Unkurtash

Project Update

March 2017

Disclaimer

Certain statements within this presentation constitute forward looking statements. Such forward looking

statements involve risks and other factors which may cause the actual results, achievements or

performance of the Group to be materially different from any future results, achievements or performance

expressed or implied by such forward looking statements. Such risks and other factors include, but are

not limited to, general economic and business conditions, changes in government regulations, currency

fluctuations, the gold price, the Group’s ability to recover its reserves or develop new reserves,

competition, changes in development plans and other risks.

There can be no assurance that the results and events contemplated by the forward looking statements

contained in this presentation will, in fact, occur. These forward-looking statements are correct or

represent honestly held views only as at the date of delivery of this presentation.

The Company will not undertake any obligation to release publicly any revisions to these forward looking

statements to reflect events, circumstances and unanticipated events occurring after the date of this

presentation except as required by law or by regulatory authority.

Nothing in this presentation constitutes an offer, invitation, recommendation to purchase, sell or subscribe

for any securities in any jurisdiction or solicitation of any offer to purchase, sell or subscribe for any

securities in any jurisdiction and neither the issue of the information nor anything contained herein shall

form the basis of or be relied upon in connection with, or act as any inducement to enter into, any

investment activity.

2

Table of Contents

3

Content Pages

Investment Highlights 4

Project Summary 5

Unkurtash Overview 6

Acquisition & Development History 7

Licenses 8

Exploration 9

Geological Setting & Mineralisation 10

Mineral Resource Estimate 11

Geography & Climate 12

Mining 13

Processing & Infrastructure 14

General Layout 15

Financial Model Output 16 – 17

Appendices 19 – 21

Investment Highlights

4

Sizeable gold project with average annual gold production of >130 koz and 18 years of

mine life 1

Competitive development capex intensity of ~US$126/oz for total LOM gold production of

~2.4 mmoz 5

Favourable processing with predominantly free gold amenable for conventional processing 3

Located in existing mining area with access to infrastructure such as roads, power and

water supply and existing plans for upgrades 4

Top tier LOM AISC cash cost position of ~US$660/oz 2

Local mine management team with extensive experience in the Kyrgyzstan mining industry 6

Project Summary

Unkurtash Project (“Unkurtash” or the “Project”) is a large-scale gold project located in West Kyrgyzstan and is 100%

owned by Highland Gold (“Highland Gold” or the “Group”)

– The Project comprises three deposits: Unkurtash, Sarytube and Karatube

– The deposits’ licenses are held by Highland Exploration Kyrgyzstan LLC which is a 100% owned subsidiary of

Highland Gold

Since obtaining the assets’ licenses in 2006, Highland Gold has engaged in continuous exploration works

– In June 2013, IMC Montan prepared a JORC gold resources estimate of ~3.5 mmoz (~109 tonnes) contained

gold at a grade of 1.82 g/t

SRK completed a Scoping Study on Unkurtash in January 2017 with the following key economics:

– Project NPV of US$200 mm assuming a gold price of US$1,200/oz(1) and a discount rate of 10%

– Envisaged open pit mining with an average annual gold production of ~130 koz

– 18-year mine life

– Gravity concentration and gravity tailings CIL with 4 mtpa throughput as a favoured processing technology

– Initial estimated development capex of US$322 mm(2)

Additional drilling programme planned for 2017 will position project well for advancement to PFS / DFS stage

Highland Gold is considering various strategic alternatives for proceeding with the project, including partnering with

another strategic investor to co-develop Unkurtash

5 1. NPV of US$298 mm based on flat LT consensus price case of US$1,300/oz. 2. Includes contingencies of ~US$20 mm.

