The uranium deposit/prospects of the Kyzyl Ompul Project are located in the Kyrgyz Republic, approximately 125 kilometers east of the capital of Bishkek. More specifically, the Kyzyl Ompul Project is located in the Kochkor region of the Naryn Oblast and the Issyk-Kul region of the Issyk-Kul Oblast. The Kyzyl Ompul Project is 100% owned and operated by UrAsia in Kyrgyzstan LLC (“UrAsia”) in which the Company owns a 70% interest and consists of one exploration license with an area of 42,379 hectares. The license is valid until December 31, 2020 and permits exploration for uranium.
A National Instrument 43-101 Technical Report (“NI 43-101”) on the Kyzyl Ompul License, dated April 14, 2014, was prepared by Stephen Hyland and Sam Ulrich of Ravensgate. The mineral resource described in the Kyzyl Ompul Technical Report was independently estimated by Ravensgate. In accordance with Section 7.1(2) of NI 43-101, Ravensgate reviewed the classification criteria for JORC (2012) and NI 43-101 and is of the opinion that in this instance there are no material differences and that the Kok Moinok Resource Estimate meets the criteria to be classified as an NI 43-101 Inferred Mineral Resource.
The resource estimate utilized a block model constructed using 10m by 10m by 2.5m – (east(X), north(Y), elevation(Z)). The method of grade interpolation used for U3O8 was the Ordinary Kriging technique that used calculation parameters based upon localized geostatistical and associated variography studies. The Kok Moinok Main Zone is approximately 700m along strike (east-west) by 600m perpendicular to strike (north-south) by 10-30m in depth (thick).
Kok Moinok – Mineral Resource Estimates (using Lower Cut-Off of 100ppm U3O8)
Effective date: December 2013
|Kok Monoik||Cut-off||Measured and Indicated||Inferred||Total Resources||Contained|
|Tons||U3O8 ppm||Tons||U3O8 ppm||Tons||U3O8 ppm||Pounds
|Current Ravensgate Model (December 2014)||100ppm (U3O8)||–||–||15.13||225.2||15.13||225.2||7.51|
|Note: A conversion factor of 2.20462 was utilized to derive contained U3O8 in pounds.|
The Kyzyl Ompul Project has been explored since the 1950s for uranium, with most historic exploration occurring during the 1950s and 1960s. This historic exploration identified a number of hydrothermal and placer uranium prospects within the Kyzyl Ompul Project. In total, five hydrothermal uranium prospects and five placer uranium prospects were identified.
The Kok Moinok deposit, the most advanced of the hydrothermal deposits, was discovered in 1953. From 1953 to 1957, 144 holes were drilled on a grid of 50m x 50m. Soviet classified C1 and C2 reserves were calculated using the information obtained from these drill holes. Additional drilling was completed from 1958 to 1969 on a 200m x 200m grid attempting to identify further extensions of the uranium prospects.
Geological Setting and Mineralization
The Kyzyl Ompul Project area is located between two regional strike-slip faults, which are the Central Terskei and the South Chonkemin Faults. Shear fractures and joints associated with these strike-slip faults provided conduits for the melts of the Dyke Complex and structurally controlled the distribution of uranium mineralization in the Kyzyl Ompul Project area. Uranium mineralization is associated with both hydrothermal and placer styles of mineralization.
The Tash Bulak Placer covers an area of 5.8km2 and ranges in thickness from 10m to 20m at the edges to 180m in the centre of the deposit. The Backe Placer covers an area of 5km2. The mineralized horizon overlies sandy clays and ranges in thickness from 5m to 10m in the north to 150m to 200m in the south.
The Kok Moinok deposit is a hydrothermal uranium deposit style occurrence that was discovered in 1953 by drilling after following up water sampling results from groundwater springs with anomalous uranium concentrations. The main uranium mineralization minerals are uraninite and pitchblende.
Exploration and Drilling
Exploration has been undertaken on the Kyzyl Ompul Project by UrAsia. The aim of the exploration program was to confirm hydrothermal style uranium mineralization and placer style uranium mineralization by targeting previously identified uranium deposits and prospects. This aim was also to convert the historical Kok Moinok resource estimate to one estimated in accordance with the Australasian Joint Ore Reserves Committee (“JORC”) code and NI 43-101.
The exploration program for the period from 2005 – 2008 included traverses, geological mapping (80km2), trenching (4,300m3), soil gas radon emanation surveys (60 readings) and geophysical surveys, and the collection of 84 hydrogeological samples for radon assays, 7,458 channel samples, 455 rock chip samples and 28 crushed samples.
