponding to the sub-platform stage of the regional structural development; and  The upper stage, represented by a complex piedmont molasse formed during the latest phase of the regional orogenic-tectonic activity (Oligocene to the present).

The largest regional structure formed during the late Hercynian Orogeny is the North Hissar Anticline with its northern and southern vicinity. The central part of this structure represents a very complicated, faulted and folded inter-geosynclinal tectonic framework.

The region is characterized by very limited magmatic activity which was divided according to the general magmatism of the South Hissar area:

 Upper Cambrian granite-adamellite complexes wholly intruding into Palaeozoic rocks as small irregular stocks cut by later dykes of porphyry diorite and subsequently lamprophyre;  Lower Permian hypabyssal intrusions of rhyolite-dacite composition, widely represented in central Tajikistan but limited in the Pakrut area to a set of dykes developed on the right site of the Kaltakul River and the upper flows of the Barzangi River; and  Small Lower-Middle Triassic sub-alkaline gabbro and basalt intrusions accompanied by mafic and ultramafic dykes.

The metallogenic features of the region are clearly defined by a gold-antimony-mercury paragenesis as well as by base metals representing different types of deposits and mineral occurrences.

The Pakrut ore field strikes northwesterly (“NW”) and is a part of the sub-latitudinal Pakrut- Rufigar belt which itself belongs to the Pasrud-Yagnob metallogenic zone of the Zeravshan-Hissar structural formation.

The Pakrut area is a fragment of the gold/rare metals metallogenic province of Central Tajikistan. Within the variety of mineral manifestations, gold, antimony mercury, silver, base metals and fluorite play major roles in the region. Other ore elements such as bismuth, copper and rare earths, although widely developed, do not form their own economically feasible concentrations. The most important non-metallic mineral materials are coal and industrial materials.

5.2 Local Geology

5.2.1 Local Stratigraphy

The local geology of the Project area comprises sedimentary-metamorphic rocks represented by geosynclinal variable formations of Ordovician, Silurian, Devonian and Carboniferous rock. To a

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5.2.1.1 Palaeozoic Strata

The Palaeozoic stratigraphic profile is represented by marine geosynclinal sediments of about 3500 m thickness.

Ordovician System sediments consist of a thick layer of metamorphosed sediment known as Yagnob schist that is divided into two lithological sections, Barzangi and Razskaya suites.

Lower Silurian sediments are represented by the Shingskaya suite which has a very limited distribution. It is composed of calcareous dolomite and dolomitic limestone with a bottom layer of quartz-sericite schist and a top layer of quartzite sandstone. The suite is up to 200 m thick.

Upper Silurian-Ludlovian System sediments are comprised of the Niznieargskaya (Lower Argsk) sub-suite which overlies the Lower Silurian series. This suite is composed of massive, thick layered bituminous dolomite and dolomitic limestones with a total thickness reaching 410 m.

Upper Ludlovian–Early Devonian sediments are the Verhneargskaya (Upper Argsk) sub-suite concordantly overlying the Lower Argsk sediments. It is composed of marble and dolomitic limestones with occasional inter-bedding of phyllite-like schists; the total thickness is about 370 m.

Lower Devonian sediments are represented by the Agbaliyskaya Suite concordantly overlying the Upper Argsk sub-suite. This suite is represented by phyllite-like schists with thin interlayers of carbonaceous slates and sandstones. The thickness of this suite varies from 500 – 800 m.

Lower Carbonaceous (Tournaisian - Lower Visean) sediments comprise the Marguzor Suite, which has limited distribution in the area of interest and is composed of gravels, conglomerates, sandstones and shales and has a total thickness of 550 – 800 m.

5.2.1.2 Mesozoic Strata

Lower and Middle Jurassic – Undivided

Jurassic sediments overlie the Palaeozoic surface with sharp angular unconformities and occupy limited areas. The lower section is represented by coarse-grained sandstones interbedded with gravels, stones and conglomerates; the upper section consists of fine-grained sandstones with layers of carbonaceous conglomerate. Thickness of these strata is 280 m.

5.2.1.3 Cenozoic Strata

Quaternary sediments are developed extremely well in the area and are represented by alluvial, proluvial, fluvioglacial and other genetic types. They are divided into three different groups according to their ages, namely, Middle Pleistocene, Upper Pleistocene and contemporary sediment groups.

5.2.2 Local Magmatism

The area surrounding the Pakrut deposit is characterized by a lack of intrusive rocks associated with the Variscan and Early Mesozoic magmatic cycles; intrusive rocks are instead represented by two intrusive complexes:

 An Early Permian complex of porphyry granite and hypabyssal intrusions of rhyolite- dacite formation; and  An Early-Middle Triassic complex of small sub-alkaline gabbroid basaltic intrusions.

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The Permian complex is represented by a chain of small stocks and thick dykes controlled by regional faults. All these intrusions are elongated sub-latitudinally, forming a belt up to 500 m wide on the left banks of Kaltakul River. Most of the porphyry-granite bodies are surrounded by a halo of hornfelsed shales up to 100 m wide in some places.

The Triassic intrusive complex is represented by dykes and explosive pipes. Most of the dykes in the Pakrut region are controlled by tectonic zones oriented along the fold axes but less transverse to the folds. The dykes are usually thin (0.5 m to 1.5 m) with extents of a few tens of metres.

5.2.3 Local Structure

The Pakrut ore field strikes northwesterly and is a part of the sub-latitudinal Pakrut-Rufigar belt which itself belongs to the Pasrud-Yagnob metallogenic zone of the Zeravshan-Hissar structural formation.

The Pakrut Anticline is a large antiformal chevron fold extending for several kilometres which connects the deposits of Pakrut and Eastern Pakrut from west to east. The Pakrut deposit is located near its axial plane. Graphite faults are distributed in the deposit area and are considered to coincide with local metasomatic alteration.

5.2.4 Metallogeny

The Pakrut ore field is characterized by occurrences of gold, silver, lead, zinc, antimony and mercury. Of these, the most economically potential are the Pakrut gold deposit, the gold occurrences of Eastern Pakrut, Rufigar and Sulfidnoye and a number of the antimony manifestations located in the Kaltakul River valley. Gold deposits are confined to the zones of crushing, shearing and mylonitization developed along tectonic zones such as the multiple activated developments of the Graphitovy and Rufigar faults. Gold mineralization occurs throughout their length; however, the most economically potential mineralizations so far discovered are restricted to only a few separated sections due to a number of lithological and structural host rock characteristics.

The Pakrut deposit and nearby gold occurrences are classified as gold-sulphide-quartz type occurrences, represent one of the gold bearing deposits with economic extraction potential. Structurally they are related to the zone of crushing, silification and quartz veining hosted within the Razskoy suite sericite-chlorite-quartz schists. The ore controlling structures are zones of longitudinal faults (Graphitovy and Rufigar) developed in schists and developing hydrothermal- metasomatic quartzite, albite and gold bearing sulphide alteration.

No manifestations of gold in the Pakrut-Yagnob metallogenic zone show explicit affiliation with any magmatic rocks, but they do represent all the features characteristic of plutonic hydrothermal deposits.

5.3 Deposit Geology

5.3.1 Stratigraphy and Lithology

The Pakrut general area is comprised of Razskoy Suite metamorphic rocks, a minor quantity of small alkaline gabbro-basaltic dykes of Lower-Middle Triassic age and ore bearing hydrothermal- metasomatic formations. These rocks are covered by unconsolidated Quaternary overburden sediments.

The most abundant rocks in the area are Ordovician chlorite-muscovite-albite-quartz schists with generally very well developed schistosity. Macroscopically, these are dense, coarse grained, greenish-grey or grey-green rocks often containing lenticular segregations of metamorphogenic quartz and showing gneissic textures.

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The typical mineral composition is 35% - 60% quartz (average 45%), 15% - 40% albite (average 25%), 10% – 35% muscovite (average 20%) and 5% – 20% chlorite (average 10%). Minor amounts of apatite, tourmaline, zircon, leucoxene and other accessory minerals are also present.

Among the rare lenticular-banded gneissose schists, small lenticular bodies of schists occur, showing porphyroblastic structures. Macroscopically they are massive green and light green schistose rocks with well marked disseminated grains of albite 1 mm to 2 mm in size. Mineral composition includes 0% - 35% quartz, 25% – 60% albite, 5% – 50% muscovite, 10% - 35% chlorite, 0% - 15% carbonate and 0% - 5% leucoxene. Small amounts of tourmaline (0% - 3%); rutile, epidote, apatite and opaque minerals are also present.

Carboniferous Era shales are quite diverse in composition and physical appearance. In the Project area they are mainly grey to black schistose rocks, often containing lenticular segregations of metamorphogenic quartz. The rocks are composed of alternating thin micaceous bands and albite- quartz often crumpled into complex isoclinal folds. The minerals contained in the shale include 15% - 50% quartz (average 35%), 15% - 30% albite (average 20%), 20% - 40% muscovite (average 35%) and 5% - 20% chlorite (average 15%).

In addition to the above lithology, there are several layers of quartzite, each 0.5 m - 1.5 m thick as well as 3 m – 5 m of limestone layers intercalating the chlorite-muscovite-albite-quartz schists, having a total thickness up to 35 m.

The Quaternary sediments are represented by a variety of litho-genetic composition ranging from contemporary to Upper Cenozoic formations.

The contemporary sediments are represented by upper and lower alluvia, diluvia, proluvia, talus landslides and man-made forms.

Upper Cenozoic formations are developed in the Pakrut River valley as thick alluvial fans from the right side tributaries as well as fragments of the higher alluvial terraces on the left and right sides of the valley’s mouth.

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Figure 5-1: Simplified Geological Map of the Project Area 5.3.2 Magmatic rocks

Magmatic rocks are represented by lamprophyre dykes of alkaline gabbro composition, 0.2 m - 2.0 m thick and up to 150 m long and by blocks with tectonic constraints. The dykes that were delineated by boreholes and underground workings are mainly orientated sub-meridionally, dipping to the southwest at angles of 60 – 80° and occasionally to the northeast or northwest.

The mineral composition of the most common intrusive rock in the Pakrut deposit is dominated by plagioclase (labradorite), amphibole, olivine and pyroxene; minor and accessory components are biotite, quartz, apatite, sphene and rutile.

As a result of secondary processes of decomposition and replacement, the rocks were transformed into albite-sericite-carbonate units that obscure the structure of the primary rock.

In the zones of hydrothermal activity, lamprophyres underwent fragmentation and metasomatic transformation. They are cut by the carbonate-chlorite, carbonate-albite-quartz and carbonate- hematite veins with later sulphides (chalcopyrite, tetrahedrite and tennantite). In other places, fragments of lamprophyre are cemented by albite-quartz aggregate with gold and sulphides.

Most of the dykes which were analysed did not carry significant gold values; however, some of them returned assays varying from 0.2 – 1.0 grams of gold per tonne of rock (“g/t”).

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5.3.3 Structural Framework of the Pakrut Deposit

The main structure is the Pakrut Anticline, which is about 12 km overall with 6 km of its axial zone following the Pakrut creek valley. This part of the axial plan of the anticline is relatively rectilinear, striking at azimuth 110°. West of the river mouth, the fold changes its direction to southwest and strikes to the west in the Kutihar River valley. The axial zone of the anticline is covered by alluvial overburden along its entire length. The zone is 15 m – 20 m wide and is intensely crumpled with multi-micro isoclinal folding and has vertical secondary schistosity with strong graphite and pyrite mineralization.

The limbs of the anticline are made of Razskoy Formation schists; the southern limb dips to the south (175 - 180°) at a 60° angle and the northern limb strikes mainly northeast at an azimuth of 80° and dips vertically. The structure is complicated by numerous fractures and flexures with corrugation and plaiting. The Graphitovy Fault is the biggest discontinuous structure, making up a system of sheared fractures in a zone 50 m - 200 m wide, dipping to the north at angles of 50 - 80°. Five kilometres from proposed Adit No. 3, an easterly-striking fault can be traced along the northern limb of the anticline; to the west the fault is located along the axial zone of the anticline.

The Graphitovy Fault hosts most of the gold occurrences in the eastern part of the Pakrut deposit (Ore Bearing Zone 6) and the potential Eastern Pakrut deposit is located in very close vicinity to the fault several kilometres to the east up the Pakrut valley.

The deposit area is intersected by the large Fault #1, which strikes south at 175° and dips at 62 - 65° angles at the level of Adit No. 1 and turns southeast, striking at 150 - 155° and dipping at 70 - 75°, in the eastern part of the deposit. The fault is accompanied by a zone of fractured breccia 1 m to 3 m wide and in some parts is associated with graphite alteration and lenticular metasomatite bodies. Ore Bearing Zone 1 is located at the footwall of this tectonic zone.

Latitudinally-oriented Fault #2 is located 200 m to 300 m south of Fault #1, limiting Ore Bearing Zone 7 to the south. Morphologically it is expressed by a sub-parallel system of cracks and has a strike of 180° and dips at 60°. In Drift #3 (Adit No. 1) the fault turns sharply to the northwest. In the area of this bend the schists are heavily compressed and crushed, even powdered; however, the primary schistosity is preserved.

Along with the major tectonic zones described above, higher-order discontinuities also play an important role in the formation of the deposit. Hydrothermal mineralization is strictly controlled by a sub-latitudinal system of extended reverse faults steeply dipping to the south. More rarely, the most recent displacements have steep northern latitudinal dips.

The formation of most latitudinal faults was associated with the stages of folding and regional metamorphism.

5.3.4 Hydrothermal-metasomatic Formations

The hydrothermal-metasomatic formations of the deposits can be grouped as follows:

 Carbonatized schists – the most common type of metasomatite. They are the product of alteration and changes to the schists when the iron-magnesium silicates (mainly chlorite) were replaced by iron-magnesium carbonates;  Carbonate-quartz-albite metasomatites – occur to a lesser extent than the carbonatized schists but distributed in the same areas in the Sardi-Mienna River basin; and  Quartz-sericite-beresite- like metasomatites – manifest as very limited, small compact bodies.

Silification, chlorite veinlets and veinlet-disseminated hematisation also occur and hydrothermal processes are associated with partial redistribution of the carbonaceous material.

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5.3.5 Ore Mineralogy

During the exploration of the Pakrut deposit a total of 56 different minerals were discovered and described, including 26 ore minerals, of which 8 are rare or very rare.

In general the mineral ore composition can be regarded as simple and consists of a combination of non-metallic and other ore minerals such as pyrite, arsenopyrite and hematite. Less common, but still playing an important role in the processing of the ore, are tetrahedrite, chalcopyrite, sphalerite and galena. Table 5-1 summarizes ore paragenesis in the Pakrut deposit.

Of the sulphides, pyrite and arsenopyrite carry the highest concentrations of gold, from 10 to 70 g/t, with pyrite carrying a slightly higher content.

Table 5-1: The Summary of Ore Mineralogy Order Ore minerals Gangue Minerals Secondary Minerals quartz, albite, goethite, scorodite, malachite, pyrite, arsenopyrite, hematite, Major carbonates, muscovite, azurite, wulfenite, jarosite, martite, rutile, ilmenite, leucoxene (sericite), chlorite, kermesite, cerussite, smithsonite tetrahedrite, chalcopyrite, apatite, tourmaline sphalerite, galena, magnetite, zircon, barite, celestine, Minor rutile, chlorite leucoxene antimonite, jamesonite sphene, aragonite, garnet, pyrrhotite, anatase, native gold amphibole, pyroxene,

Native gold is described on the basis of grain size as either finely dispersed gold with grain sizes of less than 0.001 mm, or visible gold with grain size of 0.001 mm to 1 mm. According to granulometric analysis, the majority of Pakrut gold grains are less than 0.2 mm in size; however, particles of sizes between 0.5 and 1.3 mm were also found.

Gold mainly occurs in its native form in intergrowths with quartz, carbonate and other rock forming minerals and sometimes with sulphides with a variety of particle shapes, including nuggets, splintery, xenomorphic, tear-drop and shapeless plates.

In sulphides, gold occurs as fine-grained disseminated inclusions having a rounded shape and yellow colour and as clusters of size 0.5 - 1.5 mm filling interstices in quartz, at the boundary of quartz and carbonate, in micro-vugs and micro cracks in these two minerals and in cracks of brecciated sulphides cementing cataclastic fragments of pyrite and arsenopyrite along with gangue material. Blending of gold with tetrahedrite is common and occurs in up to 1.5% of content.

The mineralogical study distinguished two generations of gold mineralization. The first generation is rarer and is associated with carbonate-pyrite-arsenopyrite paragenesis and with native metals, carbonaceous matter and sericite. This generation is characterized by very fine precipitated particles and (0.001 mm - 0.01 mm) and high fineness.

The second and most common occurrences of native gold are associated with tetrahedrite, chalcopyrite, sphalerite, galena, pyrrhotite and jamesonite. This second generation of gold is characterized by uneven silver content; again, high fineness prevails.

In general the gold in the Pakrut deposit is of high fineness varying from 903 to 961 and averaging 912. The silver content ranges from 3.73% to10.06%.

According to the assay analysis, the ratio of the gold to silver in the Pakrut ores averages 2.5:1.

5.3.6 Mineralized Zones

Commercially feasible mineralization at the Pakrut deposit is confined to a series of linear, sub- parallel, steeply dipping zones developed along normal and reverse faults associated with crushing,

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In general, metasomatic ore-bearing zones are divided into two groups according to the degree to which the primary minerals of the original rocks have been replaced by a newly formed paragenesis, i.e., the outer weakly-manifested banded metasomatites and the inner fully manifested zone.

Figure 5-2: Horizontal Projection of the Pakrut Gold Deposit with Locations of the Bore Holes Drilled in 2010 and Proposed for 2011 The outer zone displays transitional changes from fresh rock to altered rock, represented by uneven distributions of carbonate-albite-quartz aggregates. The sulphide content in this zone reaches 1% to 1.5% whereas the gold grades vary from 0.1 to 2 g/t, rarely more. In both foot and hanging walls the thickness of the zone ranges from 7 m to 20 m.

The inner zone composes the central part of the metasomatic column and is represented by quartz- feldspar metasomatite and macroscopically massive quartzite-like rock of light-grey or bluish colour.

The bulk of the commercial mineralization is concentrated in the inner zone of the metasomatic column. In some parts the boundaries between the two zones are quite distinct, but in most places the boundary is drawn arbitrarily, due to a gradual inter-zonal transition. The boundaries of the ore bodies generally coincide with the contour of the inner zone, though in some places it trespasses into adjacent less-altered rocks.

The shapes of the ore bodies, their sizes and spatial positions depend on the size and morphology of the ore zones.

A total of 8 mineralized zones were defined, designated Ore Bearing Zones (“OBZ”) 1, 3, 5, 6, 7, 14, 15 and 16. OBZ 1 and OBZ 3 are the two major mineralized zones. OBZ 1 can be subdivided into three sub-zones namely 1, 1a and 2 (as shown in Figure 5-2). The wireframe models of the Ore Bearing Zones are presented in Figure 5-3.

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OBZ 1 and OBZ 3 were interpreted digitally, first with the stacked vertical cross-sections oriented generally perpendicular to the ore bearing zones and then sliced with a 10 m interval horizontal grid set, followed by digitizing on a 10 m interval plan. Finally all the plans were linked together to produce a three dimensional wireframe model against the topographic model.

OBZs 5, 6, 7, 14, 15 and 16 were defined mainly based on trenches and channels samples as well as the occasional drill hole.

Along the strike of the mineralized zones, the extrapolation distance is about half of the space between two adjacent cross sections. Down the dip in the Pakrut area, OBZ 1 was extrapolated to an elevation of 1580 m ASL, OBZ 3 to an elevation of 1870 m, OBZ 5 to 2250 m, OBZ 6 to 2050 m and OBZ 7 to 1940 m ASL. In Eastern Pakrut, OBZ 14 was extended down to an elevation of 2570 m ASL and OBZ 16 to an elevation of 2420 m.

Figure 5-3: Isometric View of Ore Bearing Zones (Azimuth: 135.0°, Dip: -5.0°) The ores zones can be briefly described as follows:

OBZ 1 is further divided into three ore bodies as No. 1, 1a and 2.

OBZ 1 is the biggest zone located in the central part of deposit. It was traced on the surface with ditches and trenches over a distance of 520 m; at depth it was investigated with underground workings at the level of Adit No. 1 as well as with numerous diamond core boreholes. The zone strikes east-southeast. Its thickness in the main Zone ranges from a few metres to 51 m; the thickest and richest ore occupies the central and western part of the zone. Towards the southeast, thickness and grade decrease along both strike and dip. Between the surface and the 1160 - 1150 m levels, the zone dips to the southwest with steep angles varying from 70 to 85°. Below this level the zone dip gradually changes to northeast also at a steep angle of 75 - 85°. The zone is commercially profitable over almost its entire extent and is the most studied as regards to its tectonic structure as well as hydrothermal alteration. Its thickness is constant almost along entire extent, especially in the western and central part; additionally, the down dip extension is considerable and was followed

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OBZ 1 has a complex structure and, within its limit, two ore bodies (#1 and #1a) were defined as well as six apophyses and two lenses.

OBZ 2 is traced as a single structure over 205 meters from the junction with OBZ 1 in the southeast to Cut 6 in the northwest. The northern extension of the zone was not traced due to complicated tectonics and poor outcrop. The thickness of the altered gold-bearing rocks ranges from 10 m to 70 m, with dip azimuth 85° and dip angle 80°.

On the level of Adit No. 1, the zone was explored to a depth of 280 m via two drifts with cross-cuts spaced every 170 m, with numerous boreholes.

Two ore bodies (#2 and #2a), two apophyses and two lenses were delineated within this zone.

Figure 5-4: Typical Cross-section trough OBZ 1 OBZ 3 is located northeast of OBZ 1; it strikes to the southeast and dips to the northeast at angles of 75 - 85°. The zone was traced over 470 m on the surface with numerous trenches and ditches and underground at the level of Adit No. 1 with 22 cross-cuts. The zone was explored with boreholes from the surface to a maximum depth of 230 m.

The central part of the zone is covered with Quaternary overburden about 5 m thick.

The zone is composed of gold-bearing banded and massive metasomatic rocks. In the northwest it is limited by the Graphitovy Fault zone in the axial plane of the anticline. Structurally the zone is similar to OBZ 1 and strikes parallel to it.

OBZ 3 comprises four ore bodies, #3, #3a, #4 and #4a and two apophyses, numbered 9 and 10.

OBZ 5 is one of the most complex and little-studied structures of the deposit. In the southeast it is adjacent to OBZ 6 but has a higher grade of metasomatite alteration and a larger thickness of metasomatites. It is limited by a steeply-dipping fault to the east-northeast which can be seen at the

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The metasomatites are strongly impregnated with gold. Some grab samples taken from the surface returned gold values reaching 2.4 g/t. Within the zone, ore body #5 was outlined with the following average parameters: thickness 2.43 m - 4.94 m and gold grades 1.14 - 5.7 g/t.

OBZ 6 was investigated on the surface with several trenches and ditches, underground via Adit No. 3 at depths of 20 m to 45 m and with one borehole 230 m deep from the surface. Due to the thick overburden, the zone is poorly exposed at the surface. Its length at the level of Adit No. 3 is 280 m and its thickness ranges up to 30 m.

The hydrothermal-metasomatic alteration is confined to the hanging wall of the main plane of the Graphitovy Fault, which dips to the north at angles of 75 to 90°. The grade of alteration and mineralization range from weak at its western end to strong at the eastern end.

Higher gold grades occur in the central part of OBZ 6, forming a block 12 m - 17 m thick with a minimum length of 60 m, within which the density of fissures significantly increases to the east- northeast.

Within this zone, one sub-concordant (by strike and dip) ore body was outlined (#6) whose thickness varies from 2.09 m to 28.25 m and contains gold grades ranging from 1.05 to 8.54 g/t.

OBZ 7, located about 70 m south of OBZ 1, was outlined on the level of gallery No. 3 and Adit No. 1 by cross-cutting. It has a latitudinal orientation and its dip is determined by post-ore faulting to the north at angles of 70 - 85°. Ore body #7 was outlined within this zone, stretching for 330 m, 2.0m - 8.54 m thick and with gold grades between 1.1 and 3.2 g/t.

