Alacer Gold Announces a New Reserve for Its Gediktepe Project Providing Future Growth

TORONTO, Sept. 13, 2016 (GLOBE NEWSWIRE) -- Alacer Gold Corp. (“Alacer” or the “Corporation”) (TSX:ASR) (ASX:AQG) is pleased to announce positive results from the Prefeasibility Study (“PFS”) establishing a maiden resource and reserve for the 50%¹ owned Gediktepe Project (formerly known as Dursunbey) in Western Turkey.

Rod Antal, Alacer’s President & Chief Executive Officer, stated, “We are excited to announce the significant milestone achieved at Gediktepe. The PFS demonstrates that Gediktepe is an economic and technically viable project and establishes it as a valuable part of our portfolio of mining assets.

It is an outstanding result and a credit to our partner, Lidya Mining, and to our team who have converted a grassroots exploration target into a discovery and advanced it to a PFS study, all in the span of just four years. Not only does this achievement illustrate our ability to capture and convert value from exploration, it also demonstrates the great prospectivity in Turkey.

The Gediktepe project has moved into a detailed study phase where we will complete basic engineering and more technical studies. Permitting and some site preparations will be undertaken concurrent with these detailed studies. During this period, the various options for development of Gediktepe will be assessed.”

Key Highlights
(all currency in US dollars and all metrics on a 100% basis)

The Gediktepe Project is located in Balıkesir Province, about 370 km west of Ankara and 190 km to the south of Istanbul. Gediktepe will be owned on a 50%/50% basis with our joint venture partner, Lidya Mining, upon completion of the claw back right exercised by Alacer. The estimated claw back cost is $7.1 million at June 30, 2016. Lidya Mining is the operator of Gediktepe.

Gediktepe is a polymetallic orebody that contains economic values for gold, silver, copper and zinc. The sulfide deposit is overlain with oxide ore containing gold and silver which is amenable to heap leaching. Gediktepe will be an open pit mine and the oxide ore will be processed first, providing cash flow for the development and subsequent processing of the more prevalent sulfide ore. The sulfide ore contains gold, silver, copper and zinc and will be processed through a multi-stage flotation circuit producing two marketable concentrates.

Overall Project Economics

• Total payable metals of 400,000 ounces of gold, 8 million ounces of silver, 315 million pounds of copper and 780 million pounds of zinc
• Life-of-mine (“LoM”) production over 12 years of 1.8 million ounces on a Gold Equivalent Ounce² (“AuEq”) basis
• Pre-production capital expenditure of $120 million
• An additional $126 million in project capital required for the sulfide ore flotation plant and related infrastructure

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¹ Gediktepe will be owned on a 50%/50% basis with our joint venture partner, Lidya Mining, upon completion of the claw back right exercised by Alacer.
² Gold Equivalent Ounce (AuEq) is a non-IFRS measure with no standardized definition under IFRS which converts non-gold production into gold equivalent ounces. Calculation of AuEq converts payable metals into revenue using metal prices of $1,250 per ounce for
gold, $18.25 per ounce for silver, $2.75 per pound for copper, $1.00 per pound for zinc, and then the total revenue is divided by the gold price of $1,250 per ounce.

• Project after-tax net present value at 5% (“NPV”) is $475 million
• Project after-tax, unlevered internal rate of return (“IRR”) of 47%
• Project payback achieved in 2.5 years from start of production
• After-tax free cash flow of $745 million generated over the LoM
• LoM average costs on a AuEq basis:
  • Total Cash Costs³ of $613 per ounce AuEq
  • All-in Sustaining Costs² of $625 per ounce AuEq
  • All-in Costs² of $759 per ounce AuEq

Oxide Ore Overview

• Oxide ore processing of 3,000 tonnes per day for over three years at a conventional heap leach facility
• LoM oxide ore production of 300,000 ounces AuEq (250,000 ounces of gold and 3.6 million ounces of silver)
• Oxide Proven and Probable Reserves of 3.2 million tonnes with an average gold grade of 2.95 gpt and an average silver grade of 77.7 gpt
  • Oxide Measured and Indicated Resources⁴ of 3.8 million tonnes with an average gold grade of 2.60 gpt (320,000 ounces gold contained) and an average silver grade of 69.0 gpt (8.5 million ounces silver contained)
• Oxide capital expenditure of $111 million
• Oxide LoM average costs on a AuEq basis:
  • Total Cash Costs² of $387 per ounce AuEq
  • All-in Sustaining Costs² of $387 per ounce AuEq
  • All-in Costs² of $763 per ounce AuEq

