The Asia Miner

JAN-FEB 2018

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

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Page 16 of 83

Volume 15 • Issue 1 | 2018 | ASIA Miner | 15 CENTERRA Gold expects to restart negotiations with the Mongo- lian Government regarding the Gatssurt Gold Project after receiving results of a feasibility study. The study incorporates results from the technical and economic studies initiated in 2016, further optimis- ation studies completed in 2017, updated capital and operating costs and the current Mongolian tax and royalty regime. Centerra has not made a development or construction decision on the Gatsuurt project, which is in central northern Mongolia, and does not expect to do so until after the government negotiations. Gatsuurt has 15.356 million tonnes of probable reserves at 2.7 g/t gold for 1.316 million ounces. Of this there are 339,000 ounces in oxide materials and 977,000 ounces in refractory sulphide material. There are also 10.988 million tonnes of indicated resources at 1.9 g/t for 678,000 ounces and 3.812 million tonnes of inferred resources at 2.1 g/t for 263,000 ounces. If it proceeds, Gatsuurt will be the company's second mine in Mongolia after nearby Boroo, which is under care and maintenance. Centerra is continuing the care and maintenance activities and is primarily focused on reclamation work. Any revenue from Boroo gold production from the rinsing of the heap leach pad is offset against care and maintenance costs. The feasibility study plan for mining at Gatsuurt is to occur in two phases, initially targeting the oxide material that can be milled at the existing Boroo processing facility followed by the refractory sulphide material which requires the addition of a BIOX® circuit. The processing plan is to refurbish the existing Boroo mill to pro- cess the oxide material in the first three years while the BIOX® circuit is being constructed which will treat the refractory sulphide material in years 4 through 10. Initial capital expenditures for the processing of the oxide material are expected to be approximately US$76 million excluding contin- gency of $8 million. The estimated Life of Mine (LOM) gold production is 1.1 million ounces over 10 years with average annual production of 111,000 ounces. The ore will be mined from an open pit. The LOM operating cost estimates used in the feasibility study on a per tonne processed basis are: mining US$10.97, ore haulage $5.37, oxide processing $11.90, sulphide processing $26.42 and administration $8.92. SOUTHGOBI Resources has entered into an investment agreement with Beijing De Rong Tai Investment Co Ltd (BDRT) in connection with development of the Ceke Port Eco-friendly Bonded Logistics Park project. Proceeds from BDRT's equity investment will be used to construct the park, which will be at Ceke inland port on the Mon- golia-China border. BDRT has agreed, subject to fulfilling certain conditions, to invest RMB 231 million in instalments by 30 July 2018 in return for a 30% interest in Inner Mongolia SouthGobi Energy Ltd (IMSGE), while SouthGobi will hold the remaining 70% interest. IMSGE is the project company which holds 100% of the Ceke Logistics Park. Ceke is the only inland port where the coal products of SouthGobi are imported from Mongolia to China. Development of the logistics park will facilitate compliance with the Chinese government's policy to combat pollution in the Ceke port and strengthen the supervision of coal storage and transport in the port. It will also represent a strategic transformation for SouthGobi, evolving from a mining company into an integrated coal supplier and extending its downstream supply chain to reach end-customers. The Ceke Logistics Park will be an integrated bonded warehouse with completely enclosed coal storage facilities and will be connect- ed to the railway system and the highway system. Spanning 1.44 million square metres, the total annual coal han- dling capacity of the park is projected to be 24 million tonnes, en- compassing an initial 12 million tonnes in Phase 1 and an additional 12 million tonnes in Phase 2. The construction of Phase 1 was due to commence in the fourth quarter of 2017 and is expected to be completed by the fourth quarter of 2018. Meantime, the company has terminated the employment of chief executive officer Aminbuhe, citing his incapability to fulfil his daily duties. The move in late November followed SouthGobi's announcement on November 17 that Aminbuhe had been arrested on October 11 and was being detained in China as a suspect in a fraudulent loan case. In a statement, the company said Aminbuhe had also been re- moved as the chairman of the Board, but remained on the Board as a non-executive director. SouthGobi in agreement for logistics park The existing 5000 tonnes/day processing facility at the nearby Boroo project. Centerra to resume Gatsuurt negotiations

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