5.3.7 The Eastern Pakrut Area

The area designated Eastern Pakrut is located on the northern side of the Pakrut River and approximately 3 km east of the Pakrut deposit. Here a zone of gold bearing quartz-albite metasomatites was discovered associated with the Graphitovy Fault. The mineralization is 1 to 5 m wide and carries 1.12 to 20.00 g/t of gold.

The geology of this area consists of schists of the Upper Ordovician Razskoy Formation that form the sub-latitudinally oriented Pakrut anticline; the Razskoy Formation is cut sub-parallel to its axis by the Graphitovy Fault, the main ore formation-controlling structure. The formation of metasomatites was a result of metasomatic alteration of schists, their silification, albitization and cataclasis.

Thickness of the metasomatites varies from tens of centimetres to 3 - 5 m and, rarely, more. On the surface the metasomatic bodies extend from a few metres to 100 m or more. The size and shape of these bodies are determined by the type, orientation and interrelationships of the controlling fractures.

In addition to the metasomatites, numerous quartz bodies occur within the Graphitovy tectonic zone. These bodies occur in different shapes and form veins or lenses to isometric forms; and their spatial orientations vary significantly.

In the Graphitovy Fault zone the schist series also underwent intense changes manifested by a high saturation of disseminated pyrite and arsenopyrite with strong limonite alteration and elevated gold content.

Several thomsonite-bearing lamprophyre dykes stretching over 1.5 km are observed at the foot wall of the Graphitovy fault.

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The Graphitovy fault in the area of Eastern Pakrut is represented by two sub-parallel branches separated by a 90 m to 100 m gap and forming two ore bearing zones, the southern OBZ 14 and northern OBZ 15.

Figure 5-5: Eastern Pakrut Ore Zone Locations and Boreholes Drilled in 2011 OBZ 14 is the most explored; at the surface it is traced for a distance of about 800 m. Three ore bodies, #1, #2 and #3, were outlined within this zone, of which #1 is the thickest and contains higher grade ores than the other two.

OBZ 15 is located to the north and is parallel to OBZ 14. Due to the thick, widespread Quaternary overburden, this zone is known only to a limited extent. The recent drilling did not encounter OBZ 15 at depth.

OBZ 16 is found about 500 m west of OBZ 14, where it was outlined by the recent drilling. OBZ 16 was previously considered a western extension of OBZ 14. At present only two ore zones (OBZs 14 and 16) are considered potentially economically feasible and appropriate resource estimates were performed.

5.3.8 The Sulfidnoye Occurrence

The Sulfidnoye gold occurrence is located on the southern slope of the Hissar Range and the western side of the upper Sardi-Mienna River, about 4 km northwest of the Pakrut deposit (see Figure 5-3 and Figure 5-6).

The mineralization occupies a favourable structural position and is confined to an anticlinal crest, complicated by a longitudinal reverse fault, which, combined with diagonal fracturing, forms the basic structural framework that controls the gold mineralization. Gold mineralization is mainly associated with quartz-sulphide lenses and veins and occasionally occurs in selvages. Its grades are unevenly distributed and proportional to the sulphide concentration. The content of gold in the veins varies from minor amounts to 6.2 g/t. The associated elements are represented by elevated grades of silver varying from a few grams per tonne to 940 g/t (the silver :gold ratio is 10:1) and include up to 4.5% lead, 1.5% zinc and 0.59% antimony. The gold carriers are pyrite and arsenopyrite; these ores are classified as low sulphide gold-quartz formations.

Four mineralized zones were distinguished in the Sulfidnoye area, all mainly of sub-latitudinal orientation, occasionally striking northeast. Theirs sizes are a few tens of metres in width and a few tens to a few hundred metres in length, with gold grades varying from fractions to 46.2 g/t. Within Sulfidnoye Zone No. 1 an ore body 60 m long and 5.81 m wide occurs and has average gold and silver grades of 6.72 g/t and 53.0 g/t respectively.

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5.3.9 The Rufigar Occurrence

The Rufigar occurrence is located on the left side of the Kaltakul River about 5 km north of the Pakrut deposits (see Figure 5-3 and Figure 5-6) and is marked by a series of surface manifestations stretching 5 km along the Rufigar tectonic zone. The western flank is located 1 km east of Rufigar village; the eastern flank is limited to the valley of Glubov Creek, the left tributary of the Kaltakul River. The area of interest is 80% covered by 2 to 5 meters (or more) of diluvial overburden and by landslides.

The area is built of metamorphic schists, micro-quartzites and Razskoy suite meta-effusives of Upper Ordovician age and to a limited extend of intrusive rocks which occur in the Eastern Rufigar area as Lower Permian granite and granodiorite porphyries dykes and stock bodies.

Four separated mineralized zones were defined within the Rufigar area: Central, Eastern, Upper Rufigar and Surmyanoye. Drilling and trenching results showed that the prospect shares a similar metallogenetic advantage with Pakrut.

Figure 5-6: Mineralized Indications at Rufigar and Sulphidnoye

5.4 Exploration Review

5.4.1 Exploration History of 1975-1981

The exploration history of the Pakrut deposit area started in 1971 - 1972 when, on the basis of aerial photography, a 1:50,000 scale topographical map was made, after which the area was prospected. The gold occurrences in Pakrut and Rufigar were discovered and recommended for further detailed exploration.

In 1975 a Tajikistan governmental surveying party created a topographic grid at a scale of 1:2000 as a result of a stereo photogrammetric survey covering an area of 7 km2.

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Surveying works included surface location of trenches, boreholes and other investigation points; underground workings including locating entrances, mouths, their orientation and inclination; underground mapping and location of underground drillings; and finally, compiling maps and cross sections of all exploration workings.

From 1976 to 1980 various geophysical surveys were implemented to examine the western limb of the Pakrut anticline from the point of view of its potential for hosting ore deposits (primarily gold).

On the surface the deposit was investigated with trenches of different lengths and depths excavated across the strike of the Ore Bearing Zones; these were spaced every 20 – 40 m. Underground, the five adits, with additional drifts and cross-cuts were driven along the strike of the ore to trace the continuity and changeability of the mineralization with continuous face sampling. Cross-cuts were excavated and channel samples were collected along both sides to investigate the ore zones across their full thicknesses. Below the level of Adit No. 1 (2292.8 m) the ore bodies were investigated and resource estimates using the Russian system of category C1 were estimated using the results from underground drillings spaced every 30 m.

The resources of category C2 and prognostic resources of category P1 were estimated based on a drilling program carried out along the exploration lines spaced every 60 m and inclined at 60°.

5.4.2 2004 to Present

After acquiring a mining licence, Pakrut LLC transferred all licence rights to Kryso Resources and conducted exploration work on the Pakrut area. From 2009 to the present the exploration has been targeting deep levels of this deposit.

The first two years were focused on logistics in conjunction with exploration on the surface with trenches and underground with additional drifts and drilling. All collected channel and core samples were analysed using atomic absorption spectrometry (“AAS”) and fire assays.

From 2009 to the present, exploration has been focused on the deeper levels of this deposit with diamond core drilling using ONRAM and Longyear drill rigs. Recently Kryso has acquired two new Chinese CSD1800A machines. The drill holes were collared on a 30 × 60 m grid to investigate the geology and to search for new economic resources. All the data thus obtained was imported into Datamine software and used for the geological interpretation and spatial (3D) modelling of this very structurally complex deposit.

A total of 194 exploration drillholes, for a total depth of 40,595 m, were recorded in the database in November 2012, in addition to 7 geotechnical holes totaling 953 m, 304 trenches and 902 adit channels.

5.4.3 Sampling Techniques

During the first period of exploration (1975 to 1981) different types of sampling were carried out to determine the grades of the main and associated elements as well as the physical, mechanical and technological properties of the mineralization.

Channel samples were collected in all surface and underground mining works excavated across the ore bearing zones. Underground, the cross-cuts were sampled on both sides, 1 m above the floor across the ore body with 3 to 5 m overlaps into the wall rocks.

The drifts that follow the OBZs along the strike were sampled at the same level every 2.5 m to 4 m across the entire face.

Channel sampling of all types of trenches (shallow and deep) was conducted along one side at the contact with the floor.

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All channel samples were collected either manually and/or using mechanical devices such as pneumatic hammers and diamond saws.

The lengths of the samples varied from 0.2 m to 1.5 m with an average of 1 m, depending upon the thickness and homogeneity of the sampled rocks. When the thickness of the uniform ore was greater than 2 m, samples were taken at 1 m intervals. Unaltered wall rocks in the trenches were sampled using point-channel sampling at least 5 m beyond the contact with the wall rock.

During the site visit SRK noticed that all previous channel samples in Adit No. 1 had been re- sampled by the Pakrut team using diamond saws.

Drill core samples, like channel samples, were collected from all hydrothermally-altered sections. From 2005 to the present, the samples were taken from the entire length of the boreholes. The length of the samples varies from 0.4 m to 3.0 m depending upon the variability of the mineralization and rock features. Where the altered rocks were very thick samples were taken at equal intervals of 1 m or 1.5 m and rarely 2.0 m.

Drill cores with HQ diameter (63.5 mm) or larger were cut with diamond saws along the axis into two equal halves, one for sample preparation and analysis and the other preserved in boxes as duplicates. NQ diameter cores (47.6 mm) were sampled in their entirety.

Bulk samples were collected for technological testing. Sampling was carried out from the pillars of the underground mine workings. As a rule, the bulk sampling consisted of sample collection via tunnel driving, then transporting the sample to the surface and processing it according to the sample’s intended purpose.

Small laboratory samples came from ore selected and collected for the purpose of laboratory technological testing. The weight of these samples varied from 15 to 20 kg and they were collected using either a hammer and chisel or a pneumatic device.

Grab samples were collected for the determination of major and associated components in bulk samples. The grab sampling technique varied with the volume of the bulk samples. For large- volume bulk samples, grab sampling was carried out directly from the trucks at five points. The weight of each sample was 10 to 15 kg.

Hand specimens were collected throughout the exploration work in order to study the mineral composition and petrographic features of both the ore and host rocks and their physical properties (density, moisture, durability, etc.). Samples for mineralogical and petrographic studies were taken from the surface at the adits and from the core samples.

5.4.4 Sample Preparation

From 1975 to1981, preparation of all types of samples was carried out first by crushing the rocks down to 1 mm in the preparation laboratory of the South Tajik Geological Exploration Expedition (“GRE”) by mechanical grinding according to the Richards-Chechetta formula Q = kd2. In this formula, Q = sample mass, d = maximum diameter of the particles in the sample, in mm; and k = coefficient of uneven distribution of gold in the ore. Pulverizing the ore down to 0.75 mm (-200 mesh) was carried out by the Central Laboratory of Unified Enterprise of the Tajik Soviet Socialist Republic (“SSR”).

From 2005 to the present, sample preparation has been carried out at Pakrut LLC’s laboratory in Dushanbe using two steps of jaw crushing and vibrating pulverisers. The required -200 mesh sample is obtained by selective splitting and sieving. Sample preparation methodology is subject to continuous quality control monitoring.

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5.4.5 Assaying

Primary Analytical Work

From 1975 to 1981 all primary analyses were conducted at the Central Laboratory of Unified Enterprise of the Tajik SSR (“CLUETS”).

Semi-quantitative spectral analysis was used to determine the grades of 13 components: gold, silver, arsenic, tin, tungsten, molybdenum, copper, lead, zinc, antimony, mercury, tellurium and bismuth, including a full spectral analysis for gold and silver, together with traditional chemical analysis for gold. At the same time a series of analyses were carried out to determine the samples’ bulk density, moisture, carbonate-silica ratio and other characteristics.

During the second stage of exploration (2005 - 2010) the primary analyses for gold, silver and arsenic were performed by the Pakrut LLC laboratory in Dushanbe using aqua-regia digestion and AAS. The samples which returned grades greater than 0.15 g/t were reanalysed using fire assays by the SGS laboratory in South Africa and by the Central Governmental Laboratory of the Republic of Tajikistan.

During these periods a total of 26,358 samples were analysed using AAS and 7243 by fire assay.

Currently, samples with gold grades ≥0.5 g/t are reanalysed at the Intertek Laboratory in Beijing by fire assays.

Arsenic is a harmful element as determined by AAS at Pakrut LLC’s laboratory.

Control Analytical Work

For quality assurance purposes, internal and external laboratory testing for gold and arsenic was performed in the process of conducting analytical work in 2009 and 2010. For internal control purposes, a portion of encrypted sample duplicates (taken from the other half of the primary sample) were included in the stream of primary samples and analysed using the same methodology. Additionally, two industrial standards were inserted in every batch of 20 to 25 samples. The standards were purchased from international sources and vary in grade from 0.26 g/t to 13.64 g/t. The results were analysed and reported by quality control personnel.

External quality control tests were carried out by re-analysing duplicate samples in the Central Governmental Laboratory of the Republic of Tajikistan. Generally the samples for external control were submitted quarterly, but during periods of low sampling activity they were submitted every six months or even annually.

The internal and external control results were both compared with the primary assays; if the discrepancy exceeded that permitted by regulation all results from that batch were rejected and the samples assayed again.

Both internal and external control results were subjected to statistical analysis and are reported in detail in References Nos. 1 and 2.

5.4.6 Reporting of Exploration Results

During the many years of exploration of the Pakrut deposit and surrounding areas, countless reports, protocols and other papers were issued by and submitted to the Central Geological Department of Tajik SSR.

The most important and updated documents were issued by Pakrut LLC and submitted to the Central Geological Department of the Republic of Tajikistan since 2007 and included:

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 Umarov, MM, et al: Preliminary exploration of the Pakrut gold deposit 2005 - 2008, 2 volumes, 3 books, Central Geological Department of the Republic of Tajikistan, Dushanbe, December 2008 (THF, Pakrut LLC) U-42-31, Republic of Tajikistan;  Umarov, MM, et al: Technical and Economical Validation (TEO) – quality requirements for resource estimate and reasonability of industrial development of the Pakrut gold deposit, 2 volumes and 2 books – Central Geological Department of the Republic of Tajikistan, Dushanbe, 2008 (THF, Pakrut LLC) U-42-31, Republic of Tajikistan; and  Umarov, MM, et al: Preliminary exploration of the deep horizons of the Pakrut gold deposit for 2009 and 2010. 2 volumes, 2 books, Central Geological Department of the Republic of Tajikistan, Dushanbe, November 2010 (THF, Pakrut LLC) U-42-31, Republic of Tajikistan.

5.5 Quality Assurance and Quality Control Protocol and SRK Verification

The historical quality assurance and quality control (“QA/QC”) protocols for sampling, sample preparation and sample analysis performed by the former Soviet geological team could only be traced from the geological reports, exploration database and check samples. However, the QA/QC protocols implemented by Pakrut LLC can be partly compared and verified based on the present drilling program and pulp duplicates and inspection of the remnant halves of cores and the laboratory workshop.

5.5.1 Sampling

A total of 47,094 exploration samples for the Pakrut Project were collected from 206 boreholes, 300 trenches and 866 underground channels. Drill cores were stored in wooden boxes with proper markers after being taken from drilling tubes, then were logged and recorded on standard sheets on site before being transported to Pakrut LLC’s laboratory in Dushanbe.

Samples for analysis were chosen based on the diameter of the drill core samples. The HQ sized (outside-hole diameter about 96 mm and inside-core diameter about 63.5 mm) cores were split into two halves; one half was sampled and the other half returned to the core tray. NQ size (outside diameter 75.7 mm and inside diameter 47.6 mm) cores were not split; all of the material was sampled. The sample sheet records show that most of the Pakrut LLC’s core samples (the phrase “Pakrut LLC’s samples” refers in particular to those samples taken by Pakrut LLC from 2004 to the present) were about 1.5 m long on average, with individual cores between 0.5 m to 2 m in length. The average core recovery was 82.15%. It is worth noting that the previous samples taken by former Soviet Union’s exploration team averaged about 1 m length.

Channel sampling was carried out in trenches and underground workings. The length of channel samples varied from 0.2 m to 1.5 m (average 1 m) and the channels were about 10 cm by 5 cm.

5.5.2 Sample Preparation

In addition to drill cores, other field samples were also prepared at Pakrut LLC’s laboratory, such as those channelled from trenches and adits.

Cores and/or rock chips were crushed by jaw crushers to grains of about 2 mm and then pulverised to 0.075 mm for assaying. Generally 1 to 3 kg of rock chips from each sample were prepared for the pulp and duplicates assays.

Pakrut LLC laboratory does not have a recognised international accreditation. However, during SRK’s visit to the sample preparation workshop, SRK noted that the sample preparation procedures carried out at the laboratory were similar to those carried out at other respected laboratories in Tajikistan, if possible including laboratories with valid international accreditation.

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The crushers, splitters and other containers were cleaned with brushes and air-nozzles before each new sample was processed and also used pure quartz blank samples to ensure that all sampling equipment was cleaned effectively. To ensure the regularly inserting of the full volume of blank samples, SRK recommends that the assessments of possible contamination in the sample preparation process should be performed with blank samples such as pure quartz or glass in every batch of samples and the quality of sample the preparation should be strictly monitored on a regular basis.

5.5.3 Sample Assaying

All core and channel samples were first analysed for gold (and sometimes but not always for silver and arsenic) by a modified aqua regia method and gold content was determined by AAS. Samples returning gold values were subsequently sent to the Intertek Laboratory (“Intertek”) in Beijing, China, a branch of an internationally recognized establishment, where the gold concentration was determined by fire assay. It should be noted that prior to the 2010 drilling program, all mineralized samples were sent to the SGS Laboratory (“SGS”) in South Africa for fire assays.

Pakrut LLC’s QA/QC protocols for sample assaying include the insertion of commercial standards into each sample run prior to submission to the laboratories, along with pulp duplicate samples taken after pulverisation of the samples. These QA/QC samples are inserted at a rate of approximately 1 in 20 to 25 samples.

A total of 15 types of commercial standard samples with certified mean and standard deviation values of gold grades have been adopted by Pakrut LLC in routine sample batches to monitor the laboratory’s analytical accuracy through its internal laboratory and Intertek. The standards range in grade from 0.25 g/t gold up to 13.65 g/t.

One type of standard blank sample, GLG304-3, was submitted to the Pakrut LLC laboratory to monitor for any significant contamination during the assaying process. This standard blank sample has an expected gold grade of 2.0 to 2.7 parts per billion (“PPB”), far below the lower detection limit of normal fire assay and/or aqua regia methods.

Pulp duplicates were sent to Intertek and/or SGS to assess the assays’ level precision. All samples indentified by Pakrut LLC as containing gold values could be used for comparisons between Pakrut LLC’s gold grades using the aqua regia digestion method and Intertek’s or SGS’s results using fire assays. The results show that overall there is no significant difference between the laboratories in the mineralized grade ranges and the mineralized intervals derived from the two laboratories’ results are similar.

Larger differences occurred in a few samples. For the pulp duplicates, the variability between duplicate assays is caused primarily by the pulp sub-sampling methodology, digestion (in this case using aqua regia) and the final analysis.

Additionally, it should be noted that both SGS and Intertek each have their own laboratory QA/QC protocols for sample assaying, including the insertion of standards, duplicates and blanks. The final database of sample analyses contained only the fire assay results returned from SGS and/or Intertek.

Overall, SRK is of the opinion that the sample assaying data for Pakrut LLC’s samples is acceptable for resource estimation. Pakrut LLC has its own protocol for sample preparation and preliminary assaying and such protocol was reviewed and found to meet the requirements for appropriate mineralization identification (for 0.5 g/t Au and above).

5.5.4 SRK’s Verification

SRK had paid visits to the Pakrut LLC office in Dushanbe, Pakrut Mine, Eastern Pakrut Deposit and Rufigar Occurrences in August and November 2011 and again in November 2012. The

HG/QH/RK/AL/YL/YW/PX/AX/YS/RA/MW SRK_Report_for_Kryso_Pakrut Gold_Final June 2013 SRK Consulting China Ltd Independent Technical Report – Pakrut Gold Project Page 34 verification work of Pakrut exploration and resources determined by the Competent Person, Mr Richard Kosacz, included:

 Visiting the Pakrut LLC office, collecting the database and maps for the geological review and resource estimation;  Discussing the Project’s geology, exploration and resources with Pakrut LLC’s management and technical personnel;  Visiting the Pakrut LLC laboratory and viewing the present procedures/protocols of sample preparation and assaying;  Inspecting the remainders of the drill cores and pulp samples at the Pakrut LLC core shed;  Visiting the Project site, assessing the on-going drilling program and underground workings of the Pakrut Mine;  Making random checks of the sealed borehole collars and locations (with handheld GPS units), collecting several random field samples;  Selecting 96 verification pulp duplicates with insertion of standards re-assayed by Intertek in August 2011;  Selecting 50 verification coarse and pulp duplicates from the core storage, having coarse samples pulverized in Pakrut LLC laboratory with close supervision in November 2012; and  Building a 3D geological model and resource estimate, as well as comparing the updated resources with previous models and estimates.

During the visits to the Pakrut campground and Pakrut LLC temporary core shed in the camp, SRK examined some of the cores and remainders from several boreholes.

All check samples collected by SRK in 2011 were analysed by the Intertek laboratory in Beijing, China, one of the branches of an internationally recognized establishment.

Fire assays and AAS (Intertek Analysis Code: FA51 and FA12) were used to analyse the gold content. The detectable lower limit of the applied assaying methods is 0.01 g/t. A detailed list of SRK’s check sample results is provided in SRK’s geology and resource report.

Out of a total of 96 pulp duplicate samples, the original assaying results (by Intertek and SGS and the Soviet samples) vary from 0.5 g/t gold up to 62.80 g/t, averaging 5.57 g/t; and the check assays returned by Intertek are in the range of 0.13 – 49.00 g/t, averaging 5.16 g/t. SRK’s result is about 7.69% lower than the original average grade.

Comparative assays of 47 samples show that the check results are higher than the originals, while the other 49 sample results suggest the opposite conclusion. The average deviation (relative difference) between SRK’s check assays and the original results is -6.13%, indicating that original results are slightly higher.

The chart below (Figure 5-7) illustrates that most of the comparable assaying deviations are within 20% of the mean; however, some large deviations exist out of the range.

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65.00

60.00

55.00

50.00

45.00

40.00

35.00 Check Results (g/t) 30.00

25.00

20.00

15.00

10.00

5.00

0.00 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00 55.00 60.00 65.00 Original Assays (g/t) y=x 20% deviation 10% deviation

Figure 5-7: Duplicate Sample Assays – SRK’s Check Results vs. the Original Results (2011) SRK believes that the differences between the analytical results of two equivalent samples returned from different periods are very likely caused by the following aspects:

 The “Nugget effect” – since the mineralization is distributed in the veins unevenly, consequently the check samples taken from the pulp duplicates may return significantly different results from the original samples. It is difficult to get pulps from different locations with identical mineralization, especially for cases of gold mineralization in veinlets; and/or  The native gold within the ore is not easy to pulverize consistently across all samples; this causes small differences for duplicate assaying; and/or  The higher-grade samples of gold with primary mineralization usually contain sulphides, which may have suffered from weathering and oxidation while some of the pulps were stored for long periods, e.g., the Soviet samples; and/or  The largest differences between two equivalent assays could be derived from the uneven splitting carried out during sample preparation. SRK recommends that the Pakrut LLC laboratory improve its internal QA/QC protocols for sample preparation.

In addition to the pulp duplicates, SRK took four random samples during the site visit to check surface mineralization. These samples were crushed at Pakrut LLC’s laboratory and then dispatched to Intertek for pulverization and assaying. Results from these four random check samples are presented in Table 5-2 below.

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Table 5-2: SRK Random Check Samples in 2011 OBZ Grade (g/t) Eastern Pakrut 15 0.12 Pakrut 2 0.48 Pakrut 7 18.00 Pakrut 3 0.84

Intertek has its own protocols to ensure the quality of sample preparation and assaying and SRK also requested the insertion of blanks, duplicates and standards. The external standards used by Pakrut LLC’s laboratory were inserted by SRK into this batch of samples and the assays returned satisfying results, as shown in Table 5-3.

Table 5-3: Standard Sample Inserted by SRK in 2011 Standards Expected Value (g/t) Intertek Results (g/t) Difference (g/t) Relative Difference (%) Standard #1 1.48 1.45 -0.03 2.05 Standard #2 6.27 6.29 0.02 0.32 Standard #3 13.65 13.40 -0.25 1.85

Another batch of 50 check samples collected by SRK in 2012 were despatched to the SGS laboratory located in Tianjin, China. A comparison between the original and check assays is shown below in Figure 5-8. An overall analysis for the mineralized samples (0.5g/t Au and above) suggests that the two assays returned results with tolerable discrepancies.

