Georgian Mining Corp (LON:GEO) ihas today announced that it has agreed a 2018 Work Programme with its partner Caucasian Mining Group (‘CMG’) to proceed with the development of the Kvemo Bolnisi gold-copper project, and to perform further regional exploration at the 860 sq km licence located on the Tethyan Belt in Georgia. In line with this, the Company’s 50% owned subsidiary, Georgian Copper & Gold JSC (‘GCG’), has entered into a Memorandum of Understanding (‘MoU’) with RMG Gold LLC, (‘RMG’), CMG’s sister production company, relating to the mining and processing of ore from the Kvemo Bolnisi East target (‘KBE’).
Highlights
· GEO and CMG will fund the development of GCG on a 50/50 basis
· 2018 Work Programme will initially focus on building a mining operation at KBE Gold Zone 2 (‘GZ2’)
· The KBE drill programme includes further expansion of the copper-gold sulphides resources which are currently open in all directions and further exploration in the wider KB area
· In-fill drilling for resource definition expected to commence in April 2018 and take approximately two months to complete
· Results will be incorporated into a final JORC compliant Resource estimate for the gold oxides at GZ2
· Additional bulk sampling, metallurgical testwork, site investigations, and environmental studies to be carried out at GZ2 in parallel with infill drilling
· Commencement of processes to obtain additional permits relating to GZ2 extraction, including environmental and construction permits
· MOU covers mining, hauling and processing of ore from KBE at one of RMG’s processing plants at the nearby Madneuli and Sakdrisi mines
· Final agreement subject to and conditional upon completion of above work programme and a positive feasibility study – both Parties have agreed to expedite this work as a priority
Georgian Mining Corp Managing Director Greg Kuenzel said, “The development of the gold oxides, and expansion of the copper-gold sulphides at KBE is a core focus for ourselves and our partner. Initial production from the gold oxides will serve as a starter operation and pave the way for the subsequent exploitation of the primary copper-gold sulphide ores at KBE. We also firmly believe that KB and the licence area as a whole have excellent potential for a major discovery of large-scale epithermal gold-copper mineralisation, and this is the focus of our wider exploration programme.
“With an agreed path towards development of the KBE operation, a strengthened relationship with our partner and further regional exploration planned across the Licence, 2018 promises to be a pivotal year as we look to build a portfolio of significant copper-gold assets in the prolific Tethyan Belt, and in the process generate value for our shareholders.”
Further Information
In July 2015 the Company entered into a Shareholder Agreement (‘the Agreement’) with CMG to govern the operation of GCG, a 50% joint venture between the parties focussed on the exploration and the development of an 860 sq km mining licence located in Georgia. The Agreement required GEO to contribute US$6 million towards the operating costs of GCG in return for its 50% stake while CMG transferred the licence into the JV in return for its 50% holding. Following completion of the initial two year work programme, GEO and CMG will now fund the development of GCG on a 50/50 basis.
While the negotiations in relation to the various agreements have been underway, GCG has focussed on expanding its knowledge of the extended licence area with a comprehensive soil sampling programme as well as metallurgical testing and desktop work on the JORC resource at KBE.
2018 Work Programme and Business Plan
Following the successful completion of the initial two year work programme and the satisfaction of the commitment of US$6 million, and in light of the progress made at Kvemo Bolnisi, CMG and GEO have now put in place a 2018 Work Programme and Budget. The focus will continue to be on the further development of KBE GZ2 gold oxides, initially with an in-fill drilling programme for resource definition and, in parallel, further testwork and environmental and feasibility studies to achieve the target of a starter mining operation at GZ2. The Work Programme also includes further testing and expansion of the JORC compliant copper-gold resources beneath the oxides at GZ2 and Copper Zone 1 (‘CZ1’), which contribute significant value to the future operation.
The 2018 Work Programme also includes further exploration in the wider KB area; at the other known epithermal gold-copper targets within the 860km2 licence area; and the continuation of regional geochemical and geophysical surveys to identify and expand upon other potential targets.
Memorandum of Understanding on Production at KBE
The MoU entered into between RMG and GCG (together the ‘Parties’) sets forth the current understanding and a framework for the detailed terms and conditions to be agreed relating to a Mining and Processing Agreement (‘MPA’). The MoU and the MPA relate to KBE and both the gold oxides and copper-sulphides (the ‘Ore’). RMG is the owner and operator of the processing plants at the Madneuli and Sakdrisi mines.
The Parties have agreed that the Ore from KBE will be mined and then hauled and processed at one of RMG’s processing plants. The initial phase, mining and processing of the gold oxide ore from GZ2, is subject to and conditional upon completing:
· Additional in-fill drilling at GZ2, and a final Resource estimate compliant with the JORC (2012) Mineral Resource Reporting Code;
· Bulk sampling and additional metallurgical testwork;
· A positive Feasibility Study (including an agreed mine plan and design) into the mining and processing of the Ore;
· Obtaining additional permits relating to GZ2 extraction, such as an environmental permit, construction permits, etc (note the License already includes permission for mining); and
· Signing of the final MPA and any associated additional contracts between the Parties to give effect to mining and processing the Ore.
