RTG to Acquire 90% Stake IN the High Grade Chanach GOLD Project IN the Kyrgyz Republic Announcement to the Australian Securities Exchange and Toronto Stock Exchange
RTG TO ACQUIRE 90% STAKE IN THE HIGH GRADE CHANACH GOLD PROJECT
IN THE KYRGYZ REPUBLIC
ANNOUNCEMENT TO THE AUSTRALIAN SECURITIES EXCHANGE
AND TORONTO STOCK EXCHANGE
5 SEPTEMBER 2019
RTG Mining Inc. ( ASX:RTG, TSX:RTG , OTCQB:RTGGF) (“RTG” or “the Company”) is
pleased to announce that it has entered into a Sale and Purchase Agreement (“SPA”) with
White Cliff Minerals Limited (“WCN”) to acquire its majority (90%) stake in the high grade
Chanach Gold and Copper Project (“Chanach Project”) in the Kyrgyz Republic (“Transaction”).
Highlights of the Transaction include:
• Strategic addition to RTG’s portfolio with an existing high grade JORC compliant
Inferred Mineral Resource of 2.95 Mt @ 5.11 g/t Au for 484,000 ounces of Au and
17.23 Mt @ 0.37% Cu for 64,000t of Cu1 (141.1 Mlbs Cu) from only limited drilling
to date.
• Acquisition cost of US$3.65 / ounce of Gold and US$0.0063 / pound of Copper.
• Consideration of US$2.15 million cash and US$0.5m in RTG shares (escrowed for
12 months).
• Transaction subject to WCN shareholder approval with a target completion date of
mid to late October 2019.
• Unanimous WCN board recommendation and shareholder support statements
from 20% of WCN’s shareholders to vote in favour of the Transaction (both in the
absence of a superior proposal).
• Experienced technical expert, advising RTG, believes the exploration potential at
the Chanach Project is excellent.
The Chanach Project is located in the prolific southern Tien Shan metallogenic belt, which
runs more than 1,500 km from Uzbekistan through to China and hosts one of the world’s
largest open pit gold mines, Murantau (175 Moz2) with production believed to be in the order
of 2 million ounces per annum 2. RTG have appointed Mr. Greg Hall of Phoenix Gold
International and former Chief Geologist for Placer Dome, as a consultant given his knowledge
of the Chanach Project and other projects in similar geological settings.
1 The Mineral Resource estimates were originally compiled and announced by WCN on 30 May 2018, in accordance with the
JORC Code, 2012 and was last disclosed in WCN’s March, 2019 quarterly report on 30 April, 2019.
https://www.asx.com.au/asxpdf/20190430/pdf/444pg6f8t5ln5t.pdf
2 Wilde, A. and Gilbert, D. 2000. Setting of the giant Muruntau Gold Deposit: Implications for ore genesis. In: (Ed.) Gordon Lister,
Geological research for the exploration industry, Journal of the Virtual Explorer, Electronic Edition, ISSN 1441 -8142, volume 1,
paper 1, doi:10.3809/jvirtex.2000.00004
The Chanach Project has extensive outcropping mineralised geology with high grade gold
veins from surface and significant gold and copper Inferred Mineral Resources. With only 5%
of the identified strike length tested to date, RTG believes the Chanach Project has substantial
upside. The Chanach Project area is considered to be highly prospective for world class
epithermal gold, porphyry copper-gold and polymetallic skarn deposits with numerous targets
already identified.
To date the limited exploration activities have defined an Inferred Mineral Resource of 2.95 Mt
@ 5.11 g/t Au for 484,000 ounces of Au and 17.23 Mt @ 0.37% Cu for 64,000t of Cu1.
Figure 1: Chanach Project Location
DEAL TERMS
RTG has agreed to acquire a 90% interest in the high grade Chanach Project in the Kyrgyz
Republic (License AP590) through the acquisition of 100% of PB Partners (Malaysia) Pte Ltd,
a wholly owned subsidiary of WCN . The Transaction is subject to the approval of WCN
shareholders under Chapter 11.2 of the ASX Listing Rules. The purchase price consists of: (i)
cash consideration of US$2.15 million: and (ii) US$0.5 million in new RTG shares to be issued
at a price equal to the 5 -day VWAP of the RTG shares on the ASX for the 5 trading days
leading up to completion of the Transaction.