6.0 5.5 5.0 4.5 4.0 Au)

3.5 (g/t

3.0 Assays 2.5

Check 2.0 1.5 1.0 0.5 0.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 Original Assays (g/t Au) Duplicate Assays 0 deviation 10% deviation ‐10% deviation 20% deviation ‐20% deviation

Figure 5-8: Duplicate Sample Assays - SRK’s Check Results versus the Original Results (2012)

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5.6 Mineral Resource Estimation

SRK has re-estimated the resources of Pakrut and Eastern Pakrut with the provided database. The solid and block models were built using software MineSight (version 6.60); and the block model was updated using Surpac. The Joint Ore Reserves Committee (“JORC") Code, a mineral resource/ore reserve classification system that has been widely used and is internationally recognized, was adopted by SRK to state the mineral resources of the Pakrut Project in this Report. The definitions of “Mineral Resource” and the classification of Mineral Resource can be found in “The JORC Code” (2004 edition).

5.6.1 Previous Resource Estimate

Previous resource estimates and updates had been performed by:

 Snowden Consultants (Snowden) in March 2007,  GeoLogix Mineral Resource Consultants (GeoLogix) in November 2009,  Snowden in June 2010,  Snowden in April 2011 and  Snowden in May 2012.

The latest resource estimate for Pakrut and Eastern Pakrut was completed by Snowden in May 2012. A total of 9 zones of mineralization were created and numbered as #1, #1a, #2, #3, #5, #6 and #7 in Pakrut and #14, #15 and #16 in Eastern Pakrut. The resource estimate results has been tabulated with cut-off grades of 0.0 g/t gold (Au), 0.5g/t Au, 1.0g/t Au, 3.0g/t Au and 5.0 g/t Au. At a cut-off grade of 0.5g/t Au, the estimated Pakrut and Eastern Pakrut Mineral Resource includes 18.2 million tonnes (Mt) of Measured Mineral Resources with an average grade of 3.00 g/t Au, 7.63 Mt of Indicated Mineral Resources with an average grade of 1.83 g/t Au and 41.6 Mt of Inferred Mineral Resources with an average grade of 2.10 g/t Au.

5.6.2 Topography Model

SRK used the topographic model provided by Pakrut LLC and imported it to MineSight. The topographical data provides the upper limit of the mineralized zones.

5.6.3 Exploration Dataset

The exploration dataset used for the resource estimate is comprised of trenches and underground channel samples as well as drilling cores. The collar, survey and assay data of the drill holes, trenches and channels were imported into MineSight. General error checking was automatically performed by the software and SRK corrected minor errors regarding the aspects of collar coordinates, sample discontinuity, overlap for the location of samples and sample beginning and end position. The final dataset used for modelling includes 1,403 datasets, comprising 304 trenches, 197 drill holes and 902 adit channels.

5.6.4 Mineralized Zones Interpretation

The following parameters were used by SRK to create the mineralization zones on cross sections:

 Cut-off grade: 0.5 g/t Au;  The minimum mineable thickness: 0.8 m; and  The maximum dilution thickness: 2.0 m.

A total of 8 mineralized zones were defined, #1, #3, #5, #6, #7, #14, #15 and #16. Zones #1 and #3 are the two major mineralized zones. Zone #15 is interpreted by limited trenching and some recent

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After comparing the previous results done by Kryso and Snowden, SRK combined the originally numbered mineralized zones No. 1, No. 1a and No. 2 into one zone, namely Zone #1, because spatially, zones #1, #1a and #2 are linked with each other and not easy to separate.

5.6.5 Weathering Surface

Surface trench sampling has shown that there is an oxidised horizon of around 10 m in depth below the topography. SRK used the same approach as that applied in Snowden’s model, in which oxidised zones were built from the surface to 10 m down. There is no precisely separated model built for the oxidised and fresh zones; and the interpreted oxidised zones account for a very small part of the total mineral resource. In SRK’s 2012 resource update, mineral resources in the oxidised zones are not presented.

5.6.6 Bulk Density

No specific analysis of bulk density data was undertaken for this project. An average in situ density of 2.57 tonnes per cubic metre (“t/m3”) has been applied to the oxidised zones of the mineralization and 2.62 t/m3 for the sulphide zones. These in situ density values reflect the average value of the determinations made from the diamond core collected from the Pakrut deposit.

5.6.7 Compositing and Statistical Analysis

The validated dataset was coded in line with mineralized zones and oxidation states. The coded dataset was then composited to 1.0 m downhole; the small intervals were not merged.

Basic statistics were performed for the composite sample data in each zone. These statistical results were detailed in SRK’s geology and resource report (see Reference No. 4). SRK noted that there are minor and/or extreme outliers existing in each zone. Both the minor and extreme outliers were reserved to estimate the grade, but their search distance was limited to half of the non-outliers’ search distance.

5.6.8 Block Model

Model limits are shown in Table 5-4. The block model is not rotated and the same size blocks are used.

Primary items in the block model include the grade of Au, percentage of a block below the topography, codes that represent zones of mineralization and mineral resource categories, percentage of a block within a zone of mineralization, bulk density of a block, number of drill holes used for a block, number of data points used for a block, distance to the closest data point and other auxiliary items.

Table 5-4: Extent and Size of Block Model

Axis Minimum Maximum Standard Size (m) Number X 70,800 74,600 5 760 Y 62,600 63,200 5 120 Z 1270 3150 20 94

5.6.9 Grade Interpolation and Resource Classification

First, SRK used an averaging method, a secondary interpolation method, to estimate an average grade of Au from selected composites. The search distance chosen is large enough to assign a value

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Primary grade interpolation methods applied to the Project included inverse distance, simple kriging, ordinary kriging and multi-indicator kriging. A detailed explanation of the applied methods can be found in the geology and resource report (Reference No. 4).

5.6.10 Mineral Resource Reporting

The resource estimate has been tabulated for mineralization zones above block model cut-offs of 0.5 g/t Au, 1.0 g/t Au, 3.0 g/t Au and 5.0 g/t Au in Table 5-5, Table 5-6 and Table 5-7.

At a gold cut-off grade of 0.5 g/t, the Measured Mineral Resource is 18.57 million tonnes (Mt) averaging 3.16 g/t Au, the Indicated Mineral Resource is 10.02 Mt averaging 2.05 g/t Au and the Inferred Mineral Resource is 41.19 Mt averaging 1.64 g/t Au. The Mineral Resources summarised below includes aapproximately 6.12 Mt Inferred Resource averaging 1.72 g/t Au in Eastern Pakrut. The in-situ resources are as of 28 February 2013.

Table 5-5: Summary of Measured and Indicated Mineral Resources – 28 February 2013

Measured Indicated Measured + Indicated Cut-off (g/t Au) Au Au Au Au Au Au Mt Mt Mt (g/t) (koz) (g/t) (koz) (g/t) (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 2.79 534 20.90 3.40 2,283 3.0 6.55 5.47 1,152 1.80 4.18 243 8.36 5.19 1,395 5.0 2.49 8.24 659 0.26 7.87 65 2.74 8.21 724

Table 5-6: Summary of Inferred Mineral Resources – 28 February 2013

Inferred Cut-off (g/t Au) 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

1 Visually minor discrepancies may appear in the figures above. This is due to numbers of tonnes (Mt) and grades (g/t) are in the form of two decimal places and metal ounces (koz) figures are rounded. 2 Inclusive of Eastern Pakrut Resource

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Table 5-7: Mineral Resources at Each Zone – 28 February 2013

Au>=0.5g/t Au>=1.0g/t Au>=1.5g/t Au>=3.0g/t Au>=5.0g/t Zone Category kt Au g/t Au koz kt Au g/t Au koz kt Au g/t Au koz kt Au g/t Au koz kt Au g/t Au koz Measured 15,547 3.43 1,716 15,387 3.46 1,712 13,757 3.72 1,644 6,303 5.46 1,107 2,372 8.25 629 OZ#1 Indicated 7,555 2.35 571 6,815 2.52 552 5,578 2.81 504 1,751 4.16 234 239 7.86 60 Inferred 24,525 1.74 1,373 19,399 1.99 1,238 12,061 2.45 951 2,245 3.92 283 320 7.50 77 Measured 3,021 1.78 172 2,671 1.89 162 1,176 2.76 104 251 5.65 46 115 8.03 30 OZ#3 Indicated 1,534 1.05 52 458 1.77 26 255 2.24 18 20 5.24 3 8 7.62 2 P Inferred 5,721 1.12 206 2,239 1.77 127 1,093 2.37 83 67 4.36 9 11 9.84 3 A Measured ------K OZ#5 Indicated 285 0.95 9 88 1.36 4 27 1.85 2 1 3.07 0 - - - R U Inferred 611 0.96 19 258 1.27 11 41 2.20 3 6 3.75 1 1 5.02 0 T Measured ------OZ#6 Indicated 612 1.37 27 537 1.45 25 101 2.84 9 31 4.53 4 8 7.73 2 Inferred 2,079 2.11 141 1,697 2.41 132 839 3.62 98 246 7.44 59 167 9.01 48 Measured ------OZ#7 Indicated 31 1.58 2 12 2.98 1 5 5.53 1 3 8.93 1 2 11.46 1 Inferred 2,132 1.39 95 1,366 1.78 78 203 4.78 31 50 13.28 21 27 21.81 19 Measured ------OZ#14 E Indicated ------P A Inferred 4,000 1.75 225 3,879 1.78 222 2,885 1.94 180 125 3.22 13 - - - A S Measured ------K T OZ#15 Indicated ------R E U Inferred 240 1.13 9 155 1.39 7 - - - - - R T Measured ------N OZ#16 Indicated ------Inferred 1,877 1.72 104 1,165 2.35 88 1,015 2.53 83 130 4.06 17 30 6.73 6 Measured 18,568 3.16 1,889 18,058 3.23 1,874 14,933 3.64 1,748 6,555 5.47 1,152 2,487 8.24 659 Total Indicated 10,019 2.05 660 7,910 2.39 608 5,966 2.79 534 1,805 4.18 243 256 7.87 65 Inferred 41,185 1.64 2,171 30,159 1.96 1,902 18,136 2.45 1,428 2,868 4.37 403 556 8.64 154

5.6.10.1 Rufigar Resource Potential

A total of 12 drill holes have been completed in the Rufigar deposit and some adit channelling together with surface trenching have been implemented in the area. The exploration target cannot be reported in the form of Mineral Resources for the Pakrut Project according to the JORC Code, but SRK considers that the potential resources in the Rufigar deposit disclosed by exploration thus far should be noted and followed up on.

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6 Mining Assessment

6.1 Mining Conditions of the Deposit

6.1.1 Hydrogeology

The Pakrut deposit is located in the Central Asian Hissar plateau hydrogeological district, amid deep mountain valleys. The Sardi-Mienna River originates in the southern spur of the Hissar plateau and flows through the mine area via narrow gorges on its way to merge with the Pakrut River. The mining area is all located above 2180 m ASL and parts of the watershed are up to 3000 m ASL.

The upper reaches of the Pakrut drainage area are characterized by cool summers and cold, snowy winters. Statistics from the Pakrut weather station indicate that most precipitation in the area falls as snow, generally from mid-November to mid-March, while most of the rain falls between April and November. Long-term meteorological data from the Rufigar weather station show that the total annual precipitation averages 1100 mm, of which over 900 mm falls as snow.

The primary sources of groundwater are a fractured aquifer of Quaternary metamorphic rock, the Pakrut River surface water system and atmospheric precipitation. Because there is no direct connection between the surface water system and the groundwater system, a fractured aquifer consisting of Ordovician metamorphic rock cracks and their associated faults intercepts rainfall as well as snowmelt in the mining area and forms an important factor in local subsurface hydrogeology.

The water inflow at 2110 m and 1810 m ASL is estimated by the Beijing General Research Institute of Mining and Metallurgy (“BGRIMM”) in their Bankable Feasibility Study (“FS”), produced in August 2012, as shown in Table 6-1.

Table 6-1: Groundwater Inflow Estimation

3 Level Normal Inflow (m3/d) Peak Inflow (m /d) 2110 m 2700 6300 1810 m 6400 10,000

6.1.2 Geotechnical Condition

The Pakrut deposit is located in a fold zone; the wall rock is mostly chlorite sericite quartz schist and includes a minor proportion of carbonaceous schist. The wall rock has an unsatisfactory level of stability; the rock quality designation (“RQD”) averages 37%. Due to the superposition of anticlinal and fault structures, together with the dykes and joint fractures, the degree of rock fragmentation is relatively high. Most of the ore is oxide ore, weighing 2.57 t/m3; the remaining ore is sulphide ore, weighing 2.62 t/m3; the rock weighs 2.61 t/m3. The compressive strength of the rock is 93.5 Megapascals (“MPa”). As the deposit is located in an anticlinal core and faults pass through the ore body, the hardness factor value (“f”) of the primary deposit and surrounding rock should be 6 – 8. The tensile strength is 16.9 MPa; the softening coefficient when saturated is 0.82 – 0.97; the internal friction angle is 20°; and the average natural water content of the ore is 0.13% (ranging from 0.1% - 0.3%).

SRK notes that Kryso has conducted geotechnical drilling to support the design of the project. SRK opines that, based on the provided data, the level of engineering geology work which has been completed thus far is not sufficient for the mine design and future mining operations. Due to the complex geological structure of the deposits, a full systematic engineering study is necessary.

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6.1.3 Geological Resource and Reserve Condition

The ore bodies of the Pakrut deposit are mainly hosted in carbonate-quartz-albite metasomatite and quartz-sericite metasomatite, which are formed through hydrothermal alteration/ metasomatism of the surrounding rock. The ore bodies are transitional with the host rocks (greenschist), having no definite contacts.

According to the Pakrut resource model updated by SRK, the main ore bodies are located in OBZ 1 and OBZ 3.

OBZ 1 is the largest ore zone and is located in the centre of the deposit. This ore zone trends from west to southwest and east to nearly east-west; its strike length is approximately 760 m. OBZ 1 extends from 1580 m ASL to 2425 m ASL; the upper section tilts to the south-southwest while the lower section is nearly vertical. Within the zone, ore bodies above 1710 m ASL are generally categorized as Measured and Indicated Mineral Resources and below this level as Inferred Mineral Resources.

OBZ 3 is sub-parallel to OBZ 1. The western section is thicker and trends at 315°; the eastern end becomes gradually thinner gradually and trends at 110°. The strike length of this ore zone is about 600 m and the western section is parallel to OBZ 1. OBZ 3 extends from 1870 m ASL to 2345 m ASL; the upper section tilts towards the south-southwest while the lower section tilts towards the northeast at angles between 80° and the vertical. Within the zone, ore bodies above 2050 m ASL are generally categorized as Measured and Indicated Mineral Resources.

Based on the host rock’s condition and the exploration level of each ore body, the FS focused on OBZ 1 and OBZ 3, adopting a cut-off grade 1.5 g/t. The JORC Code allows the Measured and Indicated Resources to be converted into Ore Reserves. Please refer to Sections 5.6.10 and 7 for detailed statements of the Mineral Resources and Ore Reserves.

6.2 Mine Development

6.2.1 Mining Method and Mining Scope

BGRIMM’s study considered three mining method options: open-pit mining, open-pit to underground mining and underground mining. After considering various factors including resources/reserves, engineering geology, hydrogeology, technological feasibility, economics and environment, BGRIMM concluded that underground mining is the only recommended option.

The proposed mining method for the OBZ 1 and OBZ 3 ore bodies will initially target the higher grade ores at the 2110 m sub-level.

SRK opines that the underground mining method, choice of Zones and the general sequence are reasonable. However, SRK recommends that selection of the initial mining section be further demonstrated by taking costs and other economic factors into consideration.

6.2.2 Mine Development Plan

BGRIMM considered two options for development and finally selected a ramp and auxiliary shaft style of development, with the ramp leading from the surface to the 1810 m level.

Main Ramp: The ramp entrance is designed to be at the 2325.5 m level at the north of the ore body; the main ramp extends to the 2110 m level, with an average gradient of <13%. For the planned 2000 tonnes per day (“tpd”) production in Phase I, the main ramp will be used to transport ore, personnel, materials and equipment. During the 4000 tpd production schedule called for in Phase II, the main ramp will only be used to transport ore and any trackless equipment.

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Auxiliary Shaft: For the 4000 tpd production in Phase II, an auxiliary shaft is planned to be added near the west ventilation shaft and will for air intake and cage loading and as well for transporting materials and equipment.

West Ventilation Shaft: One of the two main ventilation shafts is planned to be sunk in the western part of the ore body and will serve as both an air intake and a safe exit to the interior ventilation shaft. A ramp at the 2230 m level will connect to the surface in the west of the ore body with an average gradient of 7%.

East Ventilation Shaft: The second main ventilation shaft is planned to be located in the eastern part of the ore body and will serve as a safe exit to the multi-wind shaft and as an air exhaust shaft with an extraction fan and interior ladderway. In order to reduce the potential risks of avalanches, mud slides and other natural disasters, the fan and switch house are set in a chamber. The location and characteristics of the main development works are detailed in Table 6-2. Figure 6-1 shows the mine development system.

Table 6-2: Characteristics of Main Development Length Items Usage and equipment requirements (m) Transport ore, rock, equipment, materials, etc., air Main ramp (exit to surface) 100 intake East ventilation shaft 244.5 Air discharge, ladderway, safe exit (2110 - 2354.5 m) East ventilation shaft 120 Air discharge, ladderway, safe exit (1990 - 2110 m) East ventilation shaft 180 Air discharge, ladderway, safe exit (1810 - 1990 m) West ventilation shaft 120 Air Intake, ladderway, safe exit, backfill drilling (2110 - 2230 m) West ventilation shaft 120 Air Intake, ladderway, safe exit, backfill drilling (1990 - 2110 m) West ventilation shaft 180 Air Intake, ladderway, safe exit, backfill drilling (1810 - 1990 m) West ventilation shaft / ramp (exit to Connect to west ventilation shaft at 2230 m, air 630 industrial area on surface) intake During Phase II (4000 tpd), lifting of personnel, Auxiliary shaft (1786 - 2258 m) 472 materials and equipment; ladderway; safe exit; air intake

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Figure 6-1: The Mine Development System

It is SRK’s opinion that the mine development method and related technical parameters are reasonable and meet the requirements of the designed mining capacity. SRK observed on site that the mine development had commenced. The land levelling and preparation of industrial area prior to the ramp opening is finished. Ramp development commenced from 15 November 2012, while construction of the east ventilation system is ongoing. The contract was assigned to China No. 15 Metallurgical Construction Group Co., Ltd, who have extensive experience in mine construction. Figure 6-2 shows the opening construction of the ramp.

Figure 6-2: The Opening Construction of the Ramp

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6.2.3 Mine Auxiliary Operation Systems

6.2.3.1 Transportation System

Ore from the 2292.8 m level and above will be transported to the 2110 m level via an ore pass (as the transportation backup for the drift at the 2292.8 m level) and transported by vehicle through the main ramp; when it is possible to use the 2292.8 m drift, ore may also be transported to the 2292.8 m level via the ore pass and then transported by vehicle through the 2292.8 m level drift, after which is will be drawn up to the 2110 m level via the ore pass and then transported to the surface by vehicle through the main ramp.

Ore extracted below the 2110 m level will be transported from the stope to the surface by vehicles via the main ramp.

6.2.3.2 Ventilation System

The mine plans to utilize centralized ventilation, air intake and return shafts arranged in the form of a Single wing diagonal system. During 2000 tpd production in Phase I, fresh air will flow into the mine from the west ventilation shaft and the main ramp to the level drifts, then to the stopes, then to the upper level air return drifts and finally will be extracted to the surface by the main fan through the east ventilation shaft. During 4000 tpd production in Phase II, fresh air will flow in from the west ventilation shaft, the auxiliary shaft and the main ramp, to the level drifts, then to the stopes, then to the upper level return drifts and will finally be extracted to the surface by the main fan through the east ventilation shaft.

6.2.3.3 Drainage System

A direct drain system will be adopted above the 2292.8 m level: water will be collected at the 2292.8 m level and discharged to the surface from existing adits. A direct drain system will be also adopted above the 2330 m level; water will be collected at this level and discharged to the surface from a ramp connected to the west ventilation shaft.

Mechanical drainage will be adopted below 2230 m. The water sump and pump stations will be placed at the 2110 m level; underground water from various levels (upper and middle levels) will be collected at the 2110 m water sump and then discharged to the surface via the west ventilation shaft. A water sump will be located at the 1810 m level to collect groundwater from between the 1810 m and 2110 m levels. The water will then be pumped to the 2110 m level sump and finally discharged to the surface.

It is SRK’s opinion that the mine auxiliary operation systems are reasonable and well-designed.

6.3 Mining Method

6.3.1 Mining Method Selection

The ore is characterized as high grade and high value, but the stability of the ore body and wall rock is low and the ore is embedded relatively deeply. Mining operations carried out at such depths may encounter high ground pressures and have an elevated risk of caving or subsidence. Tailings from the concentrator can be used as backfilling material. Since the Project’s industrial land area is limited by the steep local topography, the possible risks of displacement and subsidence caused by caving should be carefully considered in choosing the mining method.

Considering the technological-economical issues as well as to ensure the safety and environmental protection purposes, a backfill mining method is recommended by the FS. Two stoping methods

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6.3.2 Mining Methods

6.3.2.1 Upward Horizontal Slice Cut-and-Fill Stoping

Stope Arrangement

The stope is arranged to be 50 – 100 m long oriented across the strike when the thickness of the ore body is more than 10 – 15 m. When the thickness of the orebody is less than 10 – 15 m, the stope will be arranged along the ore body. The stope levels are designed to be 60 m high each and the sub-levels will be 12 m high; the stope width is equal to the thickness of the ore body. The adit will serve the stope from sub-levels 3 to 4.

Development and Cutting

Preparation works include the excavation and development of the ramp, passages, sub-level adits, sub-level passages, ore passes, waste passes, filling and air-return shaft, drain sump, entry cuts and other works. The ore passes and sub-level adits will be excavated in the lower sections outside the ore body. The ramp will link the sub-level adits from where the cross cut is developed to the ore body. The shaft for backfilling and air return will be developed upwards from the middle of the stope. The drain well will be built along the overhead stoping track.

Stoping Operations

Drilling and Blasting: Drilling will be carried out using an Atlas Copco Boomer 281 single-arm jumbo drill rig to drill horizontal blasting holes. Ammonium nitrate rock explosive No. 2 will be charged with the support of an aerial lifting platform and electrically detonated by detonating tube in a delayed blast. The blast area will be ventilated immediately after the blasting to extract fumes.

Scaling and Support: Scaling will be carried out immediately after ventilation. If necessary, rock- bolts, metal nets, or cables may be used for support.

Ore Drawing: Ore will be drawn and transported by JCCY-2 diesel loaders with a bucket capacity of 2 cubic metres (“m3”) and LH410 diesel loaders with a bucket capacity of 4 m3. The loaders will draw ore to the ore passes at each sub-level, from where the ore will fall down to the corresponding sub-level and then be loaded into 25 tonne (“t”) or 30 t trucks and delivered to the surface.

Stope Support

The supporting method to be applied after completion of sub-level stoping will be chosen on a case-by-case basis according to the stability of the ore body and wall rock. Rock bolts or cables are to be applied in the unstable sections.

Stope Filling

Backfilling is planned to be carried out immediately after stoping is completed. In slice filling, each slice will be filled to a height of 3 – 4 m. The slices will be filled in two sections, a lower section approximately 2.5 – 3.6 m tall and an upper section approximately 0.4 – 0.5 m tall. The lower section will be filled with a material with a low cement-to-tail ratio or with un-cemented filling material. The upper section will be filled with a material with a high cement-to-tail ratio or with cemented filling material. Cement consumption will be about 36 kg per one tonne of ore.

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Production Capacity of Ore Blocks

The production capacity of each ore block is calculated to be 200 – 350 tpd, depending upon the stage of the mining cycle (including drilling, charging, firing, ventilation, scaling, ore removal, timbering and filling) in which the block is extracted. The upward horizontal slice cut and fill stoping method is shown in Figure 6-3.