--

124 138 141

132 121

113 125 125

145 138 138

121 118

134

162

204

180

28

$732 $675 $659 $704 $748 $800 $694 $691

$576 $601 $597 $665 $673

$615 $512

$408 $435 $427

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19Year

Production (koz) TCC (US$/oz)

Unkurtash Overview

6

Overview JORC resources (IMC, 2013) of ~3.5 mmoz (~109 tonnes) contained

gold at a grade of 1.82 g/t

In March 2017, SRK completed a scoping study on the project,

demonstrating its robust economics(1):

– NPV of US$200 mm at 10% discount

– IRR of ~19%

– TCC of US$616/oz and AISC of US$662/oz

– Development capex of US$322 mm(2) with total LOM capex of

US$472 mm(3)

Project has access to significant supporting infrastructure:

– Locally situated in renowned mining district adjacent to Terekkan /

Perevalniy (to be commissioned in 2017), Ishtamberdy and

Bozymchak operating mines

– Good site access via extensive network of paved roads(4)

– Nearby village Tereksay serves as base camp

– 110 kV grid line along Kassan river valley(5)

Project Location

Production & Cash Cost Profile Resources(7) Ore Grade Contained Au Contained Au

(kt) (g/t Au) (kg) (koz)

Measured 19,256 1.83 35,324 1,136

Indicated 29,639 1.84 54,533 1,753

M&I 48,895 1.84 89,857 2,889

Inferred 11,137 1.74 19,416 624

Grand Total 60,032 1.82 109,273 3,513

1. Based on US$1,200/oz gold price assumption. 2. Includes contingencies of ~US$20 mm. 3. Includes reclamation costs of ~US$20 mm. 4. Only the last 25 km are unpaved; asphalt road to be completed in 2 years.

(1)

Kasansay

Sumsar

Ala-Buka

Dzhoy-Belent

Kyizyil-Tokoy

Ishtamberdy

Bozymchak

KYRGYZSTAN

Tereksay

Terek

Buzuk

Karatube \ Sarytube

Unkurtash

KAZAKHSTAN

KYRGYZSTAN

TAJIKISTAN CHINA

Bishkek

Dzhalal-Abad

Osh

Taskomur

Company Deposits

Operating Mine

Cities

Roads

Rivers

0 5 10km

(6)

5. Connection to the “Crystal” substation located ~150 km from the deposit is recommended to meet the estimated 23-25 MW power demand.

6. Project construction takes place during year 1. 7. As per IMC Mineral Resource Statement 2013.

Terekkan & Perevalniy

Acquisition & Development History

7

Unkurtash Acquisition through Highland Gold

The Unkurtash deposit was discovered during prospecting work that was carried out in 1980-1983

Barrick Gold acquired the Unkurtash licenses in 2002 with a subsequent exploration programme

Highland Exploration Kyrgyzstan LLC (former Barrick Gold Kyrgyzstan LLP), including the Unkurtash licenses, was acquired in

2006 as a result of an asset exchange transaction with Barrick Gold

Development History

From 2002-2012 the primary focus was on prospecting and exploring the Unkurtash and Karatube license areas

– 110,175 m drilled over 469 holes resulting in 99,890 core and RC samples being taken

From 2009-2012 test works were carried out by reputable industry contractors (TOMC, SGS, etc.), to determine an appropriate

process route and recovery rates

– Works identified gravity and gravity tailings CIL as the favourable processing method

In 2011, Highland Gold submitted “TEO Kondicii" (local PFS) to GKZ, with C1+C2 mineral reserves estimated of ~1.7 mmoz (51.7

tonnes) contained gold at a grade of 2.49 g/t

In 2013, IMC Montan prepared a JORC gold resource estimate of ~3.5 mmoz (~109 tonnes) contained gold at a grade of 1.82 g/t

# Prospects Type Issued Valid Through

2709 АП Kassansky area Prospecting May

2013

March

2018(1)

4564 AP Unkurtash - Karatube area Exploration January

2016

January

2021(2)

3121 AE Unkurtash Mining July

2012

December

2017(3)

3122 AE(4) Karatube Mining July

2012

December

2017(3)

Licenses

8

Overview of Licenses There are four licenses related to the Unkurtash gold project:

– Kassansky area Prospecting license

– Unkurtash – Karatube Exploration license

– Unkurtash Mining license

– Karatube Mining license

The licenses are held by Highland Exploration Kyrgyzstan LLC

All of the license holder’s commitments regarding the schedule of

prospecting, exploration and drilling as well as the submission of

project documentation and the receipt of government approvals have

been fulfilled in due course

The licenses will be extended, with the exception of the Kassansky

area license, which may be transferred back to the government

Licenses Location

1. Upon expiry, file for license extension or transfer license back to the government. 2. Informal commitment of increasing C1+C2 reserves by ~60 tonnes (1.9 mmoz) of contained gold by December 2018 following the submission of “TEO Kondicii” (equivalent to Western PFS). 3. Two-year extension expected in 2017. Technical Project Report (equivalent to Western feasibility study) to be prepared until December 2019. 4. The license is to be extended to include the Sarytube deposit following the submission of “TEO Kondicii” in 2018.

1

2

3

1

2

3

Kassansky Area

4

4

Exploration

Overview

485 holes of different types were

drilled of total length of 102,473

m, with 109,173 core and RC

samples taken

3,070 m of trenches and cuts

completed at Sarytube with

2,139 linear chip samples taken

Underground development at

Unkurtash totaled 2,456 m and

4,912 channel samples were

taken

12 samples for metallurgical

testwork weighing ~106 tonnes

were taken

925 samples were taken for

studying physical and

mechanical properties

107,000 fire assays with AA

finish were conducted on

geological samples to identify Au

grades (fire assay)

The Andagul intrusive area to

the west of the Unkurtash

deposit is a high potential target

requiring further exploration

9

Drill Holes Location (Unkurtash)

Drill Holes Location (Sarytube, Karatube)

Cross Section (Unkurtash)(1)

Cross Section (Sarytube, Karatube)(1)

Note: Based on prospecting and exploration works carried out in 2003-2012. Data discrepancies between the SRK Scoping Study report and the Company’s data above are due to inclusion of works conducted

before 2003 into the Scoping Study.

1. Carried out by 20-60 x 80 m grid (RC), irregular diamond drilling grid on Unkurtash, Sarytube; 35-55 x 35-50x grid (diamond drilling) on Karatube, no RC drilling owing to difficult mountain-geological conditions.

Geological Setting & Mineralisation

10

Overview Geologic Map

Cross Section (Unkurtash)

80 m

NE SW

Unkurtash

The deposit is localised in the exo-contact zone of linear

Andagul intrusion of Late Carboniferous granodiorites intruding

folded formations of the Riphean crystalloid shales and granite

gneisses, as well as Paleozoic volcanogenic and terrigenous

carboniferous formations

The orebodies are represented by linear stockworks and

mineralised breccia areas

The predominant minerals are quartz, feldspars, sericite and

muscovite. The share of sulfides ranges between 1 and 5%

among which pyrite and arsenopyrite prevail, while secondary

minerals are represented by chalcopyrite, sphalerite and galena.

Gold is predominantly free. Native gold of 750-800 purity is

mostly associated with quartz, pyrite and arsenopyrite

The areas of commercial mineralization of Unkurtash, Sarytube

and Karatube have been delineated based on the results of

continuous trench, core and RC sampling and are characterized

by a considerable length (up to 1000 m), thickness (up to 250

m) and vertical span (up to 400 m)

Kyrgyzstan GKZ approved Unkurtash

C1+C2 reserves (only Unkurtash and

Karatube deposits) of ~51.7 tonnes (~1.7

mmoz) contained gold in 2011(1)

In 2013 IMC Montan prepared a JORC

gold resources estimate

~109 tonnes (~3.5 mmoz) contained

gold at a grade of 1.82 g/t, using a

0.85 g/t cut-off grade

In 2013, Oreall prepared an updated

resources estimate report for GKZ

accounting for ~110.4 tonnes (~3.5 mmoz)

contained gold (not submitted to GKZ for

approval)

Highland Gold plans to increase GKZ

approved reserves to ~110 tonnes (~3.5

mmoz) contained gold by December

2018(2)

The approval of these reserves will

trigger a signing bonus being paid to

the Government (US$60,000 per

incremental tonne approved or

~US$3.5 mm in total)

