The Asia Miner

OCT-DEC 2015

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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32 | ASIA Miner | October-December 2015 KINCORA Copper is undertaking surface exploration, including infll mapping and geochemistry, around the Bronze Fox and Tourmaline Hill intrusive complexes in southern Mongolia. Both properties are not far from the giant Oyu Tolgoi development being undertaken by Turquoise Hill Resources, which is majority owned by Rio Tinto. Following two positive reviews by experienced independent copper porphyry consultants, Kincora has refned its feld season program that is funded from existing cash reserves. Activities are focused on sur- face exploration activities at the intrusive complexes on the Bronze Fox (eastern) and the recently returned Tourmaline Hill (western) licences. Drilling prior to the 2014 feld season was predominately within the Bronze Fox Intrusive Complex (BFIC), with 2014 activities im- pacted by the then ongoing dispute relating to the western licence and focused on volcanics on the southeast margin of the intrusive in interpreted down faulted/preserved porphyry targets with targets prioritized by induced polarization, supported by magnetics. The key objective for the 2015 feld season, which began in Au- gust, is refning discrete magnetic anomaly highs around the BFIC, including a series of large targets that cross or are adjacent to the eastern and western licence boundary, and undertaking magnetic modelling to refne potential drilling targets. Following resolution of the previous two-year dispute relating to the company's western and northern licences, Kincora has regained unimpeded control of its corporate strategy and remains committed to exploring the prospective land package in place. However, in light of current market conditions, the company is seeking potential options to enhance shareholder value both in and outside of Mongolia, both with near construction and production assets that would not otherwise be available at more favourable points in the commodity cycle. On August 6 Kincora advised that it remained in discussions with Origo Partners PLC, its biggest shareholder, regarding the settle- ment and/or extension of the $2.5 million convertible note held by Origo due on July 19, 2015. The company said there was no cer- tainty that the Origo note would be converted into shares of Kincora at Can$0.25 per share or at all. The note was issued in 2012 when Kincora was on a roll and Mongolia's reputation hadn't been tarnished with the dispute that delayed Oyu Tolgoi. On issuance the note carried an 8.7% coupon, payable in Kincora shares, and was convertible at Can$0.25 per unit, with each unit comprising one share and one warrant exercis- able at Can$0.40. TURQUOISE Hill Resources' Oyu Tolgoi Copper-Gold Project set new records for concentrate production and throughput during the June quarter. Copper and gold in concentrates increased 64.6% and 176.7% respectively from the previous quarter. Turquoise Hill CEO Jeff Tygesen said the open pit operation be- gan accessing higher-grade material during the second quarter with mining and processing of higher-grade ore expected to continue in the second half of 2015. On July 9 Oyu Tolgoi marked the second anniversary of its frst shipment of concentrate and Turquoise Hill expects the mine to produce 175,000 to 195,000 tonnes of copper and 600,000 to 700,000 ounces of gold in concentrates in 2015. Oyu Tolgoi recorded revenue of $421.3 million in the June quarter on sales of 189,800 tonnes of concentrate, a 1.2% reduction over the frst quarter refecting lower gold prices partially offset by higher concentrate sales. The operation achieved a solid safety perfor- mance with an All Injury Frequency Rate of 0.22 per 200,000 hours worked for the frst half of 2015. Oyu Tolgoi is about 550km south of Ulaanbaatar and 80km north of the Mongolia-China border. Mineralization consists of porphy- ry-style copper, gold, silver and molybdenum contained in a linear structural trend with a strike length extending more than 26km. Mineral resources have been identifed in a series of deposits throughout the trend, including the Heruga Deposit, Southern Oyu deposits (Southwest Oyu, South Oyu, Wedge and Central Oyu) and Hugo Dummett deposits (Hugo South, Hugo North and Hugo North Extension). Mining of ore commenced in May 2012 and frst concentrate was produced in January 2013. Oyu Tolgoi has initially been developed as an open-pit operation. A copper concentrator plant, with related facilities and necessary infrastructure to support a nominal daily throughput of 100,000 tonnes, has been constructed to process ore mined from South- ern Oyu open pit. Long-term development plans are based on a 95,000-tonnes/day underground block-cave mine. In August 2013, underground development was delayed pending resolution of matters with the Government of Mongolia, which was reached on May 18, 2015. Following signing of the Oyu Tolgoi Underground Mine Develop- ment and Financing Plan with the Government in May, Turquoise Hill and Rio Tinto are advancing the approximate US$4 billion in project fnancing and updating the underground feasibility study. Turquoise Hill expects signing of fnancing by the end of 2015. The 2015 feasibility study, which was submitted to the Mongolian Minerals Council in March, has been tentatively accepted pending an update of schedules and alignment with the underground plan. Kincora feld activities under way OT sets new production records Processing operations at Oyu Tolgoi Copper Gold Project in southern Mongolia.

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