In 2012, a more extensive exploration program commenced. In 2012 and 2013, UrAsia completed nine drill holes for approximately 2,275m at the Sai Bezvodniy hydrothermal prospect, 40 drill holes at the Tash Bulak placer prospect, 31 drill holes at the Backe placer prospect and 9 drill holes at the Tunduk placer prospect. UrAsia also completed 17 drill holes for approximately 4,345m at the Kok Moinok deposit. The 2012 and 2013 drilling program was designed to twin a selection of historic drill holes to confirm mineralized intervals and the uranium grades in those mineralized intervals as well as confirm the geological and mineralogical understanding of the Kyzyl Ompul Project.
Historically, the Tash Bulak and Backe placer prospects have had the most exploration conducted upon them of all the prospects, having had trenching, exploration pitting, drilling and geophysical surveys completed.
At Kok Moinok, historical exploration was conducted in two phases, the first from 1953-1957 and the second from 1966-1968. Exploration activities included the drilling of ~200 drill holes, the sinking of a shaft (~210m) and the development of two underground adits, trenching and exploration pits. Drill holes were drilled at 50m line spacings at 50m intervals as part of the 1953-1957 exploration program. The uranium mineralization is distributed into three separate mineralized zones.
Historic Resource Estimates
Important note for this section: A qualified person (“QP”) has not done sufficient work to classify these historical estimates as current mineral resources or mineral reserves in accordance with NI 43-101 and the company is not treating the historical estimate as current mineral resources or mineral reserves. This methodology provides no categorization of uranium resources and is not compliant with NI 43-101.
Resource/reserve estimates were prepared for the Tash Bulak and Backe placer prospects in accordance with the Russian classification system (historical estimate; not in accordance with the JORC Code or NI 43-101). Ravensgate presented the USSR Tash Bulak, Backe and combined Ottuk and Tunduk placer mineral resource/reserve estimates based on the 1964-1966 exploration results to a maximum depth of 150m shown below after Luhtin, et al. 1967.
Summary of the 1966 Placer Mineral Resource Estimates
|Historical Resource Estimate||Category||U Tonnes||U3O8 Mlbs|
|Tash Bulak 1966||C1||400||1.04|
|Ottuk & Tunduk||P2||2,000||5.20|
|Total Placers 1966||Total||12,800||33.28|
|Notes: Converting U to U3O8 was done by multiplying by 1.1792. Converting tonnes to pounds was done on the basis of 2204.6lbs per metric tonne.|
The 1966 Tash Bulak and Backe mineral resource/reserve estimates were re-represented by Verholantsev, et al. 2009 to show volumes, tonnes and grades of the Tash Bulak and Backe placers. Notes: Converting U to U3O8 was done by multiplying by 1.1792. Converting tonnes to pounds was done on the basis of 2204.6lbs per metric tonne.
1966 Russian Mineral Resources Estimate for the Tash Bulak Placer (after Verholantsev, et al. 2009)
|Resource/Reserve Category||Rock Mass M m3||U g/m3||U Tonnes|
|C1 + C2||122.3||14.1||1,722|
1966 Russian Mineral Resources Estimate for the Backe Placer (after Verholantsev, et al. 2009)
|Resource/Reserve Category||Rock Mass M m3||U g/m3||U Tonnes|
|C1 + C2||133.29||10.2||1,357.5|
This Soviet Era estimate is typical of extensive geological expeditions undertaken for uranium exploration by the USSR in the region. Many other regional uranium deposits were discovered and explored during this time period such as those in nearby Kazakhstan.
In 2003, UrAsia re-estimated the Tash Bulak, Backe, Ottuk and Tunduk placers and estimated for the first time the Uzun-Sai placer (historical estimate; not in accordance with the JORC Code or NI 43-101). These updated and new estimates included new exploration data, used tighter constraints and only included the top 50m of placer material for the higher confidence resource category (see table below). A higher grade layer of uranium mineralization in the top 6m was identified and was separately estimated within the top 50m subset. The 2003 estimate was done by a grade contour method using the following parameters:
- Uranium lower cut-off grade to define mineralized intervals 5g/m3 U;
- Maximum thickness of a barren layer included in the mineralized contour of 10m;
- Minimum thickness of mineralized interval of 10m, except for the near surface subset; and
- Minimum uranium grade of a mineralized contour block of 10g/m3
Ravensgate produced a summary table of the 2003 placer mineral estimates (below). A QP has not done sufficient work to classify these historical estimates as current mineral resources or mineral reserves in accordance with NI 43-101 and the company is not treating the historical estimate as current mineral resources or mineral reserves. This methodology provides no categorization of uranium resources and is not compliant with NI 43-101.