Figure 6-3: Overhand Cut and Fill Stoping 6.3.2.2 Sectional Cut-and-Dry-Fill Open Stoping

The sectional cut-and-dry-fill stoping method is suitable where the ore body and wall rock are considered to be very stable and ore body is more than 10 - 15 m in thickness.

Stope Arrangement

Sub-levels are designed to be 12 m high and 50 – 100 m long, with a thickness equal to that of the ore body. Cutting will be carried out at 80 – 100 m intervals along the length of the ore body. Vertically, each sub-level will have its own outlet that connects to the ramp. A fork-like connection road in the sub-level will extend to each stope at each sub-level. Sub-level adits will generally be arranged within the ore body.

Stoping Operation

Each sub-level is designed to be 12 m high. Ore will be mined by blasting fan holes drilled by a Chinese YGZ90 drill moved onto an underground truck using a 4 m3 diesel loader. Dry filling will be carried out after approximately every 25 m of stoping.

Stope Support

The support method to be applied after completion of sub-level stoping is based on the stability of the ore body and wall rock. Rock bolts or cables will be used in unstable sections.

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Stope Filling

The stopes will be dry filled; the main filling material will be waste rock produced from the development, which will be delivered to the stopes by truck.

Production Capacity of Ore Blocks

The production capacity of each ore block is calculated to be 500 tpd, with slight variations depending upon when in the full mining cycle (including drilling, charging, firing, ventilation, scaling, ore removal, timbering and filling) a particular block is extracted. Figure 6-4 and Figure 6-5 display diagrams of sub-level open stoping cut-and-dry-fill as designed in the FS.

Figure 6-4: Diagram of Sub-level Open Stoping Cut and Dry Fill

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Figure 6-5: Tridimensional Diagram of Sub-level Open Stoping Cut and Dry Fill (Legend: (1) mined out area; (2) caved ore fallen to the sub-level; (3) ore tunnel; (4) sub-level roadway drilling; and (5) blasting holes)

It is SRK’s opinion that, based on the morphology of the ore deposit and its geological parameters, the mining method selected in the FS is reasonable. However, the detailed calculation and design of the relevant technical parameters require further attention for the filling system. Additionally, given the rate of groundwater generation, SRK opines that emulsion explosives would be a better choice than ammonium nitrate. The Company and BGRIMM state that the project will use more waterproof explosives when necessary due to underground water conditions.

6.3.3 Main Technological Targets

The main technological of the mining method are summarised in Table 6-3.

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Table 6-3: Main Technological and Economical Targets Slice fill Section fill Main technological and Unit Arranged Arranged Section cut and dry economical targets along orebody cross orebody fill open stoping Proportion % 30 50 20 Dip (average) ° 80 80 80 Thickness (average) m 8 30 36 Allowed exposed roof area m2 400 400 900 Stope length m 50 50 (12.5×2×2) 50 (25×2) Sub-level height m 60 60 60 Height of crown pillar m 0 0 0 Height of sill pillar m 8 8 8 Width of rib pillar m 0 0 0 Number of panels operated No. 2 3 1 simultaneously Throughput of each panel tpd 200 350 500 Strip ratio in kilotonnes m/kt 13.3 7.5 6.7 Loss rate % 5 5 15 Dilution rate % 8 8 12

SRK opines that the selection of the mining method is reasonable in terms of both technology and economical parameters, but there is a risk that the actual mining operation may not achieve its target. For example, the techniques proposed are optimistic regarding the mining loss and dilution rate when using the upward horizontal slice stoping and filling method and therefore there is a risk of not achieving the intended production. Under normal conditions, the mining loss and dilution rates will average 10%. The Company stated that production will adopt regular ongoing mining management methods such as underground geotechnical and production exploration drilling to control the shape and edge of the ore body and more shallow holes will be used to speed up the ore transportation and to reduce secondary dilution.

6.3.4 Main Mining Equipment

The main mining equipment finally selected is summarized in Table 6-4.

Table 6-4: List of Main Mining Equipment

Equipment name Model specifications Unit Total Single boom jumbo Atlas Copco Boomer 281 Unit 7 YGZ90 rig YGZ90 Unit 10 Down-the-hole drill QZJ-100B Unit 4 Shallow hole drill YT-28 Unit 24 Shallow hole drill YSP45 Unit 26 Loader JCCY-2 Unit 14 Loader Sandvik LH410 Unit 4 Truck JKQ-25 Unit 12 Truck JKQ-10 Unit 2 Truck Sandvik LH430 Unit 4 Explosive charging machine BQF100 Unit 4 Concrete sprayer HPH6 Unit 7 Grader GR100 Unit 2 Local fan (stope) JK58-1NO.4 Unit 15 Local fan (development) JK58-1NO.4.5 Unit 15 Anchor car DS310 Unit 2 Trackless mancar WC20R Unit 8 Multi-function vehicle JY-5 Unit 6 Vibration ore drawing machine XZG2035L Unit 8 Crusher XYSJ-400 Unit 2

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SRK opines that the equipment and mining method proposed will be sufficient to meet the 4000 tpd capacity. SRK further recommends that the mining equipment’s breakdown rate and utilization levels should be considered and spare parts and backup equipment should be acquired accordingly.

6.4 Mining Schedule

6.4.1 Mining Capacity and Life of Mine

BGRIMM planned the mining schedule based on the geological conditions, such that the mine construction and production are intended to be developed in two stages: Phase I is planned to achieve a capacity of 2000 tpd or 0.66 million tonnes per year (“Mtpa”) and Phase II will have a capacity of 4000 tpd or 1.32 Mtpa. This includes an initial construction period of 1.5 years, with the first production year achieving 0.4 Mtpa, the second production year achieving 0.66 Mtpa, the third production year achieving 0.99 Mtpa and the fourth production year achieving 1.32 Mtpa. The designed life of mine (“LOM”) is 19 years.

It is SRK’s opinion that the mining schedule set out in the FS is reasonable, as the mineable reserve used in the design was only 74% of the Measured and Indicated Resource of OBZs 1 and 3. No mining production has so far been considered for any of the other mineralized Zones; hence, there is great potential to enlarge the resource by additional exploration, both by infill drilling and by exploration in new areas. Therefore it is quite possible that the mining capacity and LOM will be expanded.

6.4.2 Mining Schedule

In the FS it is proposed that the mine should be operated continually, with 330 working days per annum, three shifts per day, eight hours per shift. Although the Company considers 330 working days per year to be a realistic schedule, given the difficulties posed by the climate and infrastructure in the area, SRK suggests that the operational annual working days should be determined during the preparation of mining commencement.

6.4.3 Mining Production Plan

The initial mining schedule is shown in Table 6-5.

Table 6-5: Mining Plan within the LOM Year 1 2 3 4 to 13 14 to 18 19 Production (ktpa) 400 660 990 1320 660 270

SRK accepts this overall long-term mining plan. During actual production, some variations may occur.

6.5 Conclusions

After reviewing the FS, SRK considers that, overall, the Project’s prospect is favourable. In general, the FS is comprehensive and highly-detailed and is sufficient for use in mine construction/development planning and for other economic parameters. However, at a technical level, the following considerations should be highlighted:

 The ore body framework has not been re-delineated according to a reasonable cut-off, which results in low efficiency when utilizing the resources and consequent impacts on estimating the mining capability and therefore the overall LOM.  The development plan should be further refined during the design phase. Specifically, there is no comprehensive comparison of different development options for the deeper ore

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bodies, which has repercussions for the necessary level of investment in overall mine construction and continuing capital expenditure; this may also impact the overall mining plan.  The actual mining loss and dilution rates may be higher than expected. This may also impact on the economics of the Project.  BGRMM has described the filling system, method and equipment in Volume II of the FS. The equipment list has been included in Volume V of the PFS. SRK opines that the backfill system should be designed with more detailed deployment, equipment and material selections.  Mining equipment recommendations do not include any provisions for backup equipment or parts (although the Company stated that will store enough spare parts and motors for necessary equipment maintenance); this may also have an impact on the capital expenditure.  SRK is uncertain that the mining production schedule of 330 days per annum is realistic; this is to be further demonstrated during production and may impact the actual production capacity.  It is essential to have the preliminary mine design and construction blue prints finalised before the mine starts formal production.

SRK believes that the above issues will be addressed and improved upon with further refinement of the mine designing processes.

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7 Ore Reserve Estimate

BGRIMM published a feasibility study report (FS) in August 2012. Based on the parameters proposed in the FS, SRK estimated the Ore Reserves for the Project using MineSight (Version 7.80-1) software. The estimated Ore Reserves were reported in accordance with the JORC Code (2004).

7.1 Previous Work

The Project was designed as an underground mine. Production capacity for the Phase I was designed as 2000 tpd (660 ktpa). Production capacity for the Phase II was designed as 4000 tpd (1320 ktpa). Pre-production lasts 1.5 years. The Project was planned to launch production with a production capacity of 400 ktpa for the first year, then 660 ktpa for the second year, 990 ktpa for the third year and 1320 ktpa for the fourth year. The expected life of mine (“LOM”) is 19 years, of which 10 years were designed for full production capacity, followed by 6 years of decreased production capacity. The Project was designed to work 330 days per annuam. The ultimate product is gold bullion.

A cut-off grade of 1.5 g/t Au, which was approved by the Government of Tajikistan, was applied to the Project by BGRIMM and the main mining targets are the Measured and Indicated resources in Zones 1 and 3. The mineable resources were estimated to be 18,849,425 tonnes with an average gold grade of 3.23 g/t. A mining loss rate of 7% and a dilution rate of 8.8% were applied to the mineable resources estimate.

SRK is of the opinion that it’s reasonable for the Project to be designed as an underground mine. SRK has estimated the Ore Reserves for the Project based on the FS.

7.2 High Grade Cut-off and Economic Cut-off

The following two formulas were applied by SRK to calculate the high grade cut-off and economic cut-off for the feed ore.

C K∙T α P∙ε∙1r

C C K∙T α P∙ε∙1r

Parameters that were applied to calculate the high grade cut-off and economic cut-off and the results, are presented in the following table (Table 7-1).

Table 7-1: Parameters to Calculate High Grade and Economic Cut-off

Items Unit Value Comments P $/g gold bullion 40.19 Average sale price of gold bullion during full production years ε % 82.99 Combination recovery of processing and metallurgy

C $/t ore 32.77 Operating cost

C $/t ore 19.80 Mining cost r % 6.0 Royalty rate K % 10.0 Static rate of return on investment (ROI) T $/t ore 168.95 Capital cost

α g/t 1.6 High grade cut-off of for gold

α g/t 1.0 Economic cut-off of gold

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Please note that gold cut-offs show up in Table 7-1 were calculated based on some technical and economical assumptions which have been understood well to date. These assumptions would change as time goes on, so different cut-offs can be produced. A sensitivity analysis, which is presented in Figure 7-1, was carried out as a supplementary understanding of these factors influence on economic cut-off. Figure 7-1 shows that the sale price has the most influence when calculating economic cut-off, which were followed in decreasing order of influence by operating cost, static ROI and royalty rate.

2.0

1.9

1.8

1.7 g/t)

(Au:

1.6 off ‐ Cut 1.5

Economic 1.4

1.3 -20% -10% 0 10% 20% Sale price 1.98 1.76 1.58 1.44 1.32 Operating cost 1.38 1.48 1.58 1.69 1.79 Static ROI 1.48 1.53 1.58 1.64 1.69 Royalty rate 1.56 1.57 1.58 1.59 1.60

Figure 7-1: Univariate Sensitivity Analysis of Economic Cut-off

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7.3 Reserve Block Model

7.3.1 Selective Mining Unit

SRK completed the resource estimate for the Project in February 2013. The block model applied by BGRIMM during its preparation of the FS has a block size of 5 m × 5 m × 20 m (X × Y × Z). SRK believes this size is inappropriate for direct use during the Ore Reserves estimate, especially for the Z size of 20 m, for the following reasons:

 The slice filling method, which is the predominant mining method planned to be adopted for the Project, has a slice thickness of between 3m and 4m. A block size of Z = 20 m would result in significant mining dilutions. The sublevel filling method has a sublevel height of 12 m, so a block size of Z = 20 m would result in significant mining losses. SRK weighed the advantanges and disadvantages of the block size, then decided to use a block size of Z = 4 m. This size is close to the slice thickness utilised in the slice filling method. SRK thinks this block size would take give reasonably accurate results for both mining methods.  The drilling machines planned to be used are Boomer 281 and YGZ90 drill rigs, while the loaders are JCCY-2 (2.0 m3) and LH410 (4.0 m3) vehicles. Cross cuts that were designed for these machines to pass through have widths of 4.0 m and heights of 3.5 m, which is close to the minimum size required for the loaders to run smoothly. Therefore, SRK decided to use a block size of 4 m for both X and Y directions.

As a consequence of the above, SRK reblocked the block model to generate a new model with block size of 4 m × 4 m × 4 m (X × Y × Z). The new block model was referred to as the “reserve block model” and each block is referred to as a “selective mining unit” (“SMU”). The reserve block model was used by SRK to estimate the Ore Reserves for the Project.

7.3.2 Model Limits and Items

Model limits are shown in Table 7-2 . Model items are shown in Table 7-3.

Table 7-2: Ore Reserve Model Limits

Axis MinimumMaximumSize (m)Number X (Easting) 70800 71800 4 250 Y (Northing) 62600 63200 4 150 Z (Elevation)1570 2490 4 295

Table 7-3: Model Items Items Minimum Maximum Precision Description TOPO 0 100 0.01 Volume percent below topography. AU 0 50 0.01 In-situ gold grade ZONE 0 5 1 Mineralized zones code. ZONE% 0 100 0.01 Volume percent of ZONE. D1 0 999 1 Oxide code D%1 0 100 0.01 Volume percent of oxide. D2 0 999 1 Sulfide code. D%2 0 100 0.01 Volume percent of sulfide. W 0 999 1 Waste rock code. W% 0 100 0.01 Volume percent of waste rock. BD1 0 5 0.01 Bulk density of oxide. BD2 0 5 0.01 Bulk density of sulfide. BDW 0 5 0.01 Bulk density of waste rock. CAT 0 5 1 Mineral resource category. AU1 0 50 0.01 Gold grade of feed ore. MAT 0 10 1 Materials code. IPT -2000 2000 0.01 Sales income, per ton of feed ore. CPT -2000 2000 0.01 Total cost, per ton of feed ore.

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TRPT -2000 2000 0.01 Royalty, per ton of feed ore. TIPT -2000 2000 0.01 Income tax, per ton of feed ore. NRPT -2000 2000 0.01 Net revenue, per ton of feed ore. BDD 0 5 0.01 Bulk density of feed ore. CELL 0 999999 1 Mining cells/panels code. FLAG 0 999999 1 Bottom pillars code. CAT1 0 5 1 Ore reserve category.

7.3.3 Items Assignment

Model items were assigned values as follows:

 TOPO is assigned using the three dimentional (“3D”) wireframe model of topography, given as a percentage, to two decimal places.  D1 is assigned using the 3D wireframe model of mineralized zones, given as an integer where “0” indicates a block is outside of oxide, “11” indicates a block is inside of oxide of zone 1 and “31” indicates a block is inside of oxide of zone 3.  D2 is assigned using the 3D wireframe model of mineralized zones, , given as an integer where “0” indicates a block is outside of sulfide, “12” indicates a block is inside of sulfide of zone 1 and “32” indicates a block is inside of sulfide of zone 3.  AU is the reblock result of resource block model, given in g/t, to two decimal places.  ZONE is based on D1 and D2, given as an integer. ZONE is set to 1 if D1 equals 11 or D2 equals 12, which indicates mineralized zone 1. ZONE is set to 3 if D1 equals 31 or D2 equals 32, which indicates mineralized zone 3.  D%1 is assigned using the 3D wireframe model of mineralized zones, given as a percentage, to two decimal places.  D%2 is assigned using the 3D wireframe model of mineralized zones, given as a percentage, to two decimal places.  ZONE% = D%1 + D%2, given as a percent to two decimal places.  W% = TOPO - ZONE%, given as a percentage, to two decimal places.  W is based on W%, given as an integer where W = 1 if W% is greater than 0, which means a block is outside of mineralized zones and W = 0 if W% equals 0, which means a block is inside of mineralized zones.  BD1 = 2.57.  BD2 = 2.62.  BDW = 2.61.  CAT is given as an integer, where “1” indicates the Measured resources, “2” indicates the Indicated resources and “3” indicates the Inferred resources.  CAT1 is stored as an integer, where “1” indicates the Proved reserves and “2” indicates the Probable reserves.  BDD = ( D%1 * BD1 + D%2 * BD2 + W% * BDW ) / ( D%1 + D%2 + W% ) and is calculated to two decimal places.  AU1 = 0.01 * ( D%1 * BD1 + D%2 * BD2 ) * AU / BDD, given in g/t, to two decimal places.  MAT is based on CAT and AU1. MAT = 1 if CAT < 3 and AU1 ≥ 1.5. MAT = 2 if CAT < 3 and 1.1 ≤ AU1 < 1.5. MAT = 3 if CAT < 3 and 0.5 ≤ AU1 < 1.1. MAT = 4 for the remained blocks.  IPT is based on MAT and is calculated to two decimal places. IPT = AU1 * 0.8299 * 43.40 if MAT < 4. IPT = 0 if MAT = 4.  CPT is based on MAT and is calculated to two decimal places. CPT = 0 - 32.77 if MAT < 4. CPT = (0 - 19.8) if MAT = 4.  TRPT is based on MAT and is calculated to two decimal places. TRPT = 0 - IPT * 0.06 if MAT < 4. TRPT = 0 if MAT = 4.  TIPT is based on MAT and is calculated to two decimal places. TIPT = 0 - ( IPT + CPT + TRPT ) * 0.15 if MAT < 4. TIPT = 0 if MAT = 4.

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 NRPT is based on MAT and is calculated to two decimal places. NRPT = ( IPT + CPT + TRPT) * 0.85 if MAT < 4. NRPT = CPT if MAT = 4.  CELL is assigned using the 3D wireframe model of mining cells/panels. It is stored as a six (6) digits integer. For example, “199001” indicates the number 01 mining cells/panels on Level 1990.  FLAG is assigned using the 3D wireframe model of bottom pillars. It is stored as a six (6) digits integer. For example, “199000” indicates the bottom pillars on Level 1990.  CAT1 is stored as an integer. “1” indicates Proved Ore Reserves. “2” indicates the Probable Ore Reserves.

Table 7-4: MAT Assignment CAT 1 2 3 4 >= 1.6 11 21 31 AU1 1.0 ~ 1.6 12 22 32 40 0.0 ~ 1.0 13 23 33

7.4 Mining Objects and Layout of Levels

A total of eight (8) mineralized zones were modelled for the Project, which are numbered as 1, 3, 5, 6, 7, 14, 15 and 16. Zones 1 and 3 are the two predominant resources. Considering the resource tonnage and level of geological confidence, BGRIMM designated the Measured and Indicated Mineral Resources of these two zones as the mining targets. These Mineral Resources occur in elevation ranges of between 2410 m and 1690 m. SRK thinks the mining targets selected by BGRIMM are reasonable.

Ramp-and-shaft development was applied to the Project. Level height was set to 60 m. This development system has been widely practised all over the world and SRK thinks it is a reasonable choice for the Pakrut mine. On the premise of technical feasibility, SRK divided the mining targets into 12 levels: the 2350 m, 2290 m, 2230 m, 2170 m, 2110 m, 2050 m, 1990 m, 1930 m, 1870 m, 1810 m, 1750 m and 1690 m levels.

7.5 Layout of Mining Cells/Panels

Based on the reserve block model, layout of levels and mining methods, SRK modelled a technically feasible layout of mining cells/panels, which is presented in Figure 7-2. The detailed layout of mining cells/panels on each level is shown in Table 7-5 and Figure 7-2.

Mineralised Zones 1 and 3 have 140 and 18 technically feasible mining cells/panels, respectively. The number of mining cells/panels on each level is shown in Table 7-5.

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Table 7-5: Number of Mining Cells/Panels on Each Level Levels (m ASL) Zone 1 Zone 3 2350 11 2290 14 4 2230 16 1 2170 16 6 2110 16 5 2050 14 1 1990 13 1 1930 11 1870 10 1810 9 1750 8 1690 2 Total 140 18

Figure 7-2: Layout of Mining Cells/Panels (Azimuth: 0°, Dip: 0°)

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7.6 Net Revenue Estimate and Mineable Analysis

SRK estimated the net revenue (“NR”) of each mining cell/panel. Levels of mineralized zone 1 from 2350 down to 1810 have positive NR, while only level 2290 of mineralized zone 3 have positive NR. SRK took account of the fact that mineralized zone 1 is the primary mining target, while the mineralized zone 3 is the secondary mining target, so the levels with both technical feasiblity and economical feasibility were finally limited from 2350 down to 1810.

SRK noted that some mining cells/panels have positive NR, others have negative NR. Mineable cells/panels selected by SRK is shown in Table 7-6.

Table 7-6: Mineable Cells/Panels on Each Level Levels Zone 1 Zone 3 2350 235001~235007 2290 229001~229008 229001~229002 2230 223001~223012 2170 217003~217012 217003 2110 211005~211011 211002 2050 205002~205009 205001 1990 199002~199008 1930 193002~193007 1870 187003~187009 1810 181002~181008

SRK noted that recovery of bottom pillars will influence the NR estimate. If the recovery of bottom pillars would result in additional NR, they are included in the Ore Reserve estimate.

The mineable materials are divided into three types, which are described as following:

 the economic materials indicates the mineable parts of the Measured or Indicated Mineral Resources averaging gold grade of no less than 1.6 g/t, which includes the diluting materials and allowances of losses. The economic materials were assigned value of 11 or 21 for MAT in the block model.  the marginally economic materials indicates the mineable parts of the Measured or Indicated Mineral Resources averaging gold grade varying from 1.0g/t to 1.6g/t, which includes the diluting materials and allowances of losses. The marginally economic materials were assigned value of 12 or 22 for MAT in the block model.  the sub-economic materials indicates the mineable parts of the Measured or Indicated Mineral Resources averaging gold grade of less than 1.0g/t and all the Inferred Mineral Resources, which includes the diluting materials and allowances of losses. The sub-economic materials were assigned value of 13, 23, 31, 32, 33 or 40 for MAT in the block model.

Usually, the economic materials can be sent to processing plant, while the marginally economic materials can be sent to stockpiles to be processed towards the end of mine life to improve the net present value. All the sub-economic materials are intended for waste dumps. Obviously, the economic materials and the marginally economic materials can be converted to Ore Reserves.

7.7 Ore Reserves Classification

The economically mineable parts of the Measured Mineral Resources, which includes diluting materials and allowances for losses, were classified as the Proved Ore Reserves.

The economically mineable parts of the Indicated Mineral Resources, which includes diluting materials and allowances for losses, were classified as the Probable Ore Reserves.

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7.8 Ore Reserves Statement

The combined recovery of processing and metallurgy applied to the ore reserve estimate is 82.99%. The Ore Reserves were reported in the gold cut-off of 1.0 g/t as of February 28, 2013. A summary of Ore Reserves is shown in Table 7-8 to Table 7-10. Net revenue estimate is shown in Table 7-11.

At a gold cut-off of 1.0 g/t, the Proved Ore Reserves is estimated at 15,721 kt averaging 3.1 g/t gold. The Probable Ore Reserves is estimated at 2,787 kt averaging 2.5 g/t gold. The tables are further divided into high grade (above a cut-off of 1.6 g/t goldand economic ore (above the cut-off of 1g/t gold).