The purchase price, together with the planned initial drill program have been fully funded by a
new unsecured loan of US$2.5 million, obtained by RTG from an external financier, on arm’s
length terms and conditions.
This represents a highly attractive and value accretive deal for RTG with an acquisition cost
of only US$3.65 per gold ounce and US$0.0063 per pound copper (metal contained in
Inferred Mineral Resources).
On completion, RTG will be manager and operator of the Chanach Project Joint Venture
company (Chanach LLC) and will sole ly fund operating expenditure s until completion of a
Bankable Feasibility Study at which time, funding will then be contributed on a pro-rata basis
in accordance with Chanach Project interests.
The 10% joint venture partner is represented by two local brothers, both geologists, who have
a strong understanding of the region, orebodies and new targets for extension, with good local
support and strong relationships with the mining authorities. They have been very supportive
of the RTG acquisition, waiving their pre-emptive rights.
WCN has provided customary exclusivity undertakings to RTG in connection with the
Transaction, including no shop and no talk restrictions, and provided RTG with a notification
right in respect of any competing proposal.
In addition to WCN shareholder approval, the Transaction and the transactions contemplated
in the SPA are subject to any applicable regulatory approvals and no material adverse
change/breach of warranties.
COUNTRY BACKGROUND
The Kyrgyz Republic is a stable, democratic and mining-friendly jurisdiction in Central Asia
bordering China and Kazakhstan. With four new mines approved since 2014 and with another
mine under construction by Cha arat Gold Holding s Limited (AIM:CGH “Chaarat”), there is
strong government support for new mining projects and a growing awareness and recognition
of both; the significant economic contribution made by the country’s biggest industry and the
potential for this contribution to grow rapidly, with the gold industry already contributing half of
the country’s industrial output and 60% of export earnings.
Chaarat has two new projects planned, with the Tulkubash Mine under construction (target
production of 94,000 to 110,000 ounces per annum 2) to be followed by the Kyzyltash mine
which has measured and indicated resources of 4.5 million ounces @ an average gra de of
3.7 g/t2, with target production in the order of 200,000 to 300,000 ounces per annum3.
The Kumtor mine operated by TSX listed Centerra Gold Inc. ( TSX:CG “Centerra”) has
produced over 12 million ounces during its 22 years of uninterrupted profitable production
since inception in 1997, with current production in excess of 500,000 ounces per annum 4. It
has recently finalised negotiations with the Kyrgyz Government which has resulted in a
significant re-rating of the company on the Toronto Stock Exchange, trading now with a market
capitalisation of approximately C$3.5 billion. In addition to Centerra, there are other major
players including Zijin Mining Group Co. Ltd who are operating, exploring and expanding their
investment in the country.
The Kyrgyz Republic has a simple revenue-based tax system, strong rule of law , secure
licensing processes and does not have local project ownership requirements. Mining
infrastructure is well established, with a readily available and skilled mining labour force.
3 Chaarat (AIM:CGH) investor presentation June 2019 www.chaarat.com/wp-content/uploads/2019/06/Chaarat-Investor-
presentation-June-2019.pdf
4 Centerra (TSX:CG) Kumtor Production and Reserves www.centerragold.com/operations/kumtor/production-and-reserves
GEOLOGICAL SETTING
The Chanach Project (prospecting license AP590) is located in the North Western part of the
Kyrgyz Republic in the Jalal -Abad province and covers an area of 57.25 km 2 of the Chatkal
Ranges inside the south-western Tien Shan metallogenic belt.
Regionally, the world class Tien Shan system spans from Uzbekistan in the west across the
Kyrgyz Republic and into Mongolia and China and is one the best-endowed gold provinces in
the world. It hosts multiple styles of minerali sation due to its complex tectonic history. The
juxtaposition of multiple crustal sections within the Tien Shan, including volcanic arcs,
continental margins, accretionary and fore -arc complexes, and continental collisional zones,
has resulted in a complex mix of overlapping mineralised systems which developed in different
crustal environments. These mineralising systems are prolific producers of base and precious
metals. The geology of the south-western Tien Shan is generally regarded as being highly
fertile ground for sedimentary hosted gold deposits, copper -gold porphyry deposits and their
associated epithermal and polymetallic skarn deposits.
