Operational update October 2015


Kopy Goldfields AB (publ) ("Kopy Goldfields" or the "Company") hereby provides an operational update of the Krasny project.

  • The Stage 2 exploration drilling was finalized on September 18, 2015, ahead of schedule. Overall, 49 drill holes were completed, totaling 7,551 meters of core drilling, which also includes 7 drill holes for engineering and water flow testing amounting to 860 meters.
  • All core samples have been logged, registered and assayed for gold. Totally 7,766 assay tests were received for Stage 2.
  • The exploration results of Stage 2 are in line with the existing geological model of the Krasny deposit, which accounts for 300 koz of gold to the depth of 200 meters.
  • Metallurgical processing tests for gold recovery are still ongoing and results are expected shortly. In general, the preliminary results from the current processing tests follow the results from previous processing tests in 2012.
  • The work with the Russian reserve report continues in accordance with schedule and the drafting of a JORC report has also started. Preparations for pre-feasibility and feasibility studies are initiated.

This operational update further develops the information provided in press release 13/2015, dated July 30, 2015; press release 9/2015, dated June 16, 2015; press release 15/2015, dated September 10, 2015 and press release 16/2015, dated September 21, 2015.

Background

In 2013, before entering into the Krasny joint venture agreement, Kopy Goldfields published a mineral resource estimate in accordance with the JORC code showing 1.37 Moz of inferred and indicated gold resources at an average grade of 1.59 g/t. Based on these results, the joint venture with GV Gold was initiated and a new exploration program was developed, divided into 2 stages. The overall target was to confirm the existing geological modelling, starting with only the upper structure and the most central part of the deposit and convert that part into reserves first, in order to enable feasibility studies and production start, leaving the remaining deposit as upside potential. The existing geological model showed a reasonable target of 300 koz of reserves for this part of the structure. The results from Stage 1, which was finalized during Q1 2015, confirmed continuity of the gold mineralization and improved the initial geological model. In April 2015, decision was taken to proceed with Stage 2.

Exploration Program Stage 2

Stage 2 of the exploration program is focusing on in-field drilling and preparation for the reserve reporting under Russian GKZ and JORC, but also on collecting the missing engineering, processing, environmental and other data required for Feasibility Study. In-field drilling is done to convert the previous Inferred and Indicated resources into the more "safe" categories Indicated and Measured Resources and subsequent Reserves (see attachment 1 for an extract from Kopy Goldfields' Annual Report 2014 (page 15) explaining classification of mineral resources and reserves).

Within Stage 2 we still focus on the central part of the deposit, down to the depth of 200 meters, with the aim to develop it into gold production soonest. All 2014-2015 drill holes are located in the central part of the Krasny deposit. Increase of gold resources was however not the main target and for that reason, the Krasny mineralization was deliberately left open along the strike. We believe that increase of Krasny resources will be achieved at a later stage of the Krasny project development and we do see strong indications for gold resource upside both within the current Krasny deposit but also within other gold mineralizations, all located within the boundary of the Krasny license.

Preliminary exploration results

By September 18, 2015, all drilling operations on Stage 2 had been completed, totaling 49 drill holes or 7,551 meters of core drilling (see Figure 3 in attachment 2 for location of the drill holes), and all assay test have now been received. Based on the 7,766 assay tests received from the Stage 2 drilling, we see that the new exploration results continue to strongly confirm the existing geological model. Some new mineralized intervals discovered identify the upside potential.

Cross sections along profiles #46 and #48 are presented in Figure 4 in attachment 2. They represent drill lines in the central part of the deposit. From both cross sections presented, a good correlation between the projected and actual mineralized intervals (projected ore bodies are marked with purple color) can be seen.

The most interesting mineralized intervals (at cut-off grade 0.4 g/t) from Stage 2 include 27 meters (actual thickness) with average grade 2.172 g/t in the hole #141581, 14 m @ 2.142 g/t (hole # 141587), 37.9 m @ 1.521 g/t (hole # 141589), 19.2 m @ 1.775 g/t (hole #141592), 18.1 m @ 1.847 g/t (hole #141595), 8.7 m @ 2.189 g/t (hole #141595), 28 m @ 1.539 g/t (hole #141596), 26.1 m @ 1.91 g/t (hole #141597), 15.4 m @ 2.191 g/t (hole #141598), 18 m @ 1.656 g/t (hole 141599), 16.9 @ 2.492 g/t (hole 141600), 19.7 m @ 5.683 g/t (hole # 141600), 18.4 m @ 1.596 g/t (hole # 141601), 10 m @ 2.373 g/t (hole #141602), 22.7 m @ 2.499 g/t (hole #141620), 15.5 m @ 2.35 g/t (hole #141623), 23.9 m @ 1.581 g/t (hole #141623), 18.4 m @ 1.598 g/t (hole #141630), 13.6 m @ 1.94 g/t (hole # 141640), 12.6 m @ 2.058 g/t (hole # 141644), 10.4 m @ 4.075 g/t (hole #141645), 24.5 m @ 1.535 g/t (hole #141657). See Table 1 for more assay data for the drilled boreholes.

