Kopy Goldfields Half Year Report January - June 2016

KOPY GOLDFIELDS HALF YEAR REPORT JANUARY - JUNE 2016

Financial information half year 2016
The Company does not yet report any revenue
Net income MSEK -3.3 (0.1)
Earnings per share before and after dilution SEK -0.06 (0.00)
Total cash flow of MSEK 7.7 (1.6)
Investments in exploration work and licenses MSEK 0.1 (0.6)
Cash and cash equivalents amounted to MSEK 9.1 (2.7) at period end

Significant events during January - June 2016

In February 2016, a short term loan of MSEK 3 was converted into shares
In total, 5,454,545 new shares were issued by converting a debt of SEK
2,999,999.75 at the subscription price of 0.55 SEK/share. The share capital was
increased by SEK 2,073,934.09 to 
SEK 22,775,080.27 and the number of shares amount to 59,899,541 following the
share issue. 

On March 30, 2016, the formal approval of a mineral reserve report for the
Krasny deposit was received by the Russian authorities. 
The report was prepared in accordance with the Russian GKZ regulations, and
confirmed gold reserves of 9.767 tons (314 koz) in the C2 category. The project
was recommended for development into production. 
The Krasny mineralization was classified as a "gold deposit" and the Company
was graded as a "pioneer discoverer" in Russia. 

In April 2016, a conditional consideration was received and a short term loan
was repaid 
On April 21, 2016 the Company received a conditional consideration of MUSD 2
from GV Gold in accordance with the joint venture agreement and at the same
time, the short term interest bearing loan of MSEK 3.3 from five shareholders
was repaid. The Company is now debt free. 

In May 2016 a new positive scoping study was announced for the Krasny deposit
The scoping study was performed by Irgiredmet engineering consultancy and
included all exploration results until and including Stage 2 of the exploration
program. 
The study evaluated gold production from the Upper structure only and confirmed
feasibility of Krasny mine development with a total undiscounted free cash flow
of USD 94 million at a fixed gold price of 1,100 USD/oz and estimated total
production costs of 475 USD/oz. 

In May 2016 a JORC mineral resource update was announced for the Krasny deposit
The updated JORC mineral resource estimate was issued by Micon International Co
Limited and was based on the exploration data acquired until January 2016 and
covered both the Upper and Lower mineralization. 
It shows 288,000 oz of Indicated mineral resources (7,848,000 tons of rock at
an average grade of 1.141 g/t Au) and 667,000 oz of Inferred mineral resources
(12,324,000 tons at an average grade of 1.682 g/t Au) within an economically
minable open pit. 

Comments from CEO

Dear shareholders,

We started 2016 from a solid foundation thanks to the efforts and money
invested in previous years. Our flagship project - Krasny - is quickly moving
towards construction and production, while our other projects - Northern
Territories and Kopylovskoye - after being idle for several years, now return
into development. The background is growing gold prices, booming shares of gold
mining companies and general recovery of the investment climate in Russia. We
seem to be in the right industry and in the right momentum and we are now fully
prepared to join the ride. 

After three months of detailed reviews, the mineral reserve report for the
Krasny deposit, prepared in accordance with the Russian Statutory Reserve
Committee reporting regulations, was formally approved by the Russian Federal
Agency on Subsoil Usage on March 30, 2016. The report classifies the Krasny
mineralization to be a deposit with total ore reserves in the C2 category of
6,317 ktons with an average grade of 1.55 g/t, which makes 9,767 kg of gold
(314 koz). The report is based on geological data acquired before January 2015
and does not include the 2015 drill results and covers the Central Upper
mineralization only. We are very happy with this outcome as we now have a legal
right to produce gold from Krasny and we have also become pioneer gold
discoverers, which is something that every exploration company seeks to achieve
but which rarely happens in the real world. Following the GKZ reserve approval,
in accordance with the Krasny Joint venture agreement, we received a
conditional consideration of USD 2 million from GV Gold which significantly
strengthened our cash position. Overall, our relations with GV Gold develop
very successfully and we see GV Gold as an experienced and reliable partner to
develop the Krasny project with into production. 

In parallel with the GKZ reporting, in Q1 2016, we received a new scoping study
for Krasny done by Irgiredmet, one of the top mining engineering companies in
Russia. This study was based on the exploration results until and including
Stage 2 of the exploration program. The study evaluated gold production from
the Upper structure only and confirmed feasibility of Krasny mine development
with a total undiscounted free cash flow of USD 94 million at a fixed gold
price of 1,100 USD/oz and estimated total production costs of 475 USD/oz. 