Summary of the 2003 Placer Mineral Resource Estimates
|Resource||Category||Estimation Depth m||U g/m3||U Tonnes||U3O8 Mlbs|
|Tash Bulak & Backe 2003||C1 + C2||30-50||13.5||2,255||5.86|
|Total Tash Bulak & Backe 2003||C1 + C2 + P1||30-150||7,101||18.46|
|Ottuk, Tunduk & Uzun Sai 2003||P2||80-100||11.0||2,200||5.72|
|Total Placers 2003||C1 + C2 + P1 + P2||30-150||12.4||9,301||24.18|
|Notes: Converting U to U3O8 was done by multiplying by 1.1792. Converting tonnes to pounds was done on the basis of 2204.6lbs per metric tonne. The table was compiled to an appropriate level of precision and minor rounding errors may occur.|
Mineral resource estimates were also completed for Kok Moinok in accordance with the Russian classification system (historical estimate; not in accordance with the JORC Code or NI 43-101) in 1957 and 1968. Ravensgate tabulated (below) the estimates and converted grades to ppm and combined resource categories to enable a comparison with the Ravensgate mineral resource estimate. A QP has not done sufficient work to classify these historical estimates as current mineral resources or mineral reserves in accordance with NI 43-101 and the company is not treating the historical estimate as current mineral resources or mineral reserves. This methodology provides no categorization of uranium resources and is not compliant with NI 43-101.
1957 and 1968 Russian Mineral Resource and Reserve Estimates for the Kok Moinok
|Tonnes K||U3O8 Ppm||U3O8 Mlbs||Tonnes K||U3O8 Ppm||U3O8 Mlbs|
|1957 C1 + C2||2,475||706||3.83||5,594||206||2.49|
|1968 C2 growth||2,860||590||3.72||16,221||224||8.01|
|Total C1 + C2||5,335||642||7.55||21,812||214||10.50|
|Notes: The table has been modified from its original format to show the U3O8 grade and number of contained pounds in millions U3O8. Converting U to U3O8 was done by multiplying by 1.1792. Converting tonnes to pounds was done on the basis of 2204.6lbs per metric tonne.|
The terms ‘Economic’ and ‘Subeconomic’ were how the Kok Moinok resource was originally classified and does not reflect today’s economic potential of the prospect. As such, these are term used by the original authors and do not indicate economic viability which has not been evaluated for any of the deposit to date. These terms are not in accordance with NI 43-101. The 1957 and 1968 estimates used the following estimation parameters:
- Cut-off grade of 0.03% U to define ‘Economic’ mineral resources;
- Minimum block grade of 0.05% U;
- Minimum extractive thickness of mineralization of 0.7m;
- Maximum thickness of non mineralized or ‘Subeconomic’ mineralization (internal waste) of 0.5m;
- A mineralization coefficient was applied to internal waste thicknesses >0.5m. The minimum mineralization coefficient for a block is 0.7 (note the actual detail as to how this coefficient was defined is not known); and
- A lower cut-off grade of 0.01% U to define ‘Subeconomic’ mineral resources.
The 1957 (April 1) estimated resources as restated by Ravensgate for comparison purposes; C1 + C2 categories (Combined) were reported as 8,066Kt @ 359ppm U3O8 for 6.32Mlbs. Drilling was carried out on approximately 50m spacings. This is the best direct comparison in areal extent to the Ravensgate NI 43-101 Resource (December 2013, Section 14) whereas the Soviet Era 1968 non JORC/NI 43-101 mineral resource estimate was in addition to the 1957 resource and doesn’t cover the same areal extent. The 1968 estimated resources, the C2 Growth (Combined by Ravensgate for comparison purposes) was based on approximately 200m spaced drill holes, this was restated by Ravensgate as 19,081Kt @ 279ppm U3O8 for 11.73Mlbs. The total 1957 + 1968 estimated resources were 27,147Kt @ 303ppm U3O8 for 18.05Mlbs. The Qualified Person’s opinion is that the data for the C2 1968 expansion is un-verifiable based on the information provided.
In summary the total historic resource estimate for the entire Kyzyl Ompul license area ranges between 42.23-51.33 million lbs U3O8 as previously identified between the placer and hydrothermal deposits. The April 2014 NI 43-101 technical report by Ravensgate converted 7.5Mlbs U3O8 to a NI 43-101 compliant resource confirming a portion of the historical estimates at Kok Moinok inclusive of recent drilling data completed by UrAsia in 2012-2013. Further confirmation of historical estimates has not been undertaken yet to date and it is expected additional future drilling programs will be required to accomplish potential conversion. It should be further noted that the historical estimate being treated as current mineral resources or mineral resources and no QP has done sufficient work to classify them as such.
In 2016, the Company conducted desktop studies for the Kyzyl Ompul Project, in order to conserve the Company’s financial resources. In 2017, up to the execution of the earn-in agreement(“Earn-In Agreement”) with Mining Investment Company Alliance (“Alliance”), the Company continued these desktop studies and conducted minimum exploration activities as required under the exploration license. Subsequent to execution of the Earn-In Agreement, Alliance is now obligated to conduct minimum exploration activities on the Kyzyl Ompul Project.