Sulfide Ore Overview

• Sulfide processing of 6,500 tonnes per day over a 10-year period utilizing two 4 stage flotation circuits to produce a copper concentrate and a zinc concentrate
• LoM sulfide production of 700 million pounds on a Copper Equivalent⁵ (“CuEq”) basis (315 million pounds of copper, 780 million pounds of zinc, 150,000 ounces of gold and 4.6 million ounces of silver)
• Sulfide Proven and Probable Reserves of 21.7 million tonnes of ore grading 0.99% copper, 2.35% zinc, 0.93 gpt gold and 35.3 gpt silver

• Sulfide Measured and Indicated Resources³ of 32.2 million tonnes with average grades of 0.90% copper (642 million pounds copper contained), 1.93% zinc (1,370 million pounds zinc contained), 0.77 gpt gold (800,000 ounces gold contained) and 29.5 gpt silver (30.5 million ounces silver contained)
• Sulfide capital expenditure of $135 million which includes $9 million in pre-production capital, $104 million spent during the first two years of production and $22 million in sustaining capital
• Sulfide LoM average costs on a CuEq basis:
  • Total Cash Costs² of $1.45 per pound CuEq
  • All-in Sustaining Costs² of $1.48 per pound CuEq
  • All-in Costs² of $1.67 per pound CuEq

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³ Total Cash Costs, All-in Sustaining Costs, and All-in Costs are non-IFRS financial performance measures with no standardized definitions under IFRS. For further information and a detailed reconciliation, please see the “Non-IFRS Measures” section of the Corporation’s MD&A for the three months ended June 30, 2016.
⁴ Mineral Resources are inclusive of Mineral Reserves.
⁵ Copper Equivalent (CuEq) is a non-IFRS measure with no standardized definition under IFRS which converts non-copper production into copper equivalent pounds. Calculation of CuEq converts payable metals into revenue using metal prices of $1,250 per ounce for gold, $18.25 per ounce for silver, $2.75 per pound for copper, $1.00 per pound for zinc, and then the total revenue is divided by the copper price of $2.75 per pound.

An updated National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”) compliant Technical Report on the Gediktepe Project has been filed on www.sedar.com and on the Australian Securities Exchange simultaneously with this announcement.

Gediktepe Overview

http://www.globenewswire.com/NewsRoom/AttachmentNg/884bffe5-3088-4836-a8fa-b6a8f5c20c8d

The Gediktepe deposit was discovered in April 2013 with the second drill hole (DRD-002) intersecting 26.5m at 7.9g/t gold and 77g/t silver from surface⁶. Oxide mineralization is enriched in gold and silver, whereas sulfide mineralization includes gold, silver, copper and zinc. The deposit continues to be open at depth and along strike.

Production and Cost Summary

Gediktepe will be an open pit mine and is well serviced being close to existing infrastructure and connects to the national power grid. Production at Gediktepe will start with the processing of oxide ores using a conventional heap leach and Merrill Crowe process (gold and silver precipitation by zinc). The Merrill Crowe plant recovers more silver than a carbon adsorption process and is appropriate for this deposit due to the high silver content in the oxide ores. Average life-of mine recoveries for the oxide ore is 83% for gold and 45% for silver.

Production will transition from oxide processing to sulfide processing in year 3 of the operation. Sulfide ore processing will be via two 4 stage flotation circuits, one for copper recovery and one for zinc recovery. The flotation circuits will produce concentrates that will be shipped offsite for processing through copper and zinc smelters. Metallurgical tests for the sulfide flotation of Gediktepe ores yielded recoveries in copper concentrate of 69% for copper, 17% for gold and 12% for silver and recoveries in zinc concentrate of 82% for zinc, 16% for gold and 22% for silver.

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⁶ See Alacer announcements “Alacer Announces Exploration Results in Turkey”, dated September 14, 2014 and February 24, 2014, on the Corporation’s website at www.alacergold.com, on SEDAR at www.sedar.com or on ASX at www.asx.com.au.

The following is a LoM production profile on an AuEq basis.

http://www.globenewswire.com/NewsRoom/AttachmentNg/3485c879-7cbf-421b-a51d-58b2a884aad7

The table below provides a summary of the estimated capital costs for the Gediktepe Project.

