Interception of near surface mineralisation and preliminary metallurgical results

KZDD-014 intercepted two closely spaced, broad intervals containing high-grade veins and wide zones of moderate grade crackle breccia.

KZDD-014 intercepted two closely spaced, broad intervals containing high grade veins and wide zones of moderate grade crackle breccia:

• 13 metres at 5.8% zinc, 2.8% lead, 46g/t silver and 0.2g/t gold from 60 metres, including
   - 4 metres at 13.3% zinc, 6.2% lead, 110g/t silver and 0.3g/t gold
• 33 metres at 2.1% zinc, 3.1% lead, 45g/t silver, 0.2g/t gold from 80 metres, including
   - 6.4 metres at 4.6% zinc, 13.0% lead, 190g/t silver and 0.3g/t gold.

KZDD-013 was collared in mineralisation and intercepted a broad zone of sulphide mineralisation from surface:

• 26 metres at 3.5% zinc, 1.5% lead, 19g/t silver and 0.2g/t gold from surface, including
  - 7 meters at 8.6% zinc, 3.2% lead, 42g/t silver and 0.2g/t gold

Preliminary metallurgical testing demonstrates excellent recoveries of zinc, lead and silver by flotation and resultant saleable-grade lead-silver and zinc concentrates. Highlights include:

• Zinc recoveries of between 81.1 to 92.7% and concentrate grades of 58.9 to 59.2% zinc
• Lead recoveries of between 82.7 to 89.1% and concentrate grades of 60.8 to 70.6% lead
• Silver recoveries of between 72.0 to 75.3% and concentrate grades of 410 to 569g/t silver
• Very low deleterious elements and impurities

KIZEVAK DRILLING RESULTS

The first holes reported herein are a part of a 10,000 metre drilling campaign currently underway at Kizevak, and have further demonstrated that high grade, sulphide mineralisation occurs from surface, and supports previous observations that mineralisation occurs in broader intervals than historically recognised. Mineralisation remains open down dip and along strike and drilling will now focus on the exploration of these areas.

Drillhole KZDD-014 was drilled between holes KZDD-009 and KZDD-011 (as previously reported by Tethyan Resource Corp) demonstrating thickening of the mineralised zone and excellent continuity of zinc-silver-lead mineralisation from surface to 100 metres below surface, that remains open down dip (Figure 2). Within two broad intervals of mineralisation, drillhole KZDD-014 also intercepted zones of high-grade silver mineralisation including 6.4 metres at 190g/t silver, 4.6% zinc and 13.0% lead from 105 metres, and 4 metres at 110g/t silver, 13.3% zinc, and 6.2% lead from 60 metres.

Drillhole KZDD-013 was collared directly into mineralisation at surface and returned 26 metres at 3.5% zinc, 1.5% lead, 19g/t silver and 0.2g/t gold approximately 150 metres up dip of drillhole KZDD-002 (Figure 3) which returned 34.5 metres at 4.3% zinc, 2.3% lead, 48g/t silver and 0.4g/t gold (as previously announced by Tethyan Resource Corp).

Figure 1: Plan view map of the Kizevak project showing historic and Tethyan exploration drilling and adits, including highlighted results from recent drilling. The inactive Kizevak open pit is visible to the northwest, and mineralisation extending to the southeast and northwest is entirely open for expansion through further drilling.

Figure 2: Cross-section (A’-A) through the Kizevak deposit (KZDD-013)

Figure 3: Cross-section (B’-B) through the Kizevak deposit (KZDD-014)

PRELIMINARY METALLURGICAL TEST RESULTS

Metallurgical test work was conducted on two composite samples collected from quarter cut PQ and HQ diameter drill core from select intervals in core holes KSEDD-001, -002 and -003. Samples to form Composite 01 (39kg) were collected from massive sulphide type mineralisation, and samples to form Composite 02 (28kg) were collected from crackle breccia type mineralisation hosted in illite-pyrite altered andesite.

Samples were submitted to the Mining and Metallurgy Institute, Bor (MMI), Serbia for sample preparation and preliminary flotation test work. MMI also conducted optical mineralogy and X-Ray Diffraction analysis to determine the mineralogy, mineral associations and grain size distribution of each composite. No work was conducted regarding comminution or optimisation.

Mineralogical analysis showed that zinc and lead are related to sphalerite and galena respectively, and native silver is bound with galena. Gangue minerals are primarily quartz, dolomite (carbonate mineral), pyrite and illite with trace chalcopyrite, magnetite and rutile. Galena and sphalerite typically occur as liberated minerals with some intergrowths of galena-sphalerite-pyrite and sphalerite-chalcopyrite associated with coarse grained minerals.

Samples were subjected to bench scale flotation test work including three cleaning stages of the lead rougher concentrate. Final results were obtained using grind sizes of 75% passing 75 micron for Composite 01 and 85% passing 75 micron for Composite 02 (Table 1), using reagent consumptions of between 300 to 800g/t NaCN, and 900 to 2000g/t ZnSO4. The degree of oxidation of the lead and zinc minerals is very low (<0.1%) so there are unlikely to be issues with recovery loss to tailings due to the presence of oxide lead and zinc minerals.

Analysis of the zinc and lead concentrates for deleterious elements show that no significant impurities report to either of the concentrates and that iron, antimony, arsenic, bismuth, cadmium, copper and mercury are generally below concentrations that would typically incur a penalty charge (Table 2).

Follow up metallurgical test work will be required in the future to include comminution tests, locked cycle tests, and optimisation work to reduce reagent consumption and further depress deleterious elements. This will be considered once additional drilling has been completed.