The underexplored system plays host to some significant discoveries and operations including
very large sediment hosted gold deposits such as Kumtor in Kyrgyzstan (19 million ounces5)
and Muruntau in Uzbekistan (175 million ounces6), which is recognised as one of the world’s
largest gold deposits. It also hosts large porphyry copper deposits like Almakyr in Uzbekistan.
Major deposits located within 100km of Chanach contain inventories of up to 93 million ounces
of gold and 25 million tonnes of copper (Figure 1 and Figure 2).
Figure 2: The Gold Endowment of the Tien Shan Metallogenic Belt7
5 Centerra (TSX:CG) Kumtor Production and Reserves www.centerragold.com/operations/kumtor/production-and-reserves
6 Wilde, A. and Gilbert, D. 2000. Setting of the giant Muruntau Gold Deposit: Implications for ore genesis. In: (Ed.) Gordon
Lister, Geological research for the exploration industry, Journal of the Virtual Explorer, Electronic Edition, ISSN 1441 -8142,
volume 1, paper 1, doi:10.3809/jvirtex.2000.00004
7 Indicative gold endowment shown as aggregation of historical production and mineral inventory
DISCOVERY & DRILL RESULTS
The Chanach Project area was discovered around 1963 with geological mapping and surface
sampling intermittently up to 2010. The geology of the Chanach Project area is prospective
for epithermal gold deposits, porphyry copper deposits and polymetallic skarn deposits. The
project area h as outcropping mineralised geology seen as multiple high grade outcropping
epithermal veins and skarns, which have indicated several porphyry targets.
From 2010 more modern exploration has taken place with approximately US$8.0 million spent
by WCN on exploration, of which US$5.7 million is attributable to the Chanach Gold Project ,
with the balance spent on Chanach Copper Project exploration and resource development.
Targeting has been enhanced by various structural and geophysical surveys including a
structural geology study completed by Orefind in 2017, a ground magnetics study by Southern
Geoscience in 2016 and a geophysical study completed by Baoding Geological Eng ineering
Institute in 2011.
The Chanach Project is a target-rich environment with 2019 planned exploration focussing on
multiple gold targets designed to extend the current Inferred Mineral Resource.
Total exploration drilling includes 142 reverse cir culation and diamond holes totalling
approximately 19,500 metres , of which 111 drill holes (87 RC and 24 diamond) for a total
length of 14.1km can be attributed to the Chanach Gold Project and the balance to copper
exploration and the development of the Chanach Copper Project.
To date, the Chanach Project has generated an Inferred Gold Mineral Resource of 484,000
ounces Au at a grade of 5.1 g/t at an extremely cost -effective rate of US$11.80 / ounce and
this metric is expected to improve with the ongoing enhancement and refinement of geological
understanding and targeting.
Exploration drilling at the Chanach Gold Project commenced in 2014 and to date there have
been spectacular intersections of gold mineralisation spanning across the project area , as
previously reported by WCN.
Significant intervals from the Quartz Gold Zone include:
• UGZ-15-35 - 8m @ 57.08 g/t Au from 75m including 1m @ 85.53 g/t Au from 76m,
1m @ 89.34 g/t Au from 80m followed by 1m @ 73.28 g/t Au from 81m.
• ERC16-035 - 7m @ 23.52 g/t Au from 45m including 1m @ 149.41 g/t Au from 45m.
• ERC16-036 - 12m @ 15.65 g/t Au including 1m @ 63.24 g/t Au from 82m followed by
1m @ 95.12 g/t Au from 83m.
Significant intervals from the Sandstone Gold Zone include:
• UGZ-15-33 - 4m @ 99.15 g/t Au from 65m including 1m @ 348.48 g/t Au from 67m.
• UGZ-15-32A - 3m @ 41.45 g/t Au including 1m @ 71.58 g/t Au from 53m.