Rounding differences will occur

Project capital outlined above does not include reclamation costs that total $23 million and occur in years five and thirteen.

Financial Summary

The economic analysis was predicated on the capital and operating costs summarized above and are based on the following parameters and are estimated in fourth quarter 2015 US$:

• Gold price of $1,250 per ounce;
• Silver price of $18.25 per ounce;
• Copper price of $2.75 per pound;
• Zinc price of $1.00 per pound; and
• US$/Turkish Lira exchange rate: 3.0.

The project remains economically feasible over the entire range of the sensitivity analysis. Financial results appear to be most sensitive to metal prices and least sensitive to changes in operating cost. Spider graphs depicting the results on project NPV and IRR by varying the OPEX, CAPEX and metal price inputs are provided below.

http://www.globenewswire.com/NewsRoom/AttachmentNg/fde3ac54-ba74-44cc-9cfb-f396e8e462b4

The following is a sensitivity table of discount rates used to calculate after tax NPV.

Permitting

The Environmental Impact Assessment (“EIA”) permit was received in July 2016. With receipt of the EIA, work has now commenced on securing the additional necessary Forestry permits before a construction decision can be made.

Next Steps

The PFS has demonstrated that the Gediktepe Project is technically and financially feasible. The Project will now move into a detailed study phase where technical work will continue to advance along with basic engineering. During this next phase, necessary land use permits will be secured and financing options will be considered. A key component of this phase will be the creation of the development schedule including key milestones.

Maiden Mineral Resource and Mineral Reserve Estimates

The appendices to this announcement provide information on the data, assumptions and methodologies underlying these estimates. Further information is provided in the Technical Report on the Gediktepe Project filed simultaneously with this announcement.

The updated Mineral Reserves referenced in this press release have been subjected to a PFS in which open pit designs and a mine production schedule were developed. The PFS contemplates oxide ore processing by heap leach and sulfide ore processing by flotation. The PFS finds that the recovery of metals is technically and financially feasible, generating positive returns on plant and infrastructure investments.

Mineral Resources for the Gediktepe Deposit (As of June 1, 2016) (100% Basis)

Note: Mineral Resources are inclusive of Mineral Reserves. Mineral Resources are shown on a 100% basis, of which Alacer will own 50%. The key assumptions, parameters, and methods used to estimate the Mineral Resources and Mineral Reserves are provided in the appendices to this announcement and the NI 43-101 Technical Report filed simultaneously with this announcement. We are not aware of any new information or data that materially affects the information included in this announcement and that all material assumptions and technical parameters underpinning the estimates in the announcement continue to apply and have not materially changed. Rounding differences will occur.

Note: Mineral Reserves are shown on a 100% basis, of which Alacer will own 50%. The Mineral Reserves methodology, cut-off grades, and the key assumptions, parameters, and methods used to estimate the Mineral Resources and Mineral Reserves are provided in the appendices to this announcement and the NI 43-101 Technical Report filed simultaneously with this announcement. We are not aware of any new information or data that materially affects the information included in this announcement and that all material assumptions and technical parameters underpinning the estimates in this announcement to apply and have not materially changed. Rounding differences will occur.

About Alacer

Alacer is a leading intermediate gold mining company, with an 80% interest in the world-class Çöpler Gold Mine in Turkey operated by Anagold Madencilik Sanayi ve Ticaret A.S. (“Anagold”), and the remaining 20% owned by Lidya Madencilik Sanayi ve Ticaret A.S. (“Lidya”). The Corporation’s primary focus is to leverage its cornerstone Çöpler Mine and strong balance sheet to maximize portfolio value, maximize free cash flow, minimize project risk and, therefore, create maximum value for shareholders.

The Çöpler Mine is located in east-central Turkey in the Erzincan Province, approximately 700 miles southeast from Istanbul, Turkey and 340 miles east from Ankara, Turkey’s capital city.

Alacer is actively pursuing initiatives to enhance value beyond the current mine plan:

• Çöpler Oxide Production Optimization – expansion of the existing heap leach pad to 58 million tonnes continues to advance. All required land use permits for the Heap Leach Pad Phase 4 (“HLP4”) expansion have been received. The Corporation continues to evaluate opportunities to optimize and extend oxide production beyond the current reserves, including a new heap leach pad site to the west of the Çöpler Mine.
  