General comments and future work

From Figure 2 in attachment 2, it can be seen that the area of the Krasny license is heavily exploited for alluvial gold with three alluvial mines being currently in operation and one fully produced. As a rule of thumb, an alluvial gold deposit has a bedrock primary source deposit. We believe that Krasny is one of them and see clear signs for potential new discoveries in the future.

We proceed with metallurgical bulk sample processing tests for gold recovery from the ore. In February 2015, we sent two bulk samples of 1,000 kg each to an engineering company in Irkutsk, Russia and we expect to have the metallurgical test finalized shortly. The preliminary results in general follow the previous processing test of 2012, which recommended gravitation-flotation-leaching technology. During the current processing test, a commercial volume of oxidized rock, forming the upper part of the gold mineralization to the depth of 80-120 meters, was identified. Oxidized rock is usually easy to process and it is still to be evaluated if the oxidized rock and the primary rock can be processed with the same technology or if it may be more profitable to start with only the oxidized rock.

We proceed with drafting of the Russian reserve report in accordance with the Russian GKZ rules, which is prepared by an independent engineering company in Irkutsk. Our geologists closely review the process and confirm that intermediary results are in line with our expectations. The Russian reserve report is expected to be finalized by the end of 2015 and in January 2016, the Krasny reserve report is scheduled for review by the Russian Committee on Reserves.

We have also closed a tender for drafting a JORC resource report and based on the tender results, we have chosen Micon International Company. Micon International Company is a world leading mineral industry consulting company from UK, with experience of working in former USSR countries. They have previously had other projects in the Bodaibo area and are familiar with the local geology. We expect the JORC resource report to be completed sometime in February 2016.

In close cooperation with GV Gold, we are working on summarizing the results from our exploration activities on Krasny with the target to both develop an internal shared view over the gold resources and reserves in Krasny and to identify the most efficient way of producing them. This work will be compiled into an Internal Report which will be finalized by early December 2015.

Next steps

Following the completion of Stage 2, the Krasny project will move into Feasibility Studies, equipment procurement, construction and commissioning. The first production is preliminary estimated in the end of 2017.

In total, the Stage 1 and Stage 2 exploration costs for the Krasny project are significantly lower than the initially budgeted cost, mostly due to the sharp Ruble depreciation during 2014-2015. This will leave us with funds in the Joint Venture to proceed with the Feasibility Studies immediately after Stage 2. We are currently preparing a tender to identify an engineering consultancy that will run the pre-Feasibility Study and further the Feasibility Study report with target to commence the work already in December this year.

We plan the following events to come during the next six months:

  • Completion of the Internal report in December 2015
  • Commence pre-FS/FS report in December 2015
  • Completion and filing Russian GKZ report in January 2016
  • Approval of Russian GKZ reserves in February - March 2016
  • Completion of JORC report in February - March 2016

For the complete press release including tables, images and maps see attached document.
För pressmeddelande på svenska se bifogat dokument (Swedish).

Stockholm, October 29, 2015

For more information, please contact:
Mikhail Damrin, CEO, +7 916 808 12 17, mikhail.damrin@kopygoldfields.com
Tim Carlsson, CFO, + 46 702 31 87 01, tim.carlsson@kopygoldfields.com

The following documents can be retrieved from beQuoted
Kopy Goldfields Pressrelease 2015-10-29 English.pdf
Kopy Goldfields Pressrelease 2015-10-29 Svenska.pdf

About Kopy Goldfields AB
Kopy Goldfields AB (publ), listed at NASDAQ First North in Stockholm is a gold exploration and production company operating in one of the most gold rich areas in the world; Lena Goldfields, Bodaibo, Russia. The company holds 11 bedrock exploration- and production licenses and one alluvial license on 1,963 sq km of which the Krasny license is held to 49% and is preliminary forecasted to be in production in 2017. The target for Kopy Goldfields is to become a near-term gold producer in cooperation with a producing partner under JV agreement.

Kopy Goldfields AB applies International Financial Reporting Standards (IFRS), as approved by the European Union. Aqurat Fondkommission acts as Certified Adviser, contact number: +46-8-684 05 800.

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Attachments

Kopy_Goldfields_Pressrelease_2015-10-29_Svenska.pdf Kopy_Goldfields_Pressrelease_2015-10-29_English.pdf