Table 7-7: Summary of Proved Ore Reserves on Each Level as of February 28 2013

Proved High grade Economic Total Zone No. Level (Au≥1.6g/t) (1.0g/t≤Au＜1.6g/t) Tonnes Au Au Tonnes Au Au Tonnes Au Au (kt) (g/t) (kg) (kt) (g/t) (kg) (kt) (g/t) (kg) 1810 738 3.0 2,219 125 1.3 161 862 2.8 2,381 1870 975 3.2 3,148 196 1.3 255 1,171 2.9 3,403 1930 936 2.7 2,498 289 1.3 374 1,224 2.3 2,872 1990 1,097 2.7 2,997 378 1.3 494 1,474 2.4 3,491 2050 1,455 3.4 5,002 340 1.3 440 1,795 3.0 5,442 1 2110 1,327 4.9 6,490 266 1.3 340 1,594 4.3 6,829 2170 1,398 3.7 5,232 632 1.3 821 2,030 3.0 6,053 2230 2,083 3.6 7,586 566 1.3 737 2,650 3.1 8,322 2290 1,337 3.3 4,473 365 1.3 466 1,702 2.9 4,940 2350 461 6.5 2,978 79 1.3 102 540 5.7 3,079 Sub-total 11,805 3.6 42,623 3,236 1.3 4,190 15,041 3.1 46,813 2050 57 4.5 256 160 1.1 183 217 2.0 439 2110 100 3.7 366 163 1.2 193 263 2.1 560 2170 77 2.4 188 68 1.2 85 145 1.9 273 3 2230 ------2290 37 2.5 91 19 1.3 24 56 2.1 116 Sub-total 271 3.3 902 409 1.2 485 680 2.0 1,387 1810 738 3.0 2,219 125 1.3 161 862 2.8 2,381 1870 975 3.2 3,148 196 1.3 255 1,171 2.9 3,403 1930 936 2.7 2,498 289 1.3 374 1,224 2.3 2,872 1990 1,097 2.7 2,997 378 1.3 494 1,474 2.4 3,491 2050 1,512 3.5 5,258 500 1.2 623 2,012 2.9 5,881 Total 2110 1,427 4.8 6,856 429 1.2 533 1,856 4.0 7,389 2170 1,475 3.7 5,420 700 1.3 906 2,175 2.9 6,326 2230 2,083 3.6 7,586 566 1.3 737 2,650 3.1 8,322 2290 1,373 3.3 4,565 384 1.3 491 1,757 2.9 5,055 2350 461 6.5 2,978 79 1.3 102 540 5.7 3,079 Sub-total 12,076 3.6 43,525 3,645 1.3 4,676 15,721 3.1 48,200

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Table 7-8: Summary of Probable Ore Reserves on Each Level as of February 28 2013

Probable High grade Economic Total Zone No. Level (Au≥1.6g/t) (1.0g/t≤Au＜1.6g/t) Tonnes Au Au Tonnes Au Au Tonnes Au Au (kt) (g/t) (kg) (kt) (g/t) (kg) (kt) (g/t) (kg) 1810 639 2.8 1,801 172 1.3 224 811 2.5 2,025 1870 497 2.8 1,394 152 1.3 193 649 2.4 1,587 1930 409 2.4 994 96 1.3 124 505 2.2 1,118 1990 191 2.8 542 57 1.3 74 247 2.5 616 2050 188 2.6 494 68 1.3 88 256 2.3 582 1 2110 50 5.6 279 21 1.3 27 71 4.3 305 2170 93 2.7 255 35 1.3 45 128 2.3 300 2230 78 3.5 272 17 1.3 22 95 3.1 294 2290 ------2350 18 4.2 75 2 1.3 2 20 3.9 77 Sub-total 2,161 2.8 6,106 620 1.3 799 2,781 2.5 6,906 2050 - - - 6 1.1 7 6 1.1 7 2110 ------2170 ------3 2230 ------2290 ------Sub-total - - - 6 1.1 7 6 1.1 7 1810 639 2.8 1,801 172 1.3 224 811 2.5 2,025 1870 497 2.8 1,394 152 1.3 193 649 2.4 1,587 1930 409 2.4 994 96 1.3 124 505 2.2 1,118 1990 191 2.8 542 57 1.3 74 247 2.5 616 2050 188 2.6 494 75 1.3 95 262 2.2 589 Total 2110 50 5.6 279 21 1.3 27 71 4.3 305 2170 93 2.7 255 35 1.3 45 128 2.3 300 2230 78 3.5 272 17 1.3 22 95 3.1 294 2290 ------2350 18 4.2 75 2 1.3 220 3.9 77 Sub-total 2,161 2.8 6,106 627 1.3 806 2,787 2.5 6,913

Table 7-9: Summary of Total Ore Reserves on Each Level as of February 28 2013

Proved+Probable High grade Economic Total Zone No. Level (Au≥1.6g/t) (1.0g/t≤Au＜1.6g/t) Tonnes Au Au Tonnes Au Au Tonnes Au Au (kt) (g/t) (kg) (kt) (g/t) (kg) (kt) (g/t) (kg) 1810 1,376 2.9 4,020 297 1.3 385 1,673 2.6 4,406 1870 1,472 3.1 4,542 348 1.3 448 1,819 2.7 4,991 1 1930 1,344 2.6 3,492 385 1.3 498 1,729 2.3 3,990 1990 1,287 2.7 3,539 435 1.3 568 1,722 2.4 4,107

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2050 1,643 3.3 5,496 408 1.3 528 2,051 2.9 6,024 2110 1,378 4.9 6,768 287 1.3 366 1,665 4.3 7,135 2170 1,491 3.7 5,487 667 1.3 866 2,158 2.9 6,353 2230 2,161 3.6 7,858 583 1.3 759 2,744 3.1 8,617 2290 1,337 3.3 4,473 365 1.3 466 1,702 2.9 4,940 2350 479 6.4 3,053 81 1.3 104 559 5.6 3,157 Sub-total 13,966 3.5 48,729 3,856 1.3 4,990 17,822 3.0 53,719 2050 57 4.5 256 166 1.1 190 223 2.0 446 2110 100 3.7 366 163 1.2 193 263 2.1 560 2170 77 2.4 188 68 1.2 85 145 1.9 273 3 2230 ------2290 37 2.5 91 19 1.3 24 56 2.1 116 Sub-total 271 3.3 902 416 1.2 492 686 2.0 1,394 1810 1,376 2.9 4,020 297 1.3 385 1,673 2.6 4,406 1870 1,472 3.1 4,542 348 1.3 448 1,819 2.7 4,991 1930 1,344 2.6 3,492 385 1.3 498 1,729 2.3 3,990 1990 1,287 2.7 3,539 435 1.3 568 1,722 2.4 4,107 2050 1,700 3.4 5,752 574 1.3 718 2,274 2.8 6,470 Total 2110 1,477 4.8 7,135 450 1.2 560 1,927 4.0 7,694 2170 1,568 3.6 5,675 735 1.3 951 2,303 2.9 6,626 2230 2,161 3.6 7,858 583 1.3 759 2,744 3.1 8,617 2290 1,373 3.3 4,565 384 1.3 491 1,757 2.9 5,055 2350 479 6.4 3,053 81 1.3 104 559 5.6 3,157 Sub-total 14,237 3.5 49,631 4,272 1.3 5,482 18,508 3.0 55,113

Table 7-10: Net Revenue Estimate

Cut-off (Au: g/t) Tonnes (kt) Au (g/t) NR (1000$) 1.0 18,508 3.0 953,181 1.6 14,237 3.5 926,081

7.9 Conclusions and Recommendations

The ore reserve estimate conducted by SRK was based on the parameters proposed in the FS prepared by BGRIMM.

At a gold cut-off of 1.0 g/t, the Proved Ore Reserves have tonnes of 15,721 kt averaging 3.1 g/t gold. The Probable Ore Reserves have tonnes of 2,787 kt averaging 2.5 g/t gold.

Both SRK and BGRIMM estimated the Ore Reserves based on the resource block model directly. No new geological models were interpreted using an increased cut-off. As the cut-off increases, the manually interpreted geological models would vary from the grade shells generated using the block model. The difference is mainly caused by the intrinsic disadvantages of various interpolation methods and the subjectivity of block size setting. The difference can’t be estimated theoretically. Therefore, SRK is of the opinion that the resources reported at the lowest cut-off is the most reliable, while the resources reported at an increasing cut-off has decreased geological confidence. SRK believes it is preferable to generate geological models using an increased cut-off before preparing a feasibility study.

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8 Mineral Processing Assessment

8.1 Mineral Processing Test

BGRIMM was commissioned by Kryso to conduct a small-scale laboratory flowsheet test on Pakrut gold ores and delivered a processing flowsheet test report in February 2010.

Kryso collected the test samples and named them Sample A and Sample B. Each weighs 200 kg. All the samples are fine-ground powders and consist of high-grade underground primary ores, 87% of which were collected from the two main ore body zones, OBZ 1 and OBZ 3. The primary ore is low-sulphur quartz-feldspar arsenious gold ore.

8.2 Ore Properties

8.2.1 Chemical Composition

The chemical composition of the selected ore samples is shown in Table 8-1.

Table 8-1: Ore Chemical Composition

Element Unit Sample A Sample B Au (g/t) 5.53 4.74 Ag (g/t) 2.52 2.49 Cu (%) 0.08 0.004 C (%) 1.13 0.64 As (%) 0.32 0.51 S (%) 0.66 0.74 TFe (%) 3.12 2.98 Zn (%) 0.07 0.01 CaO (%) 1.16 0.88 MgO (%) 2.06 1.64 Mn (%) 0.052 0.05 Bi (%) <0.005 <0.005 Al2O3 (%) 8.96 8.09 TiO2 (%) 0.67 0.6 SiO2 (%) 61.48 62.14 Pb (%) 0.021 0.007 Sb (%) <0.005 <0.005 K2O (%) 2.89 2.43 Hg (%) <0.0001 <0.0001 Na2O (%) 3.06 3.28

Au is the main economic mineral in the samples. The average silver (“Ag”) content is 2.51 g/t, which is a very low grade, so it is very difficult to recover Ag commercially. The associated elements of copper, lead and zinc have no commercial value due to their low grades.

The content of the harmful element arsenic (“As”) is rather high, which may have a negative impact on gold recovery.

The carbon content is rather high, but most is in an inorganic form and therefore will have little impact on ore processing.

8.2.2 Mineral Composition

Gold occurs in the ores as native gold. Other sulphide minerals and metallic minerals include pyrite and arsenopyrite, followed by a small amount of magnetite, ilmenite, rutile and traces of galena.

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Gangue minerals include quartz and feldspar, followed by dolomite, chlorite and kaolinite and a small amount of zircon, titanate and phosphorite.

Table 8-2: Mineral Composition and Content Sample A Sample B Mineral Name Content (%) Pyrite 0.98 0.98 Arsenopyrite 0.7 1.11 Magnetite Ilmenite 0.67 0.6 Rutile Feldspar 38.2 35.12 Quartz 36.28 34.92 Carbonate minerals 8.07 6.4 Chlorite 8.61 8.61 Sericite, Kaolinite 5.72 11.57 Others 0.77 0.69

8.2.3 Gold Chemical Phase Analysis

Results of the chemical phase analysis are presented in the tables below.

Table 8-3: Gold Chemical Phase Analysis Result Sample A Sample B Sample A Sample B Phase Content (g/t) Percentage (%) Exposed Au 5.01 4 90.76 84.57 Au enclosed by sulphide 0.39 0.56 7.07 11.84 Au enclosed by other minerals 0.12 0.17 2.17 3.59 Total Au 5.52 4.73 100 100

Table 8-4: Particle Size Statistics of Visible Native Gold Sample A Sample B Sample A Sample B Size Classification Size (mm) Percentage (%) Accumulated (%) -0.374 36.43 36.43 Coarse -0.574 36.47 36.47 Medium -0.074 - +0.030 32.24 24.76 68.67 51.23 Fine -0.04 31.19 38.6 99.86 99.83 Granule -0.011 0.14 0.17 100 100

8.2.4 Gold Occurrence

8.2.4.1 The Symbiotic Relationship between Visible Native Gold and Other Minerals

In Sample A, the native gold is closely associated with arsenopyrite and pyrite. Part of the native gold is also associated with sericite and quartz. In general, the visible native gold occurs in Sample A as fissure gold, intergranular gold and free gold in most cases and also occasionally occurs as enclosed gold in a few cases. A fine-grinding process can liberate or expose most of the native gold.

In Sample B, the visible native gold is not closely associated with arsenopyrite and pyrite; however, it is quite closely associated with limonite. The visible native gold in Sample B is obviously less than that in Sample A. However, Sample B contains more sub-microscopic gold which mainly occurs in pyrite and arsenopyrite.

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Generally speaking, gold occurs in the Pakrut ores in native form with coarse, medium and fine grains distributed irregularly. In addition to the visible native gold, some sub-microscopic gold is found in pyrite and arsenopyrite.

8.2.5 Physical Properties of the Ore

Table 8-5: Ore Physical Properties Physical Property Density Hardness Loose Coefficient Angle of Repose Unit t/m3 / / 0 Index 2.62 6 - 8 1.6 40

8.3 Processing Test Result

BGRIMM conducted tests using four processing flowsheets; the test results and flowsheets are listed below.

Table 8-6: Processing Test Result and Flowsheet Gold Recovery rate% Serial No. Processing Flowsheet Sample A Sample B 1 Whole ore cyanide in leaching (“WOOCIL”) 90.05 84.18 2 WOOCIL + leaching slag flotation + fine grinding & CIL 92.23 87.11 3 Flotation + CIL 85.24 81.29 4 Gravity separation + flotation + CIL 86.62 81.81

Test sa mpl e

0. 074 mm 90 %

WOOCI L

Leachi ng sol uti on Leachi ng sl ag

Figure 8-1: Flowsheet for Whole Ore Cyanide in Leaching (“WOOCIL”)

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Test sampl e

0. 074 mm 90 %

WOOCI L

Leachi ng sol uti on 1 Leachi ng sl ag 1

3 Na2 CO3 1000 5 CuSO4 400（a）/600(b) 2 NaBX 100

Rougher

3 Na2 CO3 500 5 NaBX 2 CuSO4 30(a)50(b) 200（a）/300(b) Pi ne oil 5 2 NaBX 100 Pi ne oil 25 Cl eaner Scavenger 1

5 CuSO4 200（a）/300(b) 2 NaBX 80 Pi ne oil 15 Scavenger 2 Fl ot ati on conc.

-0. 038mm 95 %

CI L

Leachi ng sol uti on Leachi ng sl ag Taili ng

Figure 8-2: Flowsheet of WOOCIL + Leaching Slag Flotation + Fine Grinding & CIL

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Test sa mpl e

0. 074 mm 81 %a 85 % b

3 Na2 CO3 1000 3 NaPO3 10（a）/20(b) 2 NaBX 80 Pi ne oil 20 Rougher

3 Na2 CO3 500 3 ( NaPO ) 3 ( NaPO3) 3 X 5（a）/10(b) X 2（a）/5(b) 2 NaBX 40

Pi ne oil 10 Cl eaner Scavenger 1

2 NaBX 40 Pi ne oil 10

Scavenger 2 Fl ot ati on conc.

-0. 038 mm 95 %

CI L

Leachi ng sol uti on Leachi ng sl ag Taili ng

Figure 8-3: Flowsheet of Flotation + Fine Grinding & CIL

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Test sa mpl e

0. 074 mm 81 %a 85 % b

Knelson Concentrat or

Tabl e concentrati on

3 Na2 CO3 1000

3 NaPO3 10（a）/20(b) 2 NaBX 80 Pi ne oil 20 Rougher

3 Na2 CO3 500

3 ( NaPO ) 3 ( NaPO3) 3 X 5（a）/10(b) X 2（a）/5(b) 2 NaBX 40

Pi ne oil 10 Cl eaner Scavenger 1

2 NaBX 40 Pi ne oil 10

Scavenger 2 Co mbi ned conc.

-0. 038 mm 95 %

CI L

Leachi ng sol uti on Leachi ng sl ag Taili ng

Figure 8-4: Flowsheet of Gravity Separation + Flotation + Fine Grinding & CIL

8.3.1.1 Recommended Process Flowsheet

If the recovery rate is the only concern, Flowsheet 2, using a three-stage process of whole ore cyanide in leaching (“WOOCIL”) + leaching slag flotation + find grinding & cyanide in leaching (“CIL”), is the optimal flow. However, considering that the leaching slag flotation concentrate has a very low leach rate after fine grinding, a modified flowsheet consisting of WOOCIL + leaching slag flotation + flotation gold concentrate roasting and leaching is recommended.

8.3.2 Test Product Analysis

Chemical analysis of the main product of the three flowsheets (WOOCIL, flotation + concentrate cyaniding and gravity separation + flotation + cyaniding) has been done and the results are listed below.

Table 8-7: Chemical Analysis Result of Concentrate from WOOCIL

Sample Au (g/t) Ag (g/t) S (%) As (%) Sample A 23.43 14.24 34.13 9.86 Sample B 26.31 6.75 29.14 14.16

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Table 8-8: Analysis Result of Concentrate from Flotation + Concentrate Cyaniding Sample Au (g/t) Ag (g/t) S (%) As (%) Ca (%) Mg (%) Mn (%) Sample A 127 20.92 17.29 7.78 0.75 0.78 0.041 Sample B 112 15.9 17.59 12.2 1.31 0.76 0.04

Table 8-9: Analysis Result of Concentrate from Gravity Separation + Flotation + Cyaniding

Sample Au (g/t) Ag (g/t) S (%) As (%) Cu (%) Sample A 160.4 - - - - Sample B 134 - - - -

8.3.3 Previous Processing Tests

The Technological Laboratory of Tajikgeology carried out processing and metallurgy tests on Pakrut gold ore in 1975 and 1976. The first test, in 1975, tested the ore’s separability and the second test, in 1976, was a semi-industrial test in a closed circuit.

In 1977 the Ingichinsckoy Pilot-Methodical Laboratory at Samark and geology in Uzbekistan carried out a large-scaled semi-industrial test on Pakrut gold ore.

In 2004 SGS Lakefield Research carried out various tests to verify the previous processing and metallurgical tests.

8.3.4 Processing Test Assessment

It is SRK’s opinion that the processing tests generated positive results and can meet the requirements of the designed processing plant.

SRK noted that the slags from both the WOOCIL flowsheet and the gravity separation + flotation + cyaniding flowsheet have quite high gold grades, ranging from 11.48 to 19.37 g/t. However, no further phase analysis has been carried out on the slag to determine why it has such a high grade. SRK suggests conducting supplementary slag analysis.

SRK also noted that a bacterial leaching and roasting test was carried out during the semi-industrial test in Uzbekistan in 1977, which generated a quite high recovery rate for gold. Therefore SRK suggests applying this technology in any future supplementary tests and during actual production, if possible, to obtain a better economic return.

8.4 Feasibility Study

The designed flowsheet in the FS is based on laboratory small-scale flowsheet tests conducted by BGRIMM and by the 1977 Uzbek semi-industrial test, as well as some successful coarse gold recovery practices used in similar Chinese plants. Other tests are only for reference due to the unrepresentative sample and inconsistent test data.

8.5 Flowsheet to be Used

8.5.1 Grinding Process

As the processing plant is planned to be completed in two stages and the designed capacity in the first stage is 2000 tpd, the recommended grinding process in the FS is closed circuit crushing + ball milling.

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In order to ensure that the final product’s particle size is 12 mm or less, the feed size is required to be smaller than 600 mm; three-stage crushing in a closed circuit is adopted.

Ball milling is completed in a two-stage closed circuit. The closed circuit in both stages of ball milling is formed by wet overflow-type ball mills and a hydrocyclone.

8.5.2 Separation Process

Based on the metallurgical tests on the Pakrut primary ore, it is easy to conclude that the recovery rates in the WOOCIL flowsheet and the WOOCIL + leaching slag flotation + fine grinding leaching flowsheet are quite high. However, considering Tajikistan’s strict rules on environmental protection and the company’s desire to reduce cost by using non-toxic tailings for backfilling, these two flowsheets must be abandoned. The FS recommends a flowsheet in which a small amount of concentrate has already been separated prior to fine grinding and leaching. This recommended flowsheet consists of gravity separation + flotation + gravity/flotation concentrate CIL. See Figure 8- for a flowchart and Figure 8-6 for a detailed diagram of the recommended flowsheet.

In this flowsheet, gravity separation is introduced into the first-stage grinding circuit to handle ball mill discharge. A Knelson concentrator and a table concentrator are used in the two-stage gravity separation.

Knelson gravity tailings go through a flotation process after second-stage closed circuit grinding. The flotation process includes a concentrating process followed by three-stage scavenging. Compared with the test flowsheet, the recommended flowsheet adds another round of scavenging to improve the recovery rate. Raw Ore

Crushi ng

Gri ndi ng

Gravity Separati on

Fl ot ati on Separati on

CI L

Smelti ng

Gol d Taili ngs

Figure 8-5: Simplified Flowchart of the Recommended Processing Flowsheet

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ROM ore

Gri zzly Vibrati on Feeder - 90 mm + 90 mm

pri mary crushing

Second crushing Screening - 12 mm + 12 mm Fine crushing Fine ore

Milli ng 1

Knelson Conecntrat or

Cycl one cl assifi cation - 0. 074 mm 55 % Table concentrat e gravity separation

Cycl one cl assifi cation Concentrat e Mi ddli ng - 0. 074 mm 80 % t o s melti ng co mbined wit h flot ation ︵ ︶ ︵ concentrat e Agit ating Milli ng 2 ︶ Roughing

Cleaner Scavenger 1

Scavenger 2

Scavenger 3

Cycl one cl assifi cation Cycl one cl assifi cation - 0. 038 mm 95 % + 0. 038 mm - 0. 038 mm Reagent re moval Thickeni ng Milli ng 3 Filt er press

Leaching 1 Wat er t o flot ation

Count erflo w t hree-deck washing

Leaching 2 Pregnant solution Count erflo w t hree-deck washing

Deoxidation Filt er press

Replace ment by Zi nc dust Air

Gold preci pit at e Barren sol ution S melting

Slag Crude gold Taili ng t o cyanide Tailing(t o filled Tailing t o fl ot ation  t ailings st orage underground t ailings st orage ) ︶ Figure 8-6: Recommended Processing Flowsheet

8.5.3 Concentrate Drying

Thickening and pressing/filtering processes are required for the gravity middling and flotation concentrate to dehydrate, which makes the concentrates much easier to transport. In accordance with the processing and metallurgical test results, the grinding fineness of the ores required in the CIL process is 95% -0.038 mm. To avoid having to repeat the thickening and pressing/filtering dehydration, the cyaniding and regrinding process is completed in the concentrate dehydration

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To maximize the washing rate and the total recovery rate, a process flow is adopted consisting of two leaching stages and two washing stages. The slurry from first leaching stage goes into a three- deck thickener for washing and the underflow goes through a second-stage leaching. In the second washing, a three-deck thickener and a press filter are used to form four counter-currents and the filter cake is treated as leached slag. The overflow from the second-stage thickener serves as the supplementary water for the first-stage thickener. The pregnant solution from the first deck of the thickener goes through a filter and deoxidizing tower, followed by zinc powder replacement in the plate-frame filter press.

The replaced gold precipitation is sent to the gold extraction room for zinc and copper removal with vitriol and lead (“Pb”) removal with alkali. After pre-treatment, the gold precipitation goes through acid leaching to separate Ag from Au and then the gold precipitate is refined with solvent to obtain the finished gold product.

8.6 Designed Index

Table 8-10: Designed Index of Processing Flowsheet (10 Year Average After Reaching Full Capacity)

Product Productive Rate (%) Gold Grade (g/t) Gold Recovery Rate (%) Gravity Concentrate 0.0009 60000 18 Gravity Middling 0.0094 4000 12.5 Flotation Concentrate 3.311 55 60.5 Flotation Tailing 96.6787 0.28 9 Raw Ore 100 3.01 100

Table 8-11: Designed Index of Cyaniding Metallurgy (10 Year Average after Reaching Full Capacity) Product Unit Index Gravity/flotation concentrate grade g/t 66.18 Gravity/flotation concentrate leaching rate % 90.5 Washing rate % 99.5 Replacement rate % 99.5 Smelting rate % 99.5 Total recovery rate % 82.99 g/d 9992 Finished gold product kg/a 3297.36

8.7 Designed Capacity

The designed capacity of the processing plant is 4000 tpd or 1.32 Mtpa and plant construction is to be completed in two phases. In Phase I, the designed capacity is 2000 tpd or 0.66 Mtpa. The capacity of the first year in operation is 0.4 Mtpa, 0.66 Mtpa in the second year, 0.99 Mtpa in the third year and 1.32 Mtpa in the fourth year, when the plant will reach full capacity for the first time. The plant is designed to operate at full capacity for ten years. The service life of the processing plant is 19 years. During the 14th to 18th years of operation, the designed capacity is reduced to 0.66 Mtpa and that of the 19th year is reduced to 0.27 Mtpa.

The plant is designed to operate for 330 working days per year. (Actually 365 working days/annum are designed; however, some downtime is anticipated due to equipment maintenance and repair requirements. The main equipment is expected to be operational only 90.4% of the time, equivalent to 330 days/annum.)