• Çöpler Sulfide Project – the Sulfide Project will deliver long-term growth with robust financial returns and adds over 20 years of production at Çöpler. The Sulfide Project will bring Çöpler’s remaining life- of-mine gold production to 4 million ounces at All-in Sustaining Costs3 averaging $645 per ounce. The Environmental Impact Assessment and all required land use permits for construction have been approved. Detailed information regarding the Çöpler Sulfide Project can be found in the Technical Report dated June 9, 2016 entitled “Technical Report on the Çöpler Mine and Çöpler Sulfide Expansion Project” (“the Updated Technical Report”) available on SEDAR at www.sedar.com and on the Corporation’s website.
  
• The Corporation continues to pursue opportunities to further expand its current operating base and to become a sustainable multi-mine producer with a focus on Turkey. The systematic and focused exploration efforts in the Çöpler District, as well as in other regions of Turkey are progressing. Çakmaktepe Southeast, Çakmaktepe East, Çakmaktepe North and Bayramdere are the main focus in the Çöpler District, which are shallow, oxide targets with favorable metallurgy and have the potential to add oxide production within the next two years. In the region, Gediktepe Project has advanced with a maiden resource and reserve released in third quarter 2016 and development options are being evaluated.

Alacer is a Canadian corporation incorporated in the Yukon Territory with its primary listing on the Toronto Stock Exchange. The Corporation also has a secondary listing on the Australian Securities Exchange where CDIs trade.

Cautionary Statements

Except for statements of historical fact relating to Alacer, certain statements contained in this press release constitute forward-looking information, future oriented financial information, or financial outlooks (collectively “forward-looking information”) within the meaning of Canadian securities laws. Forward-looking information may be contained in this document and other public filings of Alacer. Forward-looking information often relates to statements concerning Alacer’s future outlook and anticipated events or results and, in some cases, can be identified by terminology such as “may”, “will”, “could”, “should”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “projects”, “predict”, “potential”, “continue” or other similar expressions concerning matters that are not historical facts.

Forward-looking information includes statements concerning, among other things, preliminary cost reporting in this document; production, cost and capital expenditure guidance; ability to expand the current heap leach pad, development plans for processing sulfide ore at Çöpler; results of any gold reconciliations; ability to discover additional oxide gold ore, the generation of free cash flow and payment of dividends; matters relating to proposed exploration, communications with local stakeholders and community relations; negotiations of joint ventures, negotiation and completion of transactions; commodity prices; mineral resources, mineral reserves, realization of mineral reserves, existence or realization of mineral resource estimates; the development approach, the timing and amount of future production, timing of studies, announcements and analysis, the timing of construction and development of proposed mines and process facilities; capital and operating expenditures; ability to draw under the credit facility and satisfy conditions precedent including execution of security and construction documents; economic conditions; availability of sufficient financing; exploration plans; receipt of regulatory approvals and any and all other timing, exploration, development, operational, financial, budgetary, economic, legal, social, geopolitical, regulatory and political matters that may influence or be influenced by future events or conditions.

Such forward-looking information and statements are based on a number of material factors and assumptions, including, but not limited in any manner to, those disclosed in any other of Alacer’s filings, and include the inherent speculative nature of exploration results; the ability to explore; communications with local stakeholders and community and governmental relations; status of negotiations of joint ventures; weather conditions at Alacer’s operations, commodity prices; the ultimate determination of and realization of mineral reserves; existence or realization of mineral resources; the development approach; availability and receipt of required approvals, titles, licenses and permits; sufficient working capital to develop and operate the mines and implement development plans; access to adequate services and supplies; foreign currency exchange rates; interest rates; access to capital markets and associated cost of funds; availability of a qualified work force; ability to negotiate, finalize and execute relevant agreements; lack of social opposition to the mines or facilities; lack of legal challenges with respect to the property of Alacer; the timing and amount of future production and ability to meet production, cost and capital expenditure targets; timing and ability to produce studies and analysis; capital and operating expenditures; economic conditions; availability of sufficient financing; the ultimate ability to mine, process and sell mineral products on economically favorable terms and any and all other timing, exploration, development, operational, financial, budgetary, economic, legal, social, geopolitical, regulatory and political factors that may influence future events or conditions. While we consider these factors and assumptions to be reasonable based on information currently available to us, they may prove to be incorrect.