Mineral Resource Estimate

11

IMC, Mineral Resource Statement 2013 Unkurtash Ore Grade Contained Au Contained Au

(kt) (g/t Au) (kg) (koz)

Measured 16,996 1.77 30,007 965

Indicated 11,972 1.75 20,979 674

M&I Unkurtash 28,968 1.76 50,986 1,639

Inferred 9,615 1.78 17,143 551

Total Unkurtash 38,583 1.77 68,129 2,190

Sarytube Ore Grade Contained Au Contained Au

(kt) (g/t Au) (kg) (koz)

Measured --

Indicated 16,861 1.89 31,816 1,023

M&I Sarytube 16,861 1.89 31,816 1,023

Inferred 1,395 1.54 2,149 69

Total Sarytube 18,256 1.86 33,965 1,092

Karatube Ore Grade Contained Au Contained Au

(kt) (g/t Au) (kg) (koz)

Measured 2,260 2.32 5,317 171

Indicated 806 2.16 1,738 56

M&I Karatube 3,066 2.30 7,055 227

Inferred 127 0.98 124 4

Total Karatube 3,193 2.25 7,179 231

Grand Total Ore Grade Contained Au Contained Au

(kt) (g/t Au) (kg) (koz)

Measured 19,256 1.83 35,324 1,136

Indicated 29,639 1.84 54,533 1,753

M&I 48,895 1.84 89,857 2,889

Inferred 11,137 1.74 19,416 624

Grand Total 60,032 1.82 109,273 3,513

1. Balance and off-balance. 2. Informal commitment.

Geography & Climate

The surrounding geography is moderately mountainous

– Unkurtash and Sarytube-Karatube deposits are located

between 1,600 m and 2,500 m

The slope angles range from flat to low, causing no problems

for the construction of haul roads

12

Geography Climate

Continental climate, with considerable fluctuations in seasonal

temperatures

– In July-August the temperature rises to 30-35 degrees, in

winter months falls to a minus 8-20 degrees

– The mid-annual temperature is +4°С

Total precipitation of 500-700 mm a year. Snow cover appears

in the middle of November and remains till the middle of March

Depth of soils freezing in January / February usually does not

exceed 0.7-1.0 m

– No significant impact on mining operations

Mining

13

Pit optimisation studies demonstrate the viability of open pit mining

Mine plan envisages the development of two open pits with the

following average parameters:

– Width - 550 m, length - 1,300 m, depth - 280 m (Unkurtash)

– Width - 570 m, length - 1,200 m, depth - 150 m (Sarytube,

Karatube)

Optimal production rate determined at 4 mtpa applying bulk mining

method with all ore fed to the plant with an economic cut-off of 0.6 g/t

– 69% of LOM ore will come from Unkurtash, 26% from Sarytube

and 5% from Karatube

LOM stripping ratio of 4.5 t/t (~1.62 m3/t)

Mining activities will be carried out by conventional RoM ore

excavation, following drilling and blasting operations

12m3 hydraulic front-shovel excavators, operating jointly with 91-

tonne trucks are considered to be optimal main mining and stripping

equipment

Envisaged Mining Boundaries

Pit Shell – Sarytube, Karatube Pit Shell - Unkurtash

Overview

Processing & Infrastructure

14

Process Design Flow Sheet

Exisiting 110 kV grid line along Kassan river valley

Another significant power transmission installation is located at Taksomur (~150

km away) and comprises the 220/110/10 kV substation “Crystal”

Connection to the Crystal substation and the Kyrgyzstan national grid would be

the preferred option with estimated capital cost of US$36.1 mm

For water supply, planning to build a water intake from the Kassan-Say River at

the junction with Arykbulaksay stream

Good site access via extensive network of paved roads(1)