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Crushing and screening (construction to be completed in Phase 1): During construction, two 5- hour shifts per day; upon reaching full capacity: three 6-hour shifts per day.

Milling, flotation and dehydration: three shifts per day; the plant is to be completed in two phases; capacity will reach 2000 tpd in Phase 1. Space is reserved for construction of the Phase 2 expansion to reach a capacity of 4000 tpd.

Cyaniding plant: three shifts per day, 8 hours per shift; the leaching workshop is to be completed in Phase 1. Except for the washing equipment, most of the other equipment will be put into use phase by phase.

Smelting (construction to be completed in Phase 1): During Phase 1, smelting will be carried out twice every month, for 8 – 12 hours each time; after reaching full capacity it will be conducted four times every month, for 8 – 12 hours each time.

Assay laboratory (construction to be completed in Phase 1): three shifts per day; one laboratory for the processing plant and one laboratory for the cyaniding.

Test laboratory (construction to be completed in Phase 1): one shift per day; one laboratory for the processing plant and one laboratory for the cyaniding.

8.8 Main Equipment

A list of the main equipment for the processing plant is given in Table 8-12, showing the quantity of each piece of equipment to be added in each construction phase.

Table 8-12: List of Main Equipment in Processing Plant

Quantity Process Name of Equipment Specifications Phase 1 Phase 2 Vibrator grizzly feeder TF5217 Jaw crusher CT3254 1 Crushing Hydraulic standard cone crusher TC 51 S/C(PYY1650/285) 1 Hydraulic cone crusher TC 66×SH/C (HP500) 1 Circle vibrating screen 2YAH2460 2 Wet type overflow ball mill MQY3600×4500 1 1 Milling Wet type overflow ball mill MQY3200×5400 1 1 Cyclone Ø550×4 1 1 Gravity Knelson concentrator KC-×D30 1 1 separation Shaking table LY2100×1050 1 1 Stirring tank ×BT-3000 2 2 Flotation machine ×CFII-24 4 4 Flotation Flotation machine KYFII-24 8 8 Flotation machine ×CFII-8 1 1 Flotation machine KYFII-8 2 2 Wet type overflow ball mill Ø1800×3600 1 Cyclone Ø125×4 1 1 Concentrate High-efficiency thickener Ø15m 1 1 thickening Agitator tank Ø 2000×2000 1 1 Plate frame filter press ×ZG200 / 1250-U 2 1 Agitator tank ∅3000×3000 2 Energy efficient leaching tank Ø4500×5000 7 5 Leaching Agitator tank Ø2500×2500 2 and Three-deck scrubbing thickener 3NZS12 2 replacement Plate frame filter press ×ZG200 / 1250-U 2 1 Plate frame filter press BMJ30/630-30 2 Smelting Refine equipment for Au and Ag GSR-600 1 Tailings High-efficiency thickener GNZ-30T 1 dehydration Press filter APN18SL36M 3 3

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8.9 Workshop Distribution

The crushing plant is located on a fairly steep hill, while the milling and dehydrating plants are located on a gentle slope. The hillside slope can be made good use of to transfer the slurry via gravity where possible. Plant buildings are set out in a compact manner. The cyaniding plant sits on a gentle landform, where the leaching, washing and replacement plants are laid out in the proper sequence and in a compact manner, while the reagent storage and preparation workshop is adjacent to the main workshop to keep delivery pipes as short as possible, thereby avoiding unnecessary exposure to the weather. The gold extraction room is relatively independent.

The processing plant includes a raw ore bin, a primary crushing plant, a middle-fine crushing plant, a screening plant, conveyer belts, a flotation workshop, a fine grinding and thickening plant, a pressing/filtering workshop, a concentrate bin, a reagent storage and preparation workshop and test laboratories and assay laboratories. The administrative facilities are mainly offices for the processing plant.

8.10 Main Reagents

The main reagents used in the flotation process are pine oil (oil #2), butyl xanthate, sodium hexametaphosphate and sodium carbonate. Sodium hexametaphosphate and sodium carbonate are prepared in the agitator tank.

The main reagents used in the replacement process are zinc powder and lead acetate. Zinc powder is fed into the filter press by a belt feeder.

The main reagents used in the gold slurry smelting process are borax, quartz sand and nitre.

8.11 Assay Laboratory

Regular processing analysis and geological sample analysis, as well as the rapid analysis and standard analysis of elements such as copper, lead and antimony, are completed in the assay laboratory.

8.12 Production Supervision

High-grade concentrate is produced by gravity separation, while gold slurry is replaced in the cyaniding plant. These important processes are subject to strict supervision and are monitored by a video system. The video data are stored in a digital video recorder.

8.13 Water and Power Supply

8.13.1 Water Supply

The designed annual capacity of the processing plant is 1.32 Mtpa and the total water consumption is 22,345.41 cubic metres per day (“m3/d”); fresh water consumption is 3160.05 m3/d. Consequently, the annual fresh water consumption is 10.428 million m3 and each tonne of ore consumes 0.579 m3 water, slightly less than normal level of water consumption in mines. All of the processing plant’s waste water is recycled and it is estimated that approximately 80% will be reused.

The underground water in the mining area is mainly from the nearby Sardi-Mienna River, which originates from the southern branch of the Hissar range and is supplied by groundwater, snowmelt and glacier water. The river valley is 100 m to 400 m wide. Sardi-Mienna provides a sufficient water supply, with average annual flow of 41.7 cubic metres per second (“m3/s”).

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The cyaniding plant is expected to consume 95 m3/d of fresh water. This water is planned to be supplied from the local groundwater, which is present in sufficient volume.

8.13.2 Power Supply

The mining area is currently supplied by a 110 kilovolt (“kV”) power system. The FS proposes a 2 ×1200 kilowatt (“kW”) diesel generator station and an additional 120 kW box-type diesel generator for the cyaniding plant.

After reaching full capacity, the processing plant (including the cyaniding plant) will consume 4.59 × 107 kilowatt hours (“kWh”) of electricity per annum with a comprehensive energy consumption unit index of P1 = 34.76 kWh per tonne (“kWh/t”), including auxiliary facilities. According to Chinese energy-saving regulations and the adopted flowsheet in this processing plant, the comparable energy consumption index will be P2 = 38.0 kWh/t. Since P1

The total annual power consumption is 79,235,899 kWh (power consumption of mining and processing is 2.2×106 kWh).

Power consumption for construction is approximately 60 kWh/t; and power consumption for mining and processing is 62 kWh/t.

8.14 Maintenance

Processing operations are located in the city of Vahdat, 92 km south of the mining area and has adequate access to outside assistance. The designed capacity is 4000 tpd. The processing plant consists of two sections. The pre-filtering processes are completed in the mining area and the post- CIL processes are completed in the workshop near Vahdat. In order to ensure the mine’s smooth operation, a general maintenance workshop, repair workshop for motor vehicles and engineering machinery, a warehouse and a chambered engineering shop (including chambers for trackless equipment maintenance) are proposed to be constructed in the mining area. Construction of a general repair workshop and warehouse area in the cyaniding plant area is also proposed.

8.14.1 Machine Repair Components and Tasks

The general repair workshop is set up in the mining area to ensure the proper maintenance of machines and equipment and with forging and welding facilities.

8.14.2 General Repair Workshop

The general repair workshop is responsible for the preparation, assembly and replacement of spare parts, as well as having forging and welding facilities.

8.14.3 Maintenance Facilities in the Cyaniding Plant

The general repair workshop and warehouse are set up in the cyaniding plant to prepare, assemble, replace and store spare parts, as well as having forging and welding facilities.

8.15 Heating and Ventilation

The FS has designed a well-planned heating system to ensure the smooth operation of the processing plant.

A compressed-air dust extraction device is installed in dust-prone areas in the processing plant.

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8.16 Engineering Works in the Processing Plant

Table 8-13: List of Engineering Works in the Processing Plant

Construction Area (m2) Work Phase 1 Phase 2 Total Mining facilities 1141 - 1141 Processing facilities 5926 1647.5 7573 Tailings facilities 1398 360 1758 Auxiliary production 3146 - 3146 Total camp 7855 - 7855 Cyaniding plant 6420 144 6564 Total 28,037 - 28,037

Table 8-14: List of Main Buildings in Processing Plant

Length × width × height Construction Construction Building Name 2 3 (m × m × m) area (m ) volume (m ) Raw ore bin 7.5×7.5×23 56 1294 Primary crushing plant 12×15×11.7 180 2106 Medium-fine crushing 16.5×18×13.2 297 3920 workshop Screening workshop 12×18×19.1 216 4126 #1 fine ore bin Ø12×23.5+6×6×6 113 395 #2 fine ore bin Ø12×23.5+6×6×6 113 395 Grinding/gravity separation 42×21×19.5 882 17,199 workshop (Phase 1) Grinding/gravity separation 30×21×19.5 630 12,285 workshop (Phase 1) Flotation workshop (Phase 1) 42×13.5×13.5 567 7655 Flotation workshop (Phase 2) 30×13.5×13.5 405 5467 Thickening workshop 18×24×11.5 432 4968 (Phase 1) Thickening workshop 18×18×11.5 324 3726 (Phase 2) Press/filter workshop 18×18×11.5 324 3726 (Phase 1) Press/filter workshop 18×6×11.5 108 1242 (Phase 2) Concentrate bin 18×18×5 324 3726 Reagent storage and 24×18×10.9 432 4709 preparation workshop Test and assay lab 40.2×12.9×7.2 1038 3734 Total 7573.1 Concentrate warehouse 24×12×6 288 1728 Leaching workshop (Phase 1) 36×12×12.4 432 5357 Leaching workshop (Phase 2) 12×12×12.4 144 1785 Washing workshop 36×15×19 540 10,260 Replacement workshop 48×15×12.4 720 8928 Test and assay lab 28×12.9×4.2 361 1517 Reagent storage and 30×15×11 450 4950 preparation workshop Gold smelting workshop 36×15×9 1080 4860 General maintenance 42×12×7.5 504 3780 workshop Tailings facilities 1443

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8.17 Tailings Storage Facilities

8.17.1 Introduction

Tailings from the processing and metallurgy plants are to be generated in the flotation process and cyaniding process.

The coarse particles in the flotation tailings are to be used for underground backfilling and the fine subjects are to be stored in the tailings dam.

During full-capacity years, the quantity of flotation tailings will average 3881.72 tpd or 1.281 Mtpa. Part of the flotation tailings will be used for underground backfilling and the remaining tailings to be dumped in the tailings dam will amount to 9.288 million tonnes. The density before thickening is 19.15%; dry density of tailings accumulation is 1.5 t/m3.

Cyaniding tailings: 0.6507 Mtpa; 95% particles are -400 mesh in particle size; 80% in density; dry density of tailings accumulation is 1.4 t/m3.

8.17.2 Flotation Tailings Dam

The designed flotation tailings dam in the FS is located in the Pakrut River valley. The dam is to be used to stockpile dry tailings.

The dam is designed at 150 m in height and a retaining dam will be built downstream.

Taking the height of the tailings dam and the route to dump the tailings at the dam end into consideration, the retaining dam is to be built in two phases: a drainage system including a draining well and draining pipe is required in the retaining dam and a cut-off ditch is to be built outside the tailings dam.

The final dam level is designed to be 2500 m in length. The dam height in Phase 1 is designed at 90 m and 150 m in Phase 2. The final slope ratio will be 1:4. The total storage capacity of the dam will be 6.43904 million m3, which is sufficient to accommodate the needs of the project.

8.17.3 Cyanide Tailings Dam

The designed cyaniding plant is located 92 km downstream of the flotation plant and lies in the hilly area northwest of Vahdat.

The cyanide tailings are to be 80% dehydrated and dry stockpiled. Tailings are conveyed to the tailings dam by the returning branch of the belt conveyor that draws the ore upstream to the plant.

The final elevation of the dam will be 990 m. The final dam height will be 27 m with a total storage capacity of 466,600 m3, which is sufficient to accommodate the cyaniding tailings generated during the service life of the cyaniding plant.

8.17.4 Tailings Transport and Returning Water System

8.17.4.1 Flotation Tailings Transport

The designed flotation tailing transport includes two systems: a filling station transport system and a press/filter transport system.

The tailings are classified near the thickener. The coarse particles flow into the pressure/returning water pump station and are prepared at the backfilling station. The water overflow from the filling station will be returned to the processing plant’s return water tank.

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Coarse tailings will be used as underground backfilling, while the fine subject will be sent to a Ø30 m thickener. When its density reaches 30%, the fine tailings are transported to a press/filter workshop.

After pressing/filtering, the tailings are conveyed by belt to the tailings dam. The returning water flows to the processing plant for recycling.

8.17.4.2 Cyaniding Tailings Transport

After pressing/filtering, the cyaniding tailings are conveyed by belt to the cyanide tailings dam. The returning water flows back to the cyaniding plant for recycling.

SRK noted that 80% of the flotation tailings are below 0.074 mm in particle size. However, there is no related test demonstrating that such flotation tailings are appropriate for backfilling. SRK suggests conducting related tests to make sure such material is appropriate to be used as backfill.

8.18 Conclusion

After reviewing the FS report produced by BGRIMM and other related information, SRK is of the opinion that the Pakrut Gold Mine will be a large-scale gold mine with sound development potential. The ore is fairly easy to process and the designed processing plant enjoys a good construction environment. Generally speaking, BGRIMM’s FS report is fairly comprehensive and complete, with a sophisticated level of design; it is sufficient to act as the framework for the processing plant construction and other economic activities. However, there are some problems with the proposed ore processing procedures that need to be addressed:

 SRK noted that the slag from both the WOOCIL flowsheet and the gravity separation + flotation + cyaniding flowsheet had a quite high gold grade, ranging from 11.48 to 19.37 g/t, but that no further phase analysis had been done to the slag to determine why it has such a high grade. SRK suggests conducting such tests in the future for a better economic return.  SRK also noted that bacterial leaching and roasting tests had been carried out in a semi- industrial test in Uzbekistan in 1977, which generated a quite high recovery rate. However, no related test has been carried out as part of this FS. Therefore, SRK suggests conducting such tests in the future and applying this technology if at all possible.  SRK noted that both the flotation tailings and cyaniding tailings in the FS-designed flowsheet are dumped after being pressed/filtered while dry and all the returning water is recycled to the processing and cyaniding plants. However, no tests have been done to indicate the impact of returning water on the whole process. SRK suggests conducting related tests and making corresponding adjustments if necessary to ensure a smooth operation.  During the current design phase, due to the absence of a cyaniding tailings dam, the density of harmful ions in returning water will increase after repeated reuse of the water. Therefore, this water will have a negative impact on or even worsen the leaching and other related results. SRK suggests considering installation of an absorption unit to remove the harmful ions and to ensure a smooth operation.  SRK noted that after grading the coarse flotation tailings, they are used for backfilling. However, it is hard to demonstrate that such tailings are appropriate for backfilling without testing to determine the particle size of the flotation tailings. SRK suggests conducting related testing to ensure the tailings are appropriate backfill material.  Due to the lack of a preliminary mine design and construction drawings, the project is currently in the early stages of mine construction. SRK is of the opinion that if the above- mentioned points are addressed in the following supplementary tests/design and corresponding improvements are made where necessary, a positive impact on the mine construction, as well as on the actual operation and economic return, is more likely.

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9 Occupational Health and Safety

9.1 Project Safety Assessment and Approval

SRK has been provided with the safety assessment approval in the form of a stamp on the FS along with a letter from the Company explaining the approval process for the Pakrut Gold project (see Appendix 6); the letter is quoted as the following statement:

“The 2,000t/d safety assessment was approved on the basis of Bankable Feasibility Study (FS) issued in May 2011. Cover of each FS volume was stamped by State Main Department by Safety of Works in Mining Industry under the Government of the Republic of Tajikistan. Beside, the approval for 2,000 t/d safety assessment was confirmed in Minutes of Technical Meeting with First Deputy Chief of the Main Department Mr.Aliamov I.B by State Main Department by Safety of Works in Industry and in Mining Works Area under the Government of the Republic of Taijikistan on Dec. 16th , 2011;

Project capacity is later adjusted from 2,000t/d to 4,000 t/d, but labour load and many others factors were not changed. The safety assessment for 4,000 t/d capacity was approved on the basis of new FS issued in August 2012. Cover of each FS volume (6 volumes) was stamped by State Main Department by Safety of Works in Mining Industry under the Government of the republic of Tajikistan.”

9.2 Occupational Health and Safety Procedures

SRK has not sighted any operational occupational health and safety (“OHS”) management procedures. SRK has reviewed the section on industrial health, safety and fire control in the FS, which provides the following brief elements with respect to the proposed OHS management measures for the Project:

 OHS administration;  Establishment of an emergency response plan;  OHS regular training for relevant employees;  Safety and hazard signage;  Dust/gases monitoring and control within the workplace;  Distribution of Personal Protective Equipment (“PPE”) to all relevant employees;  Fire prevention and fire fighting;  Lightning strike prevention; and  Mine blasting management.

SRK notes that the above proposed OHS management measures are generally in line with recognised international industry practices; however, SRK suggests that more comprehensive, detailed and practical OHS management procedures be developed.

9.3 Historical Occupational Health and Safety Records

SRK notes that the Project is still at the exploration stage and therefore records of OHS statistics, such as the number and type of incidents/accidents and associated injuries, have yet to be generated.

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10 Project Costs

10.1 Capital Costs

The FS produced by BGRIMM budgets the capital cost to achieve a production capacity of 4000 tpd which is summarized in Table 10-1 below.

Table 10-1: Capital Cost Budget for the Pakrut 4000 tpd Production (from BGRIMM, 2012) (in US$1000) Items Phase I Phase II Production Total Direct Investment 147,604 40,025 32,734 220,363 Indirect Investment 6339 820 7159 Owner’s cost 6534 1422 7956 Reserve fund 16,048 4227 20,274 Grand Total 176,525 46,494 32,734 255,752

The project will be constructed into two phases. Phase I will construct the facilities for a production capacity of 2000 tpd and Phase II will increase the total production capacity to 4000 tpd.

The direct investment includes the capital costs for the engineering projects, such as mining, ore processing, metallurgical (i.e., the cyaniding plant), tailings and supportive and public facilities. Table 10-2 gives details about the capital costs of this category.

Table 10-2: Direct Investment into Engineering Facilities for the Pakrut 4000 tpd Production (from BGRIMM, 2012) (in US$1000) Phase I Phase II Item Development Construction Equipment Installation Total Total Overall Site 11,701 1722 5104 18,528 841 Mining facilities 30,199 3794 14,195 1585 49,773 26,633 Ore Processing 5111 6135 1366 12,612 5340 Facilities Tailings facilities 19,032 3822 4079 26,934 4419 Auxiliary facilities 1589 4104 503 6197 2061 Camp 3325 510 226 4061 Metallurgic plant 6058 6703 888 13,650 730 The work outside 3146 12,705 15,851 the mine area Total 30,199 53,756 37,193 26,457 147,604 40,025

The direct investment in the production period will mainly be used for equipment and tailings storage facilities (“TSF”). Table 10-3 gives details of the investment in different production years.

Table 10-3: Direct Investment in the Production Period for the Pakrut 4000 tpd Production (from BGRIMM, 2012) (in US$1000) Year Year Item Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Total 10 11 Direct 2199 6929 320 5450 455 1322 6855 320 1278 7606 32,734 Investment

The indirect investment includes the capital costs for temporary facilities in the construction period, various tests and analyses, various consulting, research and design fees, additional geo-technical exploration, site preparation, land reclamation, commission fees and office furniture and instruments. The owner’s costs include the administration and management fees, staffing and logistics, land use, permitting, communication system and community programs.

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10.1.1 Project Schedule

Phase I of the Project started in May 2012 and will be completed in April 2014. Commissioning will be conducted from May 2014 to October 2014, before Phase I is put into production. Phase II will start in May 2014 and will be completed in December 2016. There will be a second commissioning period prior to the start of full production in May 2017.

10.2 Operating Costs

10.2.1 Forecast Operating Costs

The feasibility study by BGRIMM estimated the operating cost per tonne of ore for mining and processing and per tonne of gold concentrate for metallurgy/cyaniding. Table 10-4 and Table 10-5 show the operating cash costs for Phase I and II, respectively. The study shows that the concentrate is about 3.3% of the ore processed. SRK has converted the metallurgy cost into US$ per tonne of ore in the tables.

Table 10-4: Operating Cost Budget for Phase I (BGRIMM, 2012) Phase I Items Mine Process Metallurgy Metallurgy Total US$/t ore US$/t ore US$/t Conc US$/t ore US$/t ore Support materials 11.12 4.34 0.79 0.03 15.49 Reagents 0.83 39.92 1.32 2.15 Power 4.15 2.55 5.98 0.20 6.90 Salary and welfare 1.89 1.01 9.28 0.31 3.21 Repair and maintenance 3.02 2.4 20.77 0.69 6.11 fee Administration 1.32 0.82 7.57 0.25 2.39 Sales cost 19.13 0.63 0.63 Others 1.07 0.6 5.17 0.17 1.84 Total 22.48 12.56 108.61 3.60 38.64

Table 10-5: Operating Cost Budget for Phase II (BGRIMM, 2012) Phase II Items Mine Process Metallurgy Metallurgy Total US$/t ore US$/t ore US$/t Conc US$/t ore US$/t ore Support materials 11.05 4.34 0.79 0.03 15.42 Reagents 0.83 39.92 1.32 2.15 Power 3.85 2.16 4.26 0.14 6.15 Salary and welfare 1.37 0.66 5.89 0.20 2.23 Repair and maintenance 1.88 1.21 10.94 0.36 3.45 fee Administration 0.7 0.46 4.11 0.14 1.30 Sales cost 15.05 0.50 0.50 Others 0.94 0.48 4.05 0.13 1.55 Total 19.8 10.16 85.01 2.81 32.77

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11 Project Infrastructure

11.1 Road Access

Access to the Pakrut Mine is by 60 km of paved road from Dushanbe to the village of Ramit, from where 55 km of dirt/gravel road leads to the site along the Sardi-Mienna River valley. The road is cut on the steep valley sides and is therefore exposed to landslides, rock falls and avalanches, as well as unexpected flooding from numerous tributaries. The cyaniding plant is located near the city of Vahdat. It is 92 km by road from the Project site to Vahdat, a regional central city where there is a railway station. The road linking the site and Vahdat runs from the south end of the mine site and consists of a 55 km gravel section from Ramit to the mine and a 37 km paved section from Vahdat to Ramit. The road needs to be improved in order to meet the Project’s transportation requirements.

The FS did not study the mine’s external accessibility or transportation facilities, or the transportation access between the mine and the cyaniding plant, as the road construction work will be contracted out. SRK believes that the actual road condition should be carefully reviewed and necessary improvements should be carried out to ensure that the Project’s access and transportation needs will not be interrupted.

11.2 Power Supply

According to the FS, electrical power for the mining area is supplied from a 110 kV substation situated at Khamza, which links to the upstream Muchiton 220 kV substation via two 110 kV lines (one in service, one standby). There are two 125 megavolt-ampere (“MVA”) transformers installed in the Muchiton 220 kV substation. According to the information provided by the local electrical service department, the current installed capacity of the Muchiton substation can meet the electricity requirement demanded by the mine year round.

The power supply for the cyaniding plant is a 10 kV overhead line about 2.5 km long, provided by the nearest substation. A 120 kW diesel generator unit is also set in the plant as an emergency power supply for a fire-fighting pump.

11.3 Water Supply

Based on the FS, the mining and processing plant for this project needs about 22,345 m3/d of water. Most of the water requirement will be sourced from the mine and processing plant (11,985 m3/d from recycled water and 7200 m3/d from reused water), so that only 3160 m3/d of extra water must be sourced externally. The total water consumption in the cyaniding plant is 593 m3/d, of which 498 m3/d will come from reused water while only 95 m3/d of extra water is needed.

The Pakrut River can meet the Project requirements with a supply of good water quality. If Pakrut River is selected to be the source for the fresh water supply, the water intake volume will account for 0.9 to 15.07% of the river volume; this will be higher during the dry season. Therefore, considering its larger water quantity and better quality, SRK recommends that the Project select the Sardi-Mienna River as the source of the Project’s fresh water supply.

Water consumption in the cyaniding plant, the raw water consumption is only about 95 m3/d; ground water can satisfy this requirement.