You should not place undue reliance on forward-looking information and statements. Forward-looking information and statements are only predictions based on our current expectations and our projections about future events. Actual results may vary from such forward-looking information for a variety of reasons including, but not limited to, risks and uncertainties disclosed in Alacer’s filings at www.sedar.com and other unforeseen events or circumstances. Other than as required by law, Alacer does not intend, and undertakes no obligation to update any forward-looking information to reflect, among other things, new information or future events.

For further information on Alacer Gold Corp., please contact:

Lisa Maestas – Director, Investor Relations at +1-303-292-1299

Appendix 1

Basis for Production Targets and Forecast Financial Information

The production targets in this announcement are underpinned solely by Probable Reserves and are based on Alacer's current expectations of future results or events and should not be solely relied upon by investors when making investment decisions.

The estimated Mineral Reserves and Mineral Resources underpinning the production targets have been prepared by a competent person or persons in accordance with the requirements of the JORC Code, as specified in the Appendix 2 - JORC Code Table 1.

The material assumptions which support the Probable Reserves, the production targets and the forecast financial information derived from the production targets are disclosed in the PFS and in the body of this announcement.

All forecast financial information in this announcement has been derived from the production targets set out in this announcement. Alacer is satisfied that it has a reasonable basis for making the forward-looking statements in this announcement, including with respect to production targets and forecast financial information. In particular, given Alacer’s financial position and market capitalization relative to its share of the funding requirement for the Gediktepe project, Alacer believes funding will be available when required by the development timetable for the project.

Qualified Person Statement

All Mineral Reserves and Mineral Resources referenced in this announcement are estimated in accordance with NI 43-101 standards and the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. While terms associated with various categories of “Mineral Reserve” or “Mineral Resource” are recognized and required by Canadian regulations, they may not have equivalent meanings in other jurisdictions outside Canada and no comparison should be made or inferred. Actual recoveries of mineral products may differ from those estimated in the Mineral Reserves and Mineral Resources due to inherent uncertainties in acceptable estimating techniques. In particular, Inferred Mineral Resources have a great amount of uncertainty as to their existence, economic and legal feasibility. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration. Investors are cautioned not to assume that all or any part of the Mineral Resources that are not Mineral Reserves will ever be converted into Mineral Reserves.

The Mineral Resources and Mineral Reserves disclosure in this announcement was estimated and approved by Mr. John Marek, SME Registered Member, President and Senior Mining Engineer of Independent Mining Consultants, Inc..

The information in this announcement which relates to the Mineral Resources estimate and Ore Reserves are based on, and fairly represents, the information and supporting documentation prepared by Mr. Marek and he has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which is being undertaken to qualify as Competent Persons as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” and are Qualified Persons pursuant to NI 43-101.

The scientific and technical information in this announcement is based on information compiled by John M. Marek, PE, who is an independent consultant. Mr. Marek has sufficient experience with respect to the technical and scientific matters set forth above to be a “qualified person” for the purposes of NI-43‐101 in the areas of competency for Geology, Resource Modeling, Engineering and Mine Design.

Mr. Marek consents to the inclusion in this announcement of the matters based on this information in the form and context in which it appears.

Summary for the purposes of ASX Listing Rules 5.8 and 5.9

Please also refer to the JORC Code Table 1 contained in Appendix 2 to this announcement for information relating to the estimates of Ore Reserves and Minerals Resources for the Gediktepe Project, and a copy of which can be found on www.sedar.com, the Australian Securities Exchange and on our website www.alacergold.com.

Geology and Geological Interpretation
The Gediktepe project is a massive sulfide hosted in metamorphic schist units. The upper portion of the deposit has been oxidized by surface and ground water. The oxide zone is nearly void of base metals. The sulfide zone is polymetallic with economic values of zinc, copper, gold and silver. The major economic minerals are sphalerite and chalcopyrite. Pyrite is present throughout.

Drilling completed through August 5, 2015 was used to generate the geologic model and estimate mineral resources. The mineral resource is based on a combination of Reverse circulation (RC) and diamond core drilling for a total of 487 holes. RC drilling was utilized for 184 holes and the remaining 303 holes were by diamond drilling.

Mineralized bodies strike to the northeast and dip to the northwest at about 20 degrees. Mineralization resides primarily within the Chlorite-Sericite Schist. Where oxidized, gold and silver remains within iron oxide gossan. For the sulfide zone, massive pyrite forms lenses containing sphalerite, terahedrite, chalcopyrite and galena.

The geologic model contains various schist units and ore types used within the resource model to define grade boundaries. The geologic and resource model used both the RC drilling and core holes to model boundaries and estimate metal grade.