– Nearby village Tereksay serves as base camp

Infrastructure

1. Only the last 25 km are unpaved; asphalt road to be completed in 2 years.

Sufficient testwork has been performed to

evaluate a number of different processing

options

The presence of coarse free gold in the ore

justifies preliminary gravity concentration

Optimal processing plant has a capacity of 4

mtpa RoM feed and will produce dore metal

Design is based on single stage crushing and

a two stage milling circuit with gravity recovery

followed by a CIL circuit, carbon acid wash,

elution and regeneration, gold electrowinning

and smelting

Gravity followed by flotation concentrate may

add value at certain payability levels, however

commercial concentrate terms cannot be

forecast with sufficient levels of certainty

Initial capital cost for the 4 mtpa plant is

~US$121 mm with modelled processing costs

of US$9.56/t (including US$1.65/t tailing

operating costs)

Gold recovery rates from the process are

modelled at 81%

Multiple tailings facility options considered,

with dry stack proving most favourable

General Layout

15

Financial Model Output

16

Key Operating Metrics Commentary

Operating Profile

Valuation as of end of year of first capital spending

Model is in real terms; real pricing and mainly flat opex assumed

Operating and financial assumptions based on scoping study model completed by SRK in

January 2017

– Pricing base case in financial model is US$1,200/oz

Assumed royalty of 5%

Assumed income tax of 1%(1)

Initial capex assumed of US$322 mm(2) of which key items are processing plant, mining fleet,

infrastructure, tailings structure set up

– Significant follow-up investment in mining fleet scheduled for Year 9

Cash flows have been modelled on an unlevered basis and no asset-level debt is assumed

LOM Assumptions Unit

Waste Mined (mt) 306.7

Avg. Material Mined (mtpa) 17.0

Strip Ratio (waste t /ore t) 4.5

Ore Mined (mt) 68.8

Total Head Grade (g/t Au) 1.34

Contained Gold (koz) 2,954

Mine Life (years) 18

Avg. Recovery (%) 81%

Total Gold Production (koz) 2,388

Avg. Annual Gold Prod'n (kozpa) 133

--

124 138 141 132 121 113 125 125 145 138 138 121 118 134 162 204 180

28

$732 $675 $659

$704 $748

$800

$694 $691

$576 $601 $597 $665 $673

$615

$512 $408 $435 $427

$734 $702 $669 $706

$796 $819 $732

$931

$612

$737 $692 $701 $701

$656

$526

$419 $465 $440

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Year

Production (koz) TCC (US$/oz) AISC (US$/oz)

1. Based on US$1,200/oz gold price assumption; income tax is based on revenue, applicable rate is based on sliding scale linked to the gold price. 2. Includes contingencies of ~US$20 mm.

(1) (1)

Financial Model Output (Cont’d)

17

Key Financial Metrics NPV Sensitivities (US$ mm)(1)

Cash Flow Summary (US$ mm)(5,6)

$58 $72 $76

$65 $55 $45

$63 $64

$91 $82 $83 $65 $62

$78 $111

$162

$138

($115)

($4) ($2) ($0) ($6) ($2) ($5) ($33)

($6) ($21) ($14) ($5) ($4) ($6) ($2) ($2) ($6)

($218)

($58)

$67 $73 $64 $47

$41

$57

$29

$83 $60 $67 $58 $57 $71

$107

$157 $130

$21

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Year

EBITDA Capex FCF

1. All gold price levels are flat in the model for all years, “Consensus LT” uses flat long-term consensus price case of US$1,300/oz. See appendices for details of street consensus. 2. Includes contingencies of ~US$20 mm. 3. Exclusive of ~US$20 mm contingencies allocated to development capex. 4. Includes reclamation costs of ~US$20 mm. 5. US$1,200/oz gold price assumption. 6. FCF includes income taxes.

