The Asia Miner

SEP-OCT 2014

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

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4 | ASIA Miner | September/October 2014 Road to Success where our mouth is. "$1.5 million of the $5 million came from insiders and were the frst orders in the book – our two largest shareholders as well as Board and management. "Our near-term focus is exploration and if we have some positive re- sults that will dictate what the next course of action is. If we have a really good hole there is scope to ramp up the drilling program, which is what Ivanhoe did at OT. In the history of Bronze Fox, every hole drilled has returned at least lower grade copper, eg 0.1% to 0.3%, or higher. "What we are trying to do now is refne the work done last year – the deeper and more extensive geophysics, induced polarization, alteration analysis, fertility analysis, etc. We believe the preliminary work last year and this year's exploration will reduce the risk and increase our conf- dence in fnding something that is higher grade and economic." To this end, initial results have been very encouraging, confrming the geological model, expanding the copper porphyry potential at Bronze Fox in the signifcant and new mineralized Shargal Tolgoi zone, and as- sisting to vector to interpreted high-grade and large tonnage potential. Major miner onboard Another positive for Kincora is that in the second quarter it entered into an agreement with a major miner focused on copper. Kincora has granted that company exclusive rights to carry out due diligence on Bronze Fox with respect to a potential joint venture, earn-in, strategic alliance, equity investment or other transaction. The agreement con- templates various work programs being undertaken during a staged review period in order to advance toward a potential transaction, and maintain certain exclusive rights to such a transaction and access to the properties/dataroom. "Kincora is the last remaining listed copper junior in Mongolia without a strategic partner. This is despite Bronze Fox being one of the more advanced copper projects; situated in the OT mineralization structural trend; offering large-scale potential supported by known widespread lower grade copper mineralization, and localized higher grades; and strategically located. We have previously had a lot of interest in the proj- ect but one group going to that next level is positive, particularly given the global climate and most groups, including the majors, cutting back exploration," Sam Spring says. "If nothing else, I am sure we will gain some valuable input into the technical understanding of the project from this experience and we are certainly not putting up a 'for-sale' sign." Kincora is also seeking to recover two licences revoked by the gov- ernment last year that saw almost $7 million written off the company's balance sheet. The company is actively lobbying the government, particularly as this dispute has far greater signifcance beyond just the impacted 106-licences, and the exploration sector/amended Minerals Law, with security of tenure, a transparent and consistent legal and legislative environment being key cornerstones for all private sector activities. The cornerstone for Kincora is exploration results but at the same time it is looking at getting the exploration licences back, continuing corpo- rate discussions and seeing what might happen with legislation in Mon- golia. "If the moratorium on exploration licences is lifted I'd like to think that because we are the only junior really active in the OT copper belt and have been there longer than any other group, we have an excellent platform for potentially having more of a regional footprint," he says. Providing 'bang for buck' In these times mining companies have to reduce G&A and overheads, and Kincora is doing this through its budgets and Board realignment. "We took two members off the Board and added one in a bid to tighten things a little more," Sam Spring says. "We are striving to ensure ev- eryone in the team has a very focused role in adding value. Because we have some funds enabling us to do some exploration, we are in an excellent position in terms of getting maximum 'bang for our buck'. "When we went to tender for our current drilling program, we sought detailed tenders from fve contractors we thought had the technical capacity to do the work required, being mindful of the fact that if we had some success we might require some deeper drilling capacity. Of the fve companies we sought tenders from, there were more than 100 drill rigs available with not one of them in use or even in the pipeline of being used. "Two of the fve were international drillers and three were locally based. We chose Major Drilling, which is widely regarded as the leading drilling contractor in Mongolia in terms of experience, team and safety with current excess capacity in-country, having done a lot of work at OT. Indicative of the current exploration situation is that this year, for the frst time, Major has had no work in Mongolia. "We were lucky in that not only have we obtained a very competitive rate from Major compared to what they previously tendered us but we A sandstorm approaching a camp site at Bronze Fox in May 2014. One of a series of historic Soviet Union trenches dug across the West Kasulu oxide zone on the Bronze Fox licence. Outcropping malachite is visible.

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