11.4 Workshops and Repair Facilities

At the time of the SRK site visit there were only temporary workshops on site for Project construction. BGRIMM has proposed that permanent workshops be constructed for the

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12 Workforce

12.1 Workforce Numbers

The FS forecast for the workforce required for Phase I (2000 tpd production) and Phase II (4,000 tpd production) are shown in Table 12-1 below.

Table 12-1: Workforce Required for the 4000 tpd Production Item Phase I Phase II Mining 331 482 Ore processing plant 242 290 Administration and Services 85 85 Total 658 866

The project is designed to operate continually, with 330 working days per annum, three shifts per day, 8 hours per shift. Staff in support, management and some service positions work eight hours per day.

In Phase 1, the payroll consists of 658 persons, including 573 persons for production and 85 for management and support. In Phase 2, the payroll consists of 866 persons, including 781 for production and 85 for management and support.

12.2 Assessment of Workforce

It is SRK’s opinion that the proposed workforce is sufficient for the proposed production capacity, provided that proper training is provided at the mine.

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13 Environmental Assessment

13.1 Environmental Review Objective

The objective of this environmental due diligence review is to identify and or verify the existing and potential environmental liabilities and risks and assess any associated proposed remediation measures for the Pakrut Gold Project (Pakrut Project). The Pakrut gold deposit of Tajikistan is located about 107km northeast of capital city Dushanbe. The project is being planned with a production rate of 4,000 tpd.

The Pakrut Project was at the time of SRK’s review in the initial stages of development; owned and being developed by Kryso Resources Limited (Kryso).

13.2 Environmental Review Process, Scope and Standards

The process for the verification of the environmental compliance and conformance for the Pakrut Project comprised a review and inspection of the project’s environmental management performance against:

 Tajikistan National environmental regulatory requirements. (Appendix 8).  World Bank/International Finance Corporation (IFC) environmental standards and guidelines (Appendix 9).  Internationally recognised environmental management practices.

13.3 Status of Environmental Approvals

Kryso have produced a FS for the Pakrut Project at a production rate of 4,000 tpd. The FS was prepared by BGRIMM in August 2012. SRK notes that the FS has been prepared and engineering designs follow Chinese domestic standards with reference to standards of Tajikistan.

An Environmental and Social Impact Assessment (“ESIA”) conducted for a production rate of 2,000 tpd for the Pakrut Project was produced in November 2011 with the assistance of Prime Resources. SRK has not been provided with a governmental approval for this ESIA.

SRK was subsequently provided with a further updated ESIA for a production rate of 4,000 tpd completed in October 2012 to be in line with the current Feasibility Study. The updated ESIA included assessment of modifications to the original design.

The State Committee on Environmental Protection under the Government of the Republic of Tajikistan released the “Conclusion of the State Ecological Expert Committee”, which serves as the official approval for the 4,000 tpd ESIA and was also provided to SRK for review (see Appendix 7). The document reference number is 681-15 and it was issued on 30 October 2012.

The document states, “Control for the implementation of these proposals and for the observance of the legislation of the Republic of Tajikistan in the field of environmental protection and improvement is entrusted to the Monitoring Department by the Committee and the Department of Environmental Protection of Vahdat City”.

At the time of the review SRK was not provided with other environmental assessments, approvals, or permits for review.

SRK suggests Kryso continue to undertake and obtain the required Tajikistan National project assessments and governmental approvals as required by Tajikistan National legislation and develop an operational Environmental Management Plan to identify and address any operational environmental impacts generated by the project’s operation.

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SRK also notes that the IFC guidelines specify that an environmental and social assessment is required to be completed prior to the project development/construction. In addition, the recognised international practice is that project environmental assessments are undertaken concurrently with the project design, so that the assessment and management of the project environmental impacts are considered and incorporated into the project design.

13.4 Environmental Compliance and Conformance

The significant environmental aspects for the Pakrut Project that are subject to this Report are associated with the planned mining and mineral processing activities at the Pakrut Project site. The environmental / social review identified the most significant current and potential environmental management and legislative compliance liabilities that relate to operation and further development of the Project and defines gaps in operational management as relates to industry best practices.

SRK notes that at the time of SRK’s site visit the project was at an initial stage of development, with exploration activities being the main developments progressing at the time. SRK observed during the site inspection that environmental aspects and potential liabilities were being reasonably addressed and the associated risks were being fairly well managed within the Pakrut Project area of influence. It was observed that the Pakrut Project development activities were operating for the most part in compliance with Tajikistan legislative requirements, but could do more to conform to industry best practices to improve their operational environmental management of the project.

The system of environmental impact assessment (“OVOS”) in the Republic of Tajikistan is the same as in majority of Eastern European countries, Caucasus and Central Asia (“EECCA”). The OVOS is implemented by the developer of the planned activity or the entity authorized by the developer responsible for conducting environmental impact assessment of the activity and its proposed alternatives and for preparing relevant OVOS documentation. The main State Environmental Expertise (“SEE”) Committee’s objectives are to define (and implement control over) by the state authorities the compliance of the submitted OVOS materials and other documents with the effective legislation and ecological requirements and applicability of the planned activity. SEE is implemented by the authorized state body or authorized by such body experts or by the ad hoc established expert commissions.

The following sections identify the environmental aspects that have been addressed in each of these project development reports and those environmental aspects that have not been addressed.

13.5 Land Disturbance

The main impact on the surrounding ecological environment is due to disturbance and contamination caused by surface stripping, waste rock and tailings storage, processing plant drainage, processing waste water, explosions, transportation and associated buildings that are erected. If effective measures are not taken to manage and rehabilitate the disturbed areas, the surrounding land can become polluted and the land utilisation function will be changed, causing an increase in land degradation, water loss and soil erosion.

Kryso has not recorded actual areas of land disturbance at any of the Pakrut Project sites, but the project FS and 4,000 tpd ESIA reports provide estimates of project facility areas which shall constitute disturbed areas and have detailed an assessment of impacts from land disturbances during project construction and operation along with mitigation and management measures. SRK observed during the site investigation that areas of land disturbance were generally kept to a minimum based on the project construction designs.

SRK recommends a land disturbance and rehabilitation registry be developed for recording areas and extent of disturbances and remediation work that has been conducted to allow for effective rehabilitation planning. This information can then feed into the Projects’ operational Mine Closure Planning procedure.

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13.6 Flora & Fauna

One of the most important problems to be resolved in the projects of exploitation of natural resources is the management of the impacts that could be caused to the forests and the vegetation in general.

The project 4,000 tpd ESIA reports, biodiversity specialists conducted baseline flora and fauna observational studies during spring, summer and autumn seasons although no dates were provided. Flora and fauna surrounding the project site was considered diverse although pressure from population growth and livestock grazing was putting pressure on the ecosystem.

The ESIA reports, two (2) plant species (Tulipa praestans and Allium rosenbachianum) listed in the Red Book of rare and endangered species were found in areas adjacent to the project site and also noted the Ramit Gorge consists of habitat where a number of other endangered species are known to occur.

The ESIA also referenced the surrounding aquatic ecosystems of concern due to being a spawning area for trout species and cited the recent trend of decline in trout numbers in the rivers nearby the project site.

No details or other information concerning floral and faunal protection / management measures have been sighted as part of SRK’s review.

SRK recommends baseline assessments along with predictions of potential impacts to floral and faunal communities in the surrounding area of influence be conducted to fully understand the Pakrut Project’s potential ecological environmental risk.

13.7 Waste Rock and Tailings Management

13.7.1 Waste Rock Management

The project waste rock generation rates and the Waste Rock Dump (“WRD”) engineering description (design and storage capacity) have been previously discussed with the Mining Assessment section.

The ESIA reports the bulk of the solid waste generated from mining debris shall be waste rock. The 4,000 tpd ESIA estimates the amount of waste rock that shall be produced. SRK recommends that operational records of waste rock production be developed to reconcile actual stockpiling requirements with the estimates.

The ESIA does report there is sufficient and suitable area for locating a WRD between the mine site and the processing plant.

The project ESIA includes a basic waste rock geochemical/acid rock drainage (“ARD”) assessment and reports no significant ARD is expected. Kryso also stated sulphur levels are low and that there is no heavy metal leaching. However, SRK notes that there may be some potential to encounter some portions of the waste rock that may have a significant ARD potential.

SRK recommends conducting a comprehensive ARD/geochemical characterisation assessment of waste rock to help determine effects on pH and its impact on leaching heavy metals and to develop a record of monitoring of water downstream from the WRDs to confirm it is not being impacted upon.

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13.7.2 Tailings Management

The project tailings generation rates and the Tailings Storage Facility (“TSF”) engineering description (design and storage capacity) have been previously discussed with the Metallurgical and Processing Assessment section.

The 4,000 tpd ESIA reports the bulk of industrial waste for the Pakrut Project shall be flotation tailings and cyanidation tailings. Flotation tailings: Project annual production of flotation tailings will be 643,800 tonnes. Part of the flotation tailings obtained during the production process will be waste used to fill the space of underground mine workings. The remaining tailings will be pumped to the tailings pond. The total of flotation tailings in the pond designed for the entire project period of operation deposit will be 5,432,400 tonnes.

The EIA reports the local environment may become polluted if there is a pump failure and tailings slurry back flow. The company recognized the risk and constructed an emergency containment pool near the No.1 pump station. However, the capacity of current emergency pool is limited and further expansion should be conducted.

The project 4,000 tpd ESIA includes a basic tailings geochemical/ARD assessment and the company stated that they do not expect ARD to be a significant issue for the Pakrut Project. Kryso also stated tailings will not generate any heavy metal leaching, SRK notes that the potential is not fully defined as per international practices for comprehensive geochemical characterisation of tailings.

SRK recommends that a review be undertaken in the form of a full geochemical assessment of the tailings to be generated from processing in order to confirm that the contaminant levels are low and the potential for leaching impacts are low and to develop a record of monitoring of water downstream from the TSF to confirm it is not being impacted upon.

13.8 Water Aspects

The main surface water protection targets in the vicinity of the project are the Pakrut River and the Sardi-Mienna River. The project ESIA and FS reports water quality of both rivers to be reasonable. Water from these rivers and recycled processing water are the water sources for the Pakrut Project. The Pakrut River has been proposed as the fresh water source for the project. The FS states, “the flow of the Pakrut River is between 0.3 m3/s and 5.03 m3/s which can meet the projects water requirements. The operational intake volume is estimated to account for between 0.9% and 15.07% of the river’s volume”. The FS then reports that the Sardi-Mienna River has a larger water quantity and is of better quality so shall be selected as the source of fresh water. No details of flow rate though are presented.

Water use for the Pakrut Project is mainly for ore processing, dust suppression, rock-drilling dust suppression, operation water and domestic water of the office and lodging buildings in mining areas. The FS reports that 22,345 m3/d of water shall be required for mining and processing operations. 11,985 m3/d from recycled water, 7,200 m3/d from circulating and reused water and 3,160 m3/d from fresh/raw water.

The FS reports the Pakrut Project shall adopt separate drainage systems for production waste water, domestic sewage and stormwater systems. No reference is made to site drainage collections systems for contaminated water sources and diversions for clean water surface runoff drainage.

Groundwater from mountain springs is also the main domestic water source for the project and local residents of the area, which is stated by the company to be of adequate quality.

Protection of surface water and groundwater is a major environmental priority for Kryso. Measures for processing and purification of water used will prevent discharge of water outside the industrial

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SRK recommends that the Pakrut Project’s drainage planning be upgraded, water usage be measured and recorded, wastewater monitoring be conducted and a monitoring plan be introduced to formalise the process. Also, measures to mitigate any potential contamination should be assessed and introduced as required.

13.9 Air Emissions

13.9.1 Dust and Gas Emissions

Dust emissions for the Pakrut Project will be from stockpiles, open areas, ore handling/screening, transfer points and the general movement of vehicles and mobile plant. The Project ESIA has conducted some assessment of the potential impacts caused by dust generation and have detailed measures to effectively manage and prevent dust generation. SRK notes that during the site visit the site was in an early stage of project assessment and development so no stated measures had yet been implemented at site.

The ESIA reports, the processing plant provides for the establishment and installation of equipment for the mechanical removal of dust particles, in order to keep dust in the working area below the maximum limit in 2mg/m3 established sanitary standards of the Republic of Tajikistan. Kryso is required to ensure compliance with the standards for the maximum permissible emissions of gases and dust in accordance with the regulations adopted in Tajikistan, including "Emission Limits for New Sources of Pollution" and "Comprehensive Standards for Emissions of Pollutants into the Atmosphere". In accordance with these regulations the maximum allowable concentrations of emissions is 100 mg/m3 at a rate of 3.5 kg per hour (at the height of the pipe in 15 m).

Gas emission sources will be predominantly from 3 boilers which are planned to be constructed, which the ESIA reports shall be treated prior to discharge via multi-tube cyclone collectors and that low sulphur content coal shall be used as fuel source and sulphur scrubbers shall not be required as the emission is expected to be within the Tajikistan “Standard for Emissions of Air Pollutants from Boilers” permissible limits.

SRK recommends comprehensive dust suppression management plans and gas emission management measures be developed to meet Tajikistan National standards for in the mine as well as in and around the mine site and associated facilities. SRK recommends a comprehensive analysis of the entire project’s estimated emissions and management measures be established in line with Tajikistan National legislative requirements.

13.9.2 Greenhouse Gas Emissions

There is no Tajikistan National legislative requirement for the project to estimate its Greenhouse Gas emissions or to implement any emissions reductions. As such none of the project environmental assessment documentation reviewed address the issue of Greenhouse Gas emissions, other than to say due to the small amount no engineering controls are required. These are also components of IFC environmental requirements and are considered as internationally recognised environmental management practices. Therefore, SRK suggests that consideration be given to developing initiatives to quantify Greenhouse Gas emissions and assess possible emission reduction strategies for the Pakrut Project.

13.10 Noise Emissions

The main noise sources for the Pakrut Project will be from the operation of fixed equipment (crushers, compressors, pumps, roasters and associated equipment) and mobile equipment (mainly

HG/QH/RK/AL/YL/YW/PX/AX/YS/RA/MW SRK_Report_for_Kryso_Pakrut Gold_Final June 2013 SRK Consulting China Ltd Independent Technical Report – Pakrut Gold Project Page 90 ore haulage). The Project’s ESIAs have reported that the main noise sources associated with the project are from the crushing, classification and abrasion operations. The equipment used in these three main production units (a jaw crusher, circular vibrating screen and two cone crushers) produce noise at an intensity of 80 - 90 decibels (“dB”). Three ball mills, used under wear, make noise in the range of 95 - 105 dB.

Noise reduction equipment and management measures for the Pakrut Project were provided within the ESIAs that in SRK’s opinion if implemented should be adequate to effectively mitigate noise impacts.

The project’s EIA report noise emissions may impact the local acoustic environment, but will not exceed national noise standards. The project ESIA reports as for the air-compressors, mufflers should be installed on air-let and air-outlet pipelines to reduce the noise. Rubber pads are suggested to be implemented to reduce the crusher noise.

No documentation/records of the Pakrut Project’s noise emissions or noise monitoring program have been sighted as part of this review. SRK though observed that noise impacts from the plant operations were negligible due to site location; hence the greatest noise impacts are expected to be from transportation activities by and around the local villages along the general access road to the site.

13.11 Hazardous Materials Management

The hazardous materials that shall be used during the operation of the Pakrut Project are processing reagents, cyanide, explosives and a range of hydrocarbons. At the time of SRK’s site visit no hydrocarbons were present on site as the project is in the developmental phase. Dedicated storages for reagents, explosives and cyanide shall need to be constructed on site prior to the project being operations.

The project ESIA does not include an assessment or measures for storage and handling of these materials. However, SRK observed at site that hydrocarbons stored for general use were kept in a dedicated area although no secondary containment was being employed. These hydrocarbons (mainly diesel) were at the time of SRK’s site visit being used in the operations exploration and associated activities.

The Pakrut Project needs to further develop procedures for hazardous materials management (hydrocarbons, reagents, cyanide and explosives) and use along with appropriate storage facilities and conditions to comply with Tajikistan National regulations and best industry practices. SRK recommends that all hazardous material storage and handling facilities for the Pakrut Project are constructed with secondary containment (i.e., lined and bunded areas) and in accordance with Tajikistan National environmental requirements and recognised international industry practices.

13.12 Waste Management

13.12.1 Waste Oil

The Pakrut Project will produce waste oil from the servicing and maintenance of mining equipment. No concrete hardstand with bunding was present at the project sites for the maintenance of equipment at the time of SRK’s site visit although the project was in the development phase. No estimates of annual generation rates and detailed assessment of the storage and handling requirements for this waste oil have yet been completed for the Pakrut Project. Kryso did state they sell it for recycling in line with Tajikistan directives for recycling and reuse of waste products.

SRK recommends mining equipment maintenance work is carried out over concreted hardstand areas to minimize the spillage of waste oil to the soil/water environment. The waste oil should be collected and stored in containers within secondary containment facilities, prior to being sold for

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13.12.2 Solid Wastes

The project 4,000 tpd ESIA reported estimates for annual generation rates and an assessment of the disposal of the inert industrial and domestic solid wastes for the Pakrut Project. The project ESIA did mention briefly that domestic solid waste needs to be properly disposed of. Limited uncontrolled rubbish dumping was observed within the current project site area during SRK’s site visit although the project was in the development stage.

SRK recommends placing sufficient refuse collection points about site for the collection of refuse prior to disposal. Kryso should either be able to have rubbish collected by the local county (dependent upon whether the county has such services) or can construct their own landfill (which needs permitting) for disposal of refuse generated on site. SRK did observe that scrap iron was being collected and stockpiled in an ad-hoc manner about site prior to being sold for recycling in line with Tajikistan National directives on the reuse/recycling of waste products.

13.12.3 Sewage and Oily Waste Water

The management of oily waste water/wash down waste water is not addressed in the Pakrut Project’s 4,000 tpd ESIA report. SRK noted during the site visit that the washing of mobile equipment and plant washdown drainage currently occurs without any containment, collection or separation measures. No generation rates and detailed assessment of the disposal of oily waste water for the Pakrut Project have been completed. SRK observed that there were no measures in place about the Project site for the separation of oils from waste water and that plant drainage from the Project site was being discharged into local gullies.

The projects’ EIA’s provide estimates regarding sewage generation and management measures to control potential environmental impacts. The ESIA reports, annual domestic waste water is mainly generated from cooking, sewage and washing and the main pollutants comprises of suspended solids (“SS”) and biological oxygen demand (“BOD”, technically a measure of the metabolic needs of microorganisms living in the water rather than a direct measure of pollutants). All the domestic waste water must be collected and treated appropriately to reduce the discharge and pollution. SRK notes that septic systems were being used as required.

SRK recommends the management of oily waste water and sewage be addressed as part of an operational Environmental Protection and Management Plan (“EPMP”) for the project. Kryso should construct plant washdown collection drains and concreted hardstand areas for vehicle and equipment maintenance that are bunded to collect spilt hydrocarbons for appropriate separation from water and disposal; thereby reducing the source of oily waste water.

13.13 Contaminated Sites Assessment

The assessment, recording and management of contaminated sites within mining or mineral processing operations, is a recognised international industry practice (i.e., forms part of the IFC Guidelines) and in some cases a national regulatory requirement (e.g., an Australian environmental regulatory requirement). The purpose of this process is to minimise the level of site contamination that may be generated throughout a project’s operation while also minimising the level and extent of site contamination that will need to be addressed at site closure.

A contaminated site or area can be defined as:

“An area that has substances present at above background concentrations that presents or has the potential to present a risk of harm to human health, the environment or any environmental value”.

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No contaminated sites assessment program has been developed for any of the Pakrut Project operations that cover the above mentioned components. During the site visit, SRK observed areas of minor contamination (oil spills and rubbish) about the areas of the project site; mainly, by hydrocarbon storage areas, concentrator sites and vehicle maintenance areas. SRK recommends that a contaminated sites assessment and management process be developed for the Pakrut Project, thereby actively enabling remediation of current and future contaminated sites.

13.14 Environmental Protection and Management Plan

The purpose of an operational Environmental Protection Management Plan (“EPMP”) is to direct and coordinate the management of the project’s environmental risks. The EPMP documents the establishment, resourcing and implementation of the project’s environmental management programs. The site environmental performance is monitored and feedback from this monitoring is then utilised to revise and streamline the implementation of the EPMP.

SRK observed the Pakrut Project had basic environmental management at the project site, but no operational EPMPs had been developed that detail the environmental management measures at the Project site. The Project though is in the development phase and Kryso reported they would produce an EPMP for operation at the time they plan to move into operation.

SRK recommends that Kryso develop operational EPMPs for the Pakrut Project and review and update them as required, in line with Tajikistan requirements and recognised international industry practices.

13.15 Emergency Response Plan

The IFC describes an emergency as ‘an unplanned event when a project operation loses control, or could lose control, of a situation that may result in risks to human health, property, or the environment, either within the facility or in the local community. Emergencies are of a scale that have operational wide impacts and do not include small scale localised incidents that are covered under operational area specific management measures. Examples of an emergency for a mining/mineral processing project are events such as pit wall collapse, underground mine explosion, the failure of a TSF or a large scale spillage/discharge of hydrocarbons or chemicals.

SRK has not been provided with an environmental Emergency Response Plan (“ERP”) that fulfil National Tajikistan requirements and industry best practices. SRK suggests that Kryso includes environmental emergencies within their ERP and continues to implement and as required update their operational ERPs for the Pakrut Project, in line with Tajikistan requirements and recognised international industry practices.

13.16 Site Closure Planning and Rehabilitation

The recognised international industry practice for managing site closure is to develop and implement an operational site closure planning process and document this through an operational Closure Plan. While this site closure planning process is not specified within the Tajikistan National requirements for mine closure, the implementation of this process for a Tajikistan mining project will:

 Facilitate achieving compliance with these Tajikistan national legislative requirements; and  Demonstrates conformance to a recognised international industry management practice.

There is currently no conceptual or operational closure planning process in place for the Pakrut Project that covers the above components. Conceptual measures for closure have been prescribed within the project’s 4,000 tpd ESIA, although they do not constitute a closure plan.

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SRK suggests that conceptual rehabilitation measures stated in the project’s ESIA be followed and an operational closure planning process is developed and implemented for the Pakrut Project in line with Tajikistan national legislative requirements and which incorporates recognised international industry practices.

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14 Social Assessment

The land use for the general area surrounding the Project site is a mix of agricultural and pastoral activities. Kryso stated that the population of the surrounding area is made up of predominately Tajik communities and no ethnic minorities are present in the area. Kryso also reported that there are no significant cultural heritage sites, burial sites, or nature reserves within or surrounding any of the Project sites.

The project site is located at a considerable distance from any protected area. The nearest protected territory is the Ramit Reserve, located approximately 30 km downstream from the Pakrut mine site. The ESIA reports that the status of the ecosystems in the reserve is considered unsatisfactory. There are a large number of settlements within the reserve; planning permission for these communities was granted at the end of the Soviet period. Despite the special environmental regime covering the territory, there has been continued exploitation of natural resources and deforestation is a particularly sensitive issue.

The ESIA reports that a general archaeological and historical study of the Project site was conducted in agreement with the Institute of History and Archaeology of the Academy of Sciences of the Republic of Tajikistan. Studies have examined the remains of a small village within and around the existing camps. The village was abandoned in the mid-20th century. In accordance with the conclusion of the expert on archaeology who visited the site, the remains of the village are considered to have no historical or scientific value. The only object within the area of cultural and religious significance for the locals is a small, old cemetery, located on the hilltop near the confluence of the Sardi-Mienna and Pakrut rivers.

Kryso stated they had received no official notices of public complaints in relation to the activities of the Project and that they maintained a positive relationship with the local communities.

Kryso stated the positive effects to the surrounding local communities are mainly direct employment of local contractors and use of local suppliers and service providers where practical. Kryso provided SRK with minimal information except for that presented in the 2,000 tpd and 4,000 tpd ESIAs regarding the development of social development measures amongst local communities including water and electricity supplies and the development of local infrastructure, medical clinics and the like.

The ESIA reports that local communities are already taking an interest in Pakrut LLC and the Project activities and are recognized as interested parties under the impact of the Project. These mainly relate to maintenance in keeping the local road open through the winter months and the construction of a bridge over the Sardi-Mienna River. Kryso provided a small hydro generator for Pichev village, a micro hydro power plant which provides enough electricity for lighting and satellite TV. Prior to this, the village had no power supplies apart from a small generator which became too expensive to run.