LOM Assumptions Unit

Mining Costs (US$/t mined) $1.10

Stripping Cost (US$/t waste) $1.10

Processing Costs (US$/t milled) $9.56

Avg. Annual G&A (US$/t milled) $2.5

Transport & Refining (US$/oz) $12

Royalties (US$/oz) $60

Local Tax (US$/oz) $24

Total Cash Cost (TCC) (US$/oz) $616

Sustaining Capex (US$/oz) $45

All-In-Sustaining Cost (AISC) (US$/oz) $662

Development Capex(2) (US$ mm) $322

Sustaining Capex (US$ mm) $109

Contingency(3) (US$ mm) $21

Closure Costs (US$ mm) $20

Total Capex(4) (US$ mm) $472

IRR(5) (%) 18.7%

Gold Price (US$/oz)

$1,100 $1,150 $1,200 $1,250 Consensus LT $1,350 $1,400 $1,450 $1,500

5.0% $299 $369 $440 $510 $580 $609 $678 $702 $769

5.5% $273 $341 $409 $476 $544 $571 $637 $660 $725

6.0% $249 $314 $379 $445 $510 $536 $600 $622 $684

6.5% $227 $289 $352 $415 $477 $503 $564 $585 $645

7.0% $205 $266 $326 $387 $447 $472 $531 $551 $609

7.5% $185 $244 $302 $360 $418 $442 $499 $519 $575

8.0% $167 $223 $279 $335 $392 $414 $469 $488 $542

9.0% $132 $185 $237 $290 $342 $363 $415 $433 $483

10.0% $102 $151 $200 $249 $298 $318 $366 $383 $430

Dis

co

un

t R

ate

(%

)

0 Appendices

Model Output

19

Years

UnitsLOM Total /

Average1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Mining and Processing

Ore Mined (mt) 68.8 -- 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 0.7 --

Head Grade (g/t Au) 1.3 -- 1.2 1.4 1.4 1.3 1.2 1.1 1.2 1.2 1.5 1.3 1.3 1.1 1.1 1.3 1.6 1.8 1.7 1.6 --

Recovery (%) 81% -- 82% 79% 79% 79% 80% 81% 80% 83% 76% 80% 80% 82% 82% 82% 79% 86% 82% 82% --

Production (koz Au) 2,388 -- 124 138 141 132 121 113 125 125 145 138 138 121 118 134 162 204 180 28 --

Financials

Revenue (US$ mm) $2,865 -- $149 $166 $169 $158 $146 $136 $150 $150 $174 $165 $165 $145 $142 $161 $194 $245 $216 $34 --

Operating Costs (US$ mm) ($1,472) -- ($91) ($93) ($93) ($93) ($91) ($90) ($87) ($86) ($84) ($83) ($82) ($80) ($80) ($82) ($83) ($83) ($79) ($12) --

TCC (US$/oz) $616 -- $732 $675 $659 $704 $748 $800 $694 $691 $576 $601 $597 $665 $673 $615 $512 $408 $435 $427 --

AISC (US$/oz) $662 -- $734 $702 $669 $706 $796 $819 $732 $931 $612 $737 $692 $701 $701 $656 $526 $419 $465 $440 --

EBITDA (US$ mm) $1,393 -- $58 $72 $76 $65 $55 $45 $63 $64 $91 $82 $83 $65 $62 $78 $111 $162 $138 $22 --

Income Tax (US$ mm) ($29) -- ($1) ($2) ($2) ($2) ($1) ($1) ($2) ($1) ($2) ($2) ($2) ($1) ($1) ($2) ($2) ($2) ($2) ($0) --

Total Capex (US$ mm) ($472) ($218) ($115) ($4) ($2) ($0) ($6) ($2) ($5) ($33) ($6) ($21) ($14) ($5) ($4) ($6) ($2) ($2) ($6) ($0) ($20)

Free Cash Flow (US$ mm) $893 ($218) ($58) $67 $73 $64 $47 $41 $57 $29 $83 $60 $67 $58 $57 $71 $107 $157 $130 $21 ($20)

NPV10% (US$ mm) $200

IRR (%) 18.7%

Overview of Kyrgyzstan & Local Gold Industry

Regulatory Environment

Overview

Kyrgyzstan is a Central Asian country; capital is Bishkek

Population of 6.4 mm, including Kyrgyz, Uzbek, Russian and other nationalities

– Kyrgyz and Russian are the official languages

– ~75% of the population is Muslim, ~20% Russian Orthodox and ~5% other

Kyrgyzstan is parliamentary republic (democracy)