By the end of May 2016, we announced an updated JORC mineral resource estimate
for the Krasny deposit made by Micon. This report was based on the exploration
data acquired until January 2016 and covered both the Upper and Lower
mineralization. The report shows a total of 955,000 oz of gold within an
economically minable open pit and leaves part of the Krasny gold mineralization
outside as it cannot be produced with profit at the current gold price and
operating costs. However, this part of the gold mineralization that is
currently left outside of the open pit would become minable if the market
conditions improve (the Micon report was based on the 1200 USD/oz gold price
and we see strong increase in gold price since the beginning of the year).
Although the total of the new resources is somewhat lower than the previous
reported in 2013, they are more reliable and robust as they are based on more
drilling information and reflect the current market conditions. Even if we have
seen a 30% gold price decrease between 2013 and 2016, Krasny proves to be a
solid 1 Moz gold deposit. We see a lot of potential to further increase
resources along the strike, to the depth and within parallel mineralized
structures, and as an example, we reported a discovery of the Krasny North
mineralization in the recent operational updates this year. 

Backed by these positive investment reports, we commenced the 2016 exploration
program for Krasny which is focused on finalizing the mineral processing
technology tests and developing the flow chart. The program also includes
in-fill drilling of the Lower mineralization and some exploration around the
Krasny license area to estimate the total resource potential for the area
before making the decision to proceed to mine development by the end of 2016.
Based on internal calculations, the Irgiredmet scoping study and the GKZ and
JORC reports, we see that the minable gold resources in the Upper
mineralization seem to be enough to commence profitable mining operations.
However, we wish to have more certainty over the Lower mineralization (convert
from Inferred into Indicated) to be able to model the future production. We
also have some concerns over the optimal mineral processing technology which
shall be able to efficiently address both the oxidized rock from the Upper
mineralization and the primary rock from the Lower mineralization. These two
issues will be covered in detail by the current 2016 exploration program. 

On top of Krasny, we commenced some modest operations on the Northern
Territories and Kopylovskoye projects. The Northern territories project is very
similar in geology to the closely located Sukhoy Log deposit which is an
undeveloped 60 Moz, state owned deposit which is expected to be privatized
soon. We believe that with the returning investor interest in gold mining
industry and potential sale of the Sukhoy Log deposit, our Northern Territories
project can easily become an exploration diamond in the area attracting
attention of all coming and existing players in the region. 

We have commenced Stage 1 of the prospecting program on the Northern
Territories project which include covering the total 1,852 km2 license area
with a geochemical stream sedimentary survey. The 2016 exploration program will
generate 20-26 targets for the next stage exploration, which will be a detailed
geochemical and geophysical survey followed by trench sampling, drilling and
mineral processing tests. We believe that with a 3 years exploration program,
we would have very good chances to identify 2-5 gold deposits within the
Northern Territories project, each with more than 1 Moz of bedrock gold. 

Within the Kopylovskoye project, we target to renew exploration and mining
permits for the license in order to update and extend the license terms and
potentially run a bulk sample test to confirm the grades and volume of
mineralization. The work is ongoing and we have filed all necessary documents
and expect to have the relevant permits and extended license terms in place
during the coming months. 

On behalf of Kopy Goldfields, I thank you for your interest and support of the
company. Our management team will put all efforts in developing the company
towards production on Krasny and new exiting discoveries on other projects. 

With best regards,
Mikhail Damrin, CEO

Stockholm, August 25, 2016

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

The following documents can be retrieved from beQuoted
Kopy Goldfields Pressrelease 2016-08-25 English.pdf -
http://www.bequoted.com/beQPress/download.asp?Id=18597 
Kopy Goldfields Halvarsrapport 2016.pdf -
http://www.bequoted.com/beQPress/download.asp?Id=18598 
Kopy Goldfields Pressrelease 2016-08-25 Svenska.pdf -
http://www.bequoted.com/beQPress/download.asp?Id=18599 
Kopy Goldfields Half Year Report 2016.pdf -
http://www.bequoted.com/beQPress/download.asp?Id=18600 

This information is information that Kopy Goldfields AB is obliged to make
public pursuant to the EU Market Abuse Regulation and the Securities Markets
Act. The information was submitted for publication, through the agency of the
contact person set out above, at 8:45 CEST on August 25, 2016. 

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 covering in total
1,963 sq km, of which the Krasny licenses (bedrock and alluvial) are held 49%
by the company. The preliminary forecast is to be in production in 2018. 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. 

The Share
Ticker: KOPY
www.nasdaqomxnordic.com/firstnorth/ http://www.nasdaqomxnordic.com/firstnorth/
Outstanding shares: 59,899,541