It is SRK’s opinion that the social situation in the surrounding communities has the potential to lead to conflicts with these communities if Kryso does not further their social licence to operate within and about these villages. Kryso stated they have no formalized social dispute resolution mechanism.

Public participation/community consultation programs were confirmed as being undertaken for each Project operation as part of the EIA. However, SRK observed that the program could be improved upon. No non-compliance notices or other notices of a breach of environmental or social conditions for the Pakrut Projects from the local or provincial governments have been sighted as part of this review. Kryso reported to SRK that none had been received. Kryso also stated to SRK that they maintain a strong relationship with local, provincial and national governments and with the local police.

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15 Project Risk Analysis

Mining is a relatively high risk industry. In general, the risk may decrease from exploration, through development, to the production stage. The Pakrut Gold Project is a development project with some exploration. Risks exist in different areas. SRK considered various technical aspects which may affect the feasibility and future cash flow of the Project, in particular for the 4000 tpd production and conducted a risk assessment which has been summarized in the following table.

Table 15-1: Project Risk Assessment of the Pakrut Gold Project Risk Issue Likelihood Consequence Overall Geology and Resource Lack of Significant Resource Unlikely Moderate Low Lack of Significant Reserve Unlikely Major Medium Unexpected Groundwater ingress Possible Moderate Medium Mining Significant Production Shortfalls Unlikely Major Medium Significant Geological Structures Possible Moderate Medium Excessive Surface Subsidence Unlikely Minor Low Poor Underground Condition Unlikely Moderate Low Poor Mine plan Possible Moderate Medium Poor Road Transportation/safety Unlikely Moderate Low Ore Processing Lower Production Rate Unlikely Moderate Low Lower Recovery Unlikely Major Medium Higher Production Cost Possible Moderate Medium Low Plant Reliability Unlikely Moderate Low Environmental and Social Surface water management and discharges Likely Moderate Medium (i.e. stormwater runoff, erosion control) Groundwater management and discharges Possible Moderate Medium (mine dewatering and seepage from the WRD) Storage and handling of hazardous materials Possible Moderate Medium Rehabilitation of the waste rock stockpiles and other disturbed Likely Moderate Medium areas Dust generation / gas emissions management and monitoring. Possible Minor Low Waste generation / management (industrial and domestic wastes). Possible Moderate Medium No geochemical characterisation/ ARD assessment of waste rock. Likely Moderate Low No developed structured closure planning process Likely Moderate Medium Capital and Operating Costs Project Timing Delay Unlikely Moderate Low Poor Mine Management-Plan Possible Minor Low Capital Cost Increases Possible Minor Low Higher Capital Costs- ongoing Unlikely Minor Low Operating Cost Underestimated Possible Moderate Medium

In the risk assessment, various risk issues have been assessed for Likelihood, Consequence and Overall Rating. SRK has used a matrix as described below.

The Likelihood of a risk is considered within a certain time frame, e.g., five years, as:

 Likely: will probably occur;  Possible: may occur; or  Unlikely: unlikely to occur.

The Consequence of a risk is classified as:

 Major Consequence: the factor poses an immediate danger to the Project that, if uncorrected, will have a material effect on the Project cash flow and performance and could lead a project failure;

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 Moderate Consequence: the factor, if uncorrected, will have a significant effect on the Project cash flow and performance; or  Minor Consequence: the factor, if uncorrected, will have little or no effect on the Project cash flow and performance.

The overall risk assessment combines the Likelihood and Consequence of a risk and be classified as Low (unlikely and possible minor risks and unlikely moderate risk), Medium (likely minor, possible moderate and unlikely major risks) and High (likely moderate and major and possible major risks).

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16 References

SRK notes that, unless otherwise specified, the references below have been translated from Chinese to English and the translated English versions have been reviewed.

1. Beijing General Research Institute of Mining and Metallurgy, Tajikistan Pakrut Gold Mine 4000tpd Project Bankable Feasibility Study Report, August 2012 2. Geology Press, Mineral Resources Industry Requirements Manual, August 2010 3. SRK Consulting, Preliminary Review on the Mine Design and Ore Reserve Conversion for Pakrut Gold Project, Vahdat Region, Republic of Tajikistan. September 2012. 4. SRK Consulting, Technical Review and Resource Estimate of the Pakrut Gold Deposit Vahdat Region, Republic of Tajikistan. August 2011. 5. China Dadi Press, Guidebook of Mineral Valuation, 2001.

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Appendices

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Appendix 1: Business Licences

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Appendix 2: Mining Licences Appendix to the licence of the series: A No 025 The Government of the Republic of Tajikistan therein issues the licence of the series A No 025 for the right of the usage of the mineral resources to the

Company with Limited Liability “Pakrut” The title of the user of the mineral resources

Pakrut Deposit, gold Object and type of mineral resource

The Content of Licence (conditions of licence) 1. Company with the limited liability “Pakrut” information about user of mineral resources 2. Carrying out of the geological exploration work the mission of work associated with the type licence 3. Within the limits of the mining lease spatial limits of the provided section of bowels 4. Within the limits of the land lease spatial limits of the land lease 5. 10(ten) years Period of validity 6. In accordance to Contract payments associated with the usage of mineral resources, land sites

7.300(Three hundred) thousand tonnes of ore per year the quantity of the mineral resources to be mined 8. In Accordance with established procedure the production shearing 9. In Accordance with established procedure the right on the information obtained during the mineral resources usage 10. In Accordance with established procedure obligation for the rational usage of mineral resources, protection of Environment, industrial safety 11. In Accordance with established procedure The control procedure 12. In Accordance with established procedure period of licence validity extension conditions 13. According to working draft The quantities of the disposed industrial waste, wastewater and ecological expertise 14. The Compulsory future mining other conditions

Behalf on the Government deputy of the Prime- Minister of the Republic of Tajikistan

Gulomov. A.G. Position Last Name, First Name, Patronymic signature March, 27 2004

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Appendix to the licence of the series: A No 025 The Government of the Republic of Tajikistan therein issues the licence of the series A No 025 for the right of the usage of the mineral resources to the

Company with Limited Liability “Pakrut” The title of the user of the mineral resources

Pakrut Deposit, gold Object and type of mineral resource

The Content of Licence (conditions of licence) 1. Company with the limited liability “Pakrut” information about user of mineral resources 2. Carrying out of the geological exploration work the mission of work associated with the type licence 3. Within the limits of the mining lease spatial limits of the provided section of bowels 4. Within the limits of the land lease spatial limits of the land lease 5. 10(ten) years Period of validity 6. In accordance to Contract payments associated with the usage of mineral resources, land sites

7.300(Three hundred) thousand tonnes of ore per year the quantity of the mineral resources to be mined 8. In Accordance with established procedure the production shearing 9. In Accordance with established procedure the right on the information obtained during the mineral resources usage 10. In Accordance with established procedure obligation for the rational usage of mineral resources, protection of Environment, industrial safety 11. In Accordance with established procedure The control procedure 12. In Accordance with established procedure period of licence validity extension conditions 13. According to working draft The quantities of the disposed industrial waste, wastewater and ecological expertise 14. The Compulsory future mining other conditions

Behalf on the Government deputy of the Prime- Minister of the Republic of Tajikistan

Gulomov. A.G. Position Last Name, First Name, Patronymic signature March, 27 2004

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Appendix 3: Mining Licence

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Appendix 4: The Certificate for Land Use of Pakrut area

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Appendix 5: The Water Use Permit for Pakrut LLC

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Appendix 6: The Discharge Permit (Air Emission) for Pakrut LLC

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Appendix 7: The 4000tpd Safety Production Approval (Kryso Explanation Letter)

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Appendix 7: The 4000tpd Environmental Impact Assessment Approval

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Appendix 8: Tajikistan Environmental Legislative Background

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The basis of all studies of the assessment impact on the environment of the project is the legislation of the Republic of Tajikistan and the international banking group adopted the Equator Principles for EIA.

In order to protect the environment and ensure sustainable and efficient development in Tajikistan has developed and adopted a system of laws and regulations. All actions on the project shall be in accordance with applicable regulations. Environmental protection in the Republic of Tajikistan is based on the Constitution and includes the following laws and resolutions of the Government of the Republic of Tajikistan:

 The Constitution: o Delivers exclusive state ownership of land, minerals, water, air, flora and fauna and other natural resources and their effective use in the interests of the people. (Article 13). o Ensures freedom of economic and business activities and legal protection for all types of activities including private. (Article 12). o Ensures the health of all citizens and measures to improve the environment. (Article 38). o duties performed by each environmental, historical and cultural monuments (Article 44).

Basic law regulating the issues related to the protection of the environment is:

 Nature Protection Act RT (№. 905, adopted 12.27.1993), as amended (№. 30 from 10/2002; №. 75 of 2/12/2002; №. 58 of 15.04.2004): o Delivers prioritize environmental values in the sustainable development of the Republic of Tajikistan. o declares the right to a healthy environment (Article 10) and provides tools to implement this right. These include the right to information about the environment (Article 11) and the public's right to make a decision (Article 13). o Provides a legal framework for the regulation of environmental impacts and establish a system of state control of violations of environmental law. o Defines the powers of government in the regulation of the environment. o Provides economic mechanisms of environmental protection, including the responsibilities of companies to restore the disturbed favorable environment (Article 14) and claims payment system for the use of natural resources and pollution (Article 19). o Provides a basis for the development of environmental standards for the maximum permissible concentrations of pollutants, as well as permits and standards for maximum permissible emissions (Article 23-30). o Defines the general environmental requirements for the business activities and the fulfillment of international obligations in the field of environmental protection. o Defines a procedure remedying of environmental damage from businesses and individuals. o It contains provisions for the environmental expedition for all economic activities potentially hazardous to the environment.  Law on Environmental Review of Tajikistan (№ 20 from 04.22.2003) o the general principles of environmental impact assessment. o Defines the powers of environmental experts and the types of environmental expertise, including state and public environmental review. o Includes a list of economic activities subject to mandatory environmental review. The project documentation related to the establishment of mining companies and attracting foreign investment em state environmental review (Article 7 (6)). o Defines the submission of documents to the environmental review and powers of environmental impact assessment (Article 18).

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o determine the timing of environmental assessment. The decision must be made within 45 days after receiving official documents by the authorized state body environmental assessment. o Includes provisions for the public environmental review, which may be initiated by the parties concerned. Conclusion public environmental review is a recommendation.

This project has been prepared in accordance with the following documents:

 Government of the Republic of Tajikistan on the procedure for the assessment of environmental impacts (№ 464 of October 6, 2006) includes:  EIA procedure and conditions for participation in the process of stakeholders, including the public authorities for the protection of the environment. Regulations include a list of projects subject to mandatory EIA process, although it does not contain provisions for a detailed categorization of the project. However, the large mining projects are subject to mandatory EIA process. After the completion of this project will be submitted for consideration of the state environmental review.  Subsoil Law of RT is the main piece of legislation covering aspects related to the mining industry (6/11/1993). o The law declares responsibility for violation of the provisions for the protection of air, land, buildings and structures from any negative impacts of mining and holds pollutant responsible for restoration of disturbed areas to a condition suitable for further use (Article 22, Paragraph 8-9) and a liability for violation (Article 49 (10)). o Article 23 (8) requires the adoption of measures to prevent pollution in the course of the work and prohibits waste disposal in the ground, which can cause contamination of groundwater used for drinking and industrial purposes.  Law on Air Protection (01/02/1996): o Defines the general principles of air quality on the basis of evidence-based standards (Article 3). o It contains provisions on the powers and responsibilities of government agencies for violating the law on air protection, including the payment and closure of polluting industries. o Defines the requirements for maximum permissible emissions by all mobile and stationary sources of pollution. (Article 11). o Includes provisions to regulate the negative impacts on the air, including electromagnetic pollution and noise (Article 14). The law also contains provisions on prevention of air pollution in the tunneling and blasting.  Law on Production and Consumption (№ 44 10.05.2002)

Other aspects related to the implementation of the project governed by the following legislation:

 Law on Use of Animals (1994)  Foreign Investment Law (1992)  Water Code  Land Code  Law on Land Valuation  Regulation on licensing of certain activities

Besides Tajikistan joined and ratified the following international environmental conventions:

 The UN Convention on the rational use and conservation of biological diversity (ratified on 29 October 1997), including the Cartagena Protocol of 2002 on Biosafety (1997/2004);  The Vienna Convention for the Protection of the Ozone Layer (1985) and the Montreal Protocol to reduce ozone depletion to the London Amendment of 1990 (ratified in 1996/1998)

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 1979 Bonn Convention for the Protection of Migratory Species (joined February 1, 2001);  The Ramsar Convention (1971) on the protection of wetlands of International Importance especially as Waterfowl Habitat (2001);  Framework Convention on Climate Change, LLC (ratified on 18 November 2001);  1994 UN Convention to Combat Desertification (1997)  The Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters (joined July 21, 2001) and  The Stockholm Convention on Persistent Organic Pollutants (joined May 21, 2002 and ratified February 6, 2007).  In drafting also used the following normative documents in force in the Republic of Tajikistan in the field of environmental protection:  Instructions on how to harmonize and permits for special use (from 2005);  Order regulation of discharges of pollutants into water bodies (from 2005);  Methodology maximum permissible discharge (MPD) substances into water with waste water (from 1990);  Collection of regulations on air quality I and II part (Dushanbe, 1991);

The system of State regulation of environmental protection has gone through major changes and reforms in the last decade. From 2003 to 2007, the State Committee for Environmental Protection and Forestry is the authorized state body for the protection of the environment. In October 2007, the authority was transferred to the newly created Ministry of Agriculture and the Environment (Decree № 591 dated 03/04/2007, № 185, 30.11.2007, № 595, № 603). Control over compliance with environmental regulations was assigned to the service of the State control over the use and protection of nature. In 2008 the service functions transferred to the newly created Committee on Environmental Protection under the Government of Tajikistan. The Committee includes regional and district committees of nature with a staff of inspectors who have the right to suspend the business activities in the identification of significant environmental damage. Inspection on protection of water resources and maintain safe air emissions of pollutants into the environment on the basis of the prepared projects MPE and MPD and monitor their implementation.

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Appendix 9: Equator Principles and Internationally Recognised Environmental Management Practices

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In seeking to obtain project financing or to list on a stock exchange, these institutions require the proponent to comply with such documents as the Equator Principles and the International Finance Corporation (IFC) Performance Standards and Guidelines. This is exemplified by the following preamble from the Equator Principles (July 2006):

Project financing, a method of funding in which the lender looks primarily to the revenues generated by a single project both as the source of repayment and as security for the exposure, plays an important role in financing development throughout the world. Project financiers may encounter social and environmental issues that are both complex and challenging, particularly with respect to projects in emerging markets.

The Equator Principles Financial Institutions (EPFIs) have consequently adopted these Principles in order to ensure that the projects we finance are developed in a manner that is socially responsible and reflect sound environmental management practices. By doing so, negative impacts on project-effected ecosystems and communities should be avoided where possible and if these impacts are unavoidable, they should be reduced, mitigated and/or compensated for appropriately. We believe that adoption of and adherence to these Principles offers significant benefits to ourselves, our borrowers and local stakeholders through our borrowers’ engagement with locally affected communities. We therefore recognise that our role as financiers affords us opportunities to promote responsible environmental stewardship and socially responsible development. As such, EPFIs will consider reviewing these Principles from time-to-time based on implementation experience and in order to reflect ongoing learning and emerging good practice.

These Principles are intended to serve as a common baseline and framework for the implementation by each EPFI of its own internal social and environmental policies, procedures and standards related to its project financing activities. We will not provide loans to projects where the borrower will not or is unable to comply with our respective social and environmental policies and procedures that implement the Equator Principles.

The following Tables provide a brief summary of the Equator Principles and the IFC Performance Standards respectively. These documents are used by the EPFI’s and stock exchanges in their review of the social and environmental performance of proponent companies.

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Table A9-1: Equator Principles

Equator Tit le Key A spect s (Summar y ) Principles 1 Review and Categorisation Categorise such project based on the magnitude of its potential impacts and risks

2 Social and Environmental Conduct a Social and Environmental Assessment Assessment (揂ssessment? . The Assessment should also propose mitigation and management measures appropriate to the nature and scale of the proposed project. 3 Applicable Social and The Assessment will refer to the applicable IFC Performance Environmental Standards Standards, and applicable Industry Specific EHS Guidelines (揈HS Guidelines? and overall compliance with same. 4 Action Plan and Prepare an Action Plan (AP) which addresses the relevant Management System findings of the Assessment. The AP will describe and prioritise the actions, mitigation measures, corrective actions and monitoring to manage the impacts and risks identified in the Assessment. Maintain a Social and Environmental Management System that addresses the management of these impacts, risks, and corrective actions required to comply with host country laws and regulations, and requirements of the applicable Standards and Guidelines, as defined in the AP.

5 Consultation and Consult with project affected communities. Adequately Disclosure incorporate affected communities?concerns. 6 Grievance Mechanism Establish a grievance mechanism as part of the management system. to receive and resolve concerns about the project by individuals or groups from among project-affected communities. Inform the affected communities about the grievance mechanism in the course of the community engagement process and ensure that the mechanism addresses concerns promptly and transparently, and is readily accessible to all segments of the affected communities. 7 Independent Review Independent social or environmental expert will review the Assessment, AP and consultation process to assess Equator Principles compliance. 8Covenants Covenant in financing documentation: a) to comply with all relevant host country social and environmental laws, regulations and permits; b) to comply with the AP during the construction and operation of the project; c) to provide periodic reports not less than annually, prepared by in-house staff or third party experts, that (i) document compliance with the AP, and (ii) provide compliance with relevant local, state and host country social and environmental laws, regulations and permits; and d) to decommission the facilities, where applicable and appropriate, in accordance with an agreed decommissioning plan. 9 Independent Monitoring Appoint an independent environmental and/or social expert, or and Reporting require that the borrower retain qualified and experienced external experts to verify its monitoring information. 10 EPFI Reporting Each EPFI adopting the Equator Principles commits to report publicly at least annually about its Equator Principles implementation processes and experience, taking into account appropriate confidentiality considerations.

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Table A9-2: IFC Performance Standards

IFC Title Objective Key A s pect s (Summar y ) Performance (Summary) Standard 1Social and Social and EIA and Social & Environmental Management System Environmental improved performance (S&EMS). Social & Environmental Impact Assessment and through use of Assessment (S&EIA). Risks and impacts. Management Systems management systems. Management Plans. Monitoring. Reporting. Training. Community Consultation

2 Labour and Working EEO. Safety and Implement through the S&EMS. HR policy. Conditions Health Working condition. EEO. Forced & child labour. OH&S.

3 Pollution Prevention Avoid pollution. Prevent pollution. Conserve resources. and Abatement Reduce Emissions. Energy efficiency. Reduce waste. Hazardous materials. EPR. Greenhouse Gases

4 Community Health, Avoid or minimise Implement through the S&EMS. Do risk Safety and Security risks to community. assessment. Hazardous materials safety. Community exposure. ERP

5 Land Acquisition and Avoid or minimise Implement through the S&EMS. Consultation. Involuntary resettlement. Mitigate Compensation. Resettlement planning. Resettlement adverse social impacts Economic displacement

6 Biodiversity Protect and conserve Implement through the S&EMS. Assessment. Conservation and biodiversity Habitat. Protected areas. Invasive species. Sustainable Natural Resource Management

7 Indigenous Peoples Respect. Avoid and Avoid adverse impacts. Consultation. minimise impacts. Development benefits. Impacts to traditional Foster good faith land use. Relocation. 8 Cultural Heritage Protect cultural Heritage Survey. Site avoidances. heritage Consultation.

Summary Background Information on Some Key Internationally Recognised Environmental Management Practices.

The following provides background information on some key internationally recognised environmental management practices:

 Land disturbance – The main impact on the surrounding ecological environment is due to disturbance and contamination caused by surface stripping, waste rock and tailings storage, processing plant drainage, processing waste water, explosions, transportation and associated buildings that are erected. If effective measures are not taken to manage and rehabilitate the disturbed areas, the surrounding land can become polluted and the land utilization function will be changed, causing an increase in land degradation, water loss and soil erosion.  Flora and fauna – Land disturbance from the development of mining and mineral processing projects may also result in impacts to or loss of flora and fauna habitat. The project development EIA should determine the extent and significance of any potential impacts to flora and fauna habitat. Where these potential impacts to flora and fauna habitat are determined to be significant, the EIA should also propose effective measures to reduce and manage these potential impacts.  Contaminated Sites Assessment – The assessment, recording and management of contaminated sites within mining or mineral processing operations, is a recognised international industry practice (i.e. forms part of the IFC Guidelines) and in some cases a

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National regulatory requirement (e.g. an Australian environmental regulatory requirement). The purpose of this process is to minimise the level of site contamination that may be generated throughout a project’s operation while also minimising the level and extent of site contamination that will need to be addressed at site closure.

 A contaminated site or area can be defined as; ‘An area that has substances present at above background concentrations that presents or has the potential to present a risk of harm to human health, the environment or any environmental value’.  Contamination may be present in soil, surface water or groundwater and also may affect air quality through releases of vapours or dust. Examples of typical contaminated areas within a mining/mineral processing project are spillages to soil/water of hydrocarbons and chemicals and uncontained storage and spillages to soil/water of ores and concentrates. The process to assess and record the level of contamination basically involves a combination of visual (i.e. suspected contamination observed from spillages/releases) and soil/water/air sampling and testing (i.e. to confirm contaminant levels). Once the level of contamination is defined, the area’s location and contamination details are then recorded within a site register.  Remediation/clean up of contamination areas involves the collection and removal of the contaminated materials for treatment and appropriate disposal, or in some cases the in- situ treatment of the contaminated (e.g. use of bioremediation absorbents on hydrocarbon spillage). The other key component to the management of contaminated areas is to also remove or remedy the source of the contamination (e.g. place hydrocarbon storage and handling within secondary containment).

 Environmental Protection and Management Plan – The purpose of an operational Environmental Protection and Management Plan (EPMP) is to direct and coordinate the management of the project’s environmental risks. The EPMP documents the establishment, resourcing and implementation of the project’s environmental management programs. The site environmental performance is monitored and feedback from this monitoring is then utilised to revise and streamline the implementation of the EPMP.  Emergency Response Plan – The IFC describes an emergency as ‘an unplanned event when a project operation loses control, or could lose control, of a situation that may result in risks to human health, property, or the environment, either within the facility or in the local community’. Emergencies are of a scale that have operational wide impacts and do not include small scale localised incidents that are covered under operational area specific management measures. Examples of an emergency for a mining/mineral processing project are events such as pit wall collapse, underground mine explosion, the failure of a TSF or a large scale spillage/discharge of hydrocarbons or chemicals. The recognised international industry practice for managing emergencies is for a project to develop and implement an Emergency Response Plan (ERP). The general elements of an ERP are:

 Administration – policy, purpose, distribution, definitions of potential site emergencies and organisational resources (including setting of roles and responsibilities).  Emergency response areas – command centres, medical stations, muster and evacuation points.  Communication systems – both internal and external communications.  Emergency response procedures – work area specific procedures (including area specific training).  Checking and updating – prepare checklists (role and action list and equipment checklist) and undertake regular reviews of the plan.  Business continuity and contingency – options and processes for business recovery from an emergency.

 Site Closure Planning and Rehabilitation – The recognised international industry practice for managing site closure is to develop and implement an operational site closure

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planning process and document this through an operational Closure Plan. This operational closure planning process should include the following components:

 Identify all site closure stakeholders (e.g. government, employees, community etc.).  Undertake stakeholder consultation to develop agreed site closure criteria and post operational land use.  Maintain records of stakeholder consultation.  Establish a site rehabilitation objective in line with the agreed post operational land use.  Describe/define the site closure liabilities (i.e. determined against agreed closure criteria).  Establish site closure management strategies and cost estimates (i.e. to address/reduce site closure liabilities).  Establish a cost estimate and financial accrual process for site closure.  Describe the post site closure monitoring activities/program (i.e. to demonstrate compliance with the rehabilitation objective/closure criteria).

HG/QH/RK/AL/YL/YW/PX/AX/YS/RA/MW SRK_Report_for_Kryso_Pakrut Gold_Final June 2013