Economy

2016 GDP of US$21.0 bn(1) (145th in world) at growth rate of 2.2% (128th in world)

– GDP composed of agriculture (~18%), industry (~26%) and services (~56%)

Ranks 75th out of 190 countries in World Bank’s Ease of Doing Business Index

~80% of the country’s energy is generated from hydroelectric plants

Moody’s rates Kyrgyzstan’s sovereign debt as B2, which corresponds to highly

speculative

20

Kyrgyzstan Overview Gold Industry Regulatory Environment

Source: the World Factbook, World Bank 1. 2016 US$. 2. Highland Gold has paid the signing bonus for the GKZ approved reserves of 2011; incremental signing bonus will become payable within 1 month after submission of updated report targeted for December 2018.

Mining of precious metals is subject to licensing in accordance with the procedure

established by the Subsoil Law dated September 17, 2012

The State is the beneficial owner of all mineral resources in Kyrgyzstan

The State Agency on Geology and Mineral Resources (GKZ) is responsible for the

implementation of the state policy on use of natural resources

The maximum terms are 5, 10 and 20 years for geological research, exploration

and production (mining) licenses respectively with the subsequent extension for

the expected operational life based on a feasibility study

Licenses are awarded through a tendering, auctions or direct negotiations (for

smaller deposits)

The National Bank of Kyrgyzstan has a priority right to buy all gold mined

Major gold mining taxes:

– Royalty: calculated as a percentage of the value of the minerals extracted (5%)

– Income Tax: in essence, another form of royalty with a tax rate ranging from 1

to 20% subject to the gold price

– Signing Bonus(2): the amount subject to the Mineral Reserves estimates

submitted to the GKZ for award of the license (US$60,000 per tonne of gold

reserves, balance and off-balance)

All mineral resources and reserves in Kyrgyzstan are formally classified according

to an established system and administered by the GKZ. The GKZ applies strict

control over the estimation and reporting of minerals reserves and utilizes a

prescribed protocol for their calculation

Mineral Reserves estimates are submitted to the GKZ for the approval in the form

of TEO (broadly, an equivalent to the western pre-feasibility study), followed by

TER, a document, which details the calculation of Mineral Reserves

YSYK-KOL

NARYN

OSH

JALAL-ABAD

TALAS CHUY

UZEBEKISTAN

KAZAKHSTAN

CHINA

Bishkek

Unkurtash

Dzhalal-Abad

Osh

Taskomur

Deposit Complexity

Group

Russian Resource / Reserve Category

Extent of Geological Exploration

A B C1 C2 P1 P2

Incre

ase o

f G

eolo

gic

al

Com

ple

xity

I Measured Measured Measured Indicated Inferred

II Measured Measured Indicated Inferred

III Measured Indicated Inferred

IV Indicated Indicated Inferred Not

Classified

Level of geological exploration

Explored

Reserves

Preliminarily

Estimated Reserves

Prognostic

Resources

A B C1 C P1 P2 P3

Pote

ntial

Econom

ically

Effective

Utilis

ation

Balance Reserves

(Economic)

Out-of-Balance Reserves

(Potentially Economic)

Reconciliation of GKZ & JORC Code Resource /

Reserve Classification

21

Overview GKZ Reporting System Kyrgyz GKZ system is mostly similar to Western classification

system

The level of detail of information required to support a submission

of mineral reserves to GKZ is more systematic and comprehensive

than is required under JORC code

GKZ utilises a similar set of geological, economical and technical

factors to the ones used in JORC code

Similarly to JORC Code, the GKZ standard requires demonstration

of the economic viability of a reserve base

In the GKZ system, mineral resources and reserves are recognised

as either Prognosticated Resources or Mineral Reserves

Prognosticated Resources, in contrast to Mineral Reserves, refer

to mineral resources that range from inferred to potential and

speculated resources and are not recognised as quantifiable in

Western terms

In September 2010, the Committee for Mineral Reserves Reporting

Standards (CRISCO), which includes representatives of GKZ,

approved a unified procedure for aligning Kyrgyz reserves

statements with the international system

CRIRSCO System – Reconciliation