Significant intervals from the Lower & Upper Gold Zone include:
• LGZ-15-29A - 6m @ 38.40 g/t Au from 26m with 4m @ 56.46 g/t Au from 26m including
1m @ 49.79 g/t Au from 26m, 1m @ 23.55 g/t Au from 27m, 1m @ 95.22 g/t Au from
28m and 1m @ 57.29 g/t Au from 29m.
• CH14-18 - 4m @ 23.83 g/t Au from 85m including 1m @ 30.19 g/t Au from 86m.
Readers are advised that these assay intervals have not been top -cut prior to reporting and
true mineralisation widths are not re ported. Mineralisation is expected to be sub -vertical.
Intervals selected have used a lower cut -off of 0.50 g/t Au. Locations of significant drill
intercepts with respect to the mapped mineralised zones are shown in Figure 3.
Figure 3: Locations of Significant Drill Intercepts at Chanach Gold Project
RESOURCE GROWTH POTENTIAL
The current gold resources at Chanach are open at depth and along strike. RTG Consultant
and Chartered Professional Geologist, Greg Hall of Phoenix Gold International and former
Chief Geologist for Placer Dome, has visited the Chanach P roject area and notes: “the
extensive red hematite staining in the project area is an indication of the size of the system,
which along with other geological factors and anomalies would indicate an exploration target
materially greater than the current Inferred Gold Mineral Resource with further upside in
several porphyry and skarn targets that remain untested”
The mineralised faults ( vein groups), that are currently defined by field mapping at the
Chanach Gold Project, span over a 3km strike length with drillin g along only 5% of the strike
length identified and mapped to date and with drilling to an average depth of only 120m. Given
the existing resource is open at depth, w ith 95% of veins as yet untested by drilling over the
existing 3km strike length and recent mapping programs likely to extend the mineralised strike
length by a further 4km, the potential for resource growth is thought to be significant.
Additionally; the Chanach Copper Inferred Mineral Resource is open at depth and along strike,
with multiple additional porphyry targets identified for testing including several outcropping
copper zones 4km to the east of the current resource. Copper skarn mineralisation has also
been identified along porphyry -limestone contacts over a 2km trend w ithin the Chanach
Project area.
Figure 4: Mineralised Faults (Blue) Relative to Inferred Gold Resources (Red)
Anomalous antimony, which is used as a proxy to estimate the distribution of ore stage pyrite
that accompanies gold mineralisation (defined by antimony assays in soil sample), extends
more than 3km in an east -west direction and 2km in a north -south direction. The anomaly is
coincident and thought to define the Chanach low sulphidation epithermal gold vein system
(Figure 4).
Three of the gold vein zones have an expression along the western contact of the antimony
anomaly. The eastern extent of the antimony anomaly is defined by outcropping porphyry
copper mineralisation and its causative intrusion. Ground magnetic data support s the
interpretation that the mineralised intrusion (and its precursor variably magnetic intrusion )
underlie the full extent of the antimony anomaly.
Fluid flow has been vertical from this underlying intrusion into the limestone where the
mineralising fluid has intersected a groundwater aquifer within the limestone , resulting in
oxidation of the iron within the mineralised fluid and extensive deposition of red hematite
(Figure 5). This hematite staining is another indicator of the size of the system and extends
the full length of the antimony anomaly (3km in an east-west direction). The sequence is tilted
15-20 degrees north, so the veins now dip 70-75 degrees to the south.
It is believed that the drilling of the gold vein systems to date, using relatively shallow holes to
an average of 120m , is representative of the overall strike and dip length of v eins over the
three-kilometre strike length (mapped and coincident with the antimony anomaly). Given that
only 5% of the mineralised veins have been drilled and the veins are likely to extend vertically
at least to the limestone contact, or the base of the valley (approximately 400 vertical meters),
then it is believed by RTG consultant, Greg Hall, that there is an exploration target materially
greater than the current Inferred Gold Mineral Resource.
Figure 5: Highly Visible Geology Showing Extensive Hematitic Red Staining at the Chanach
Project Area
Figure 6: Mineral Resources & Targets at the Chanach Project