Drilling Techniques
Drilling is primarily vertically oriented holes with a limited number of high angle drill holes. Approximately 38% of the drilling was RC with 62% diamond drill core. Drill hole spacing in Gediktepe varies from 25 m to 50 m centres. The central portion of the mineralized body is drilled at 25 m spacing with outer regions drilled to 50 m centres (refer to “Diagrams” in Section 2 of JORC Table 1 showing hole collar map). There was a total of 57,536 m of drilling used in the resource model.

Diamond drilling was carried out using HQ and PQ sized equipment with standard tube. For RC drilling, a face- sampling bit (121mm) was used.

Sampling and Sub-sampling
Diamond drill core was sampled as half core at 1 to 2m intervals to geological contacts.

RC chip samples were collected in bags and chip box trays at 1 and 2m intervals. In areas expected to be waste, samples were combined into 2m intervals. RC samples were collected at the rig using rotary splitters.

Sample Analysis Methods
Drill hole samples were sent off site to a recognized and independent analytical laboratories for analyses.

Drill samples collected in 2013 were sent to the SGS laboratory in Ankara. In 2014 and 2015, samples were prepared and analyzed at ALS İzmir, Turkey. All analyses for gold were undertaken via fire assay. A 33 element assay suite including Ag, Cu, Pb, and Zn was completed for each sample by inductively coupled plasma (ICP).

Mineral Resources

Estimation Methodology
Block grade estimation utilized ordinary linear kriging, respecting domain boundaries defining rock types, grade populations and oxidation surface. Modeling parameters were setup to account for extreme grade values, rotation of the mineralized zones and selected mine equipment capability. Reported Mineral Resources contain no allowances for unplanned dilution, or mining recovery.

Mineral Resources Classification
Mineral Resources were classified based on the number of composites used to estimate a block, the average distance between the block center and all the composites used to estimate the block.

Indicated Mineral Resources required blocks to be estimated with four or more composites and having an average distance to the closest composite less than 75 meters. A block was also indicated if the block was within the sulfide mineralized unit with three composites used during the estimation and less than 75 meters to the closest composite. Measured blocks required gold grade estimation using the maximum number of composites and the average distance to the closet composite of 35 meters or less.

Reasonable Prospects of Eventual Economic Extraction
To meet the reasonable prospects of eventual economic extraction criteria for reporting resources, Mineral Resources are tabulated within a floating cone algorithm using a gold price of $1,200/oz, $18/oz for silver,
$3.00/lb copper and $1.20/lb for zinc. Process recoveries and concentrate quality are based on metallurgical testing and judgement regarding the performance of a full scale plant. The metallurgical recoveries used for the floating cone inputs are shown in the table below and vary by grade, process, and concentrate.

Cut-offs vary by processing method. The oxide cutoff grades were based on the income net of refining of $11.70/tonne combining the values of gold and silver. Sulfide cutoff grades for the resource were based on a net smelter return (NSR) of $15.67/t combining the benefits of gold, silver, copper, and zinc.

Processing costs used were $6.92/t in oxide and $10.89/t for sulfide; a G&A cost of $4.78/t of ore processed was also applied. A mining cost of $1.47/t was used as input to the floating cone algorithm. Mineral Resources are reported inclusive of Ore Reserves.

Ore Reserves

Material Assumptions for Ore Reserves
The Ore Reserves were estimated as part of a PFS with all material assumptions being documented in this release and in the JORC Code Table 1 contained in Appendix 2 of this announcement. All operating and capital costs as well as revenue streams were included in the PFS financial model. The PFS finds that the recovery of metals is technically and financially feasible, generating positive returns on plant and infrastructure investments.

Ore Reserves Classification
Ore Reserves are estimated on the basis of detailed design and scheduling of the Gediktepe open pit. The pit boundaries were guided by the results of multiple applications of the floating cone algorithm. The pit shell is estimated using metal values of $1,000/oz for Au, $2.50/lb for Cu, $15.00/oz for Ag, and $1.00/lb for Zn. These metal values were then varied by revenue factors ranging from 0.4 to 1.4 in order to find the preferred pit size and geometry to use as a basis for detailed design.

All of the Ore Reserves are derived from Measured and Indicated Mineral Resources. All Inferred Mineral Resources are considered as waste.

Mining Method
The Gediktepe deposit will be mined by conventional open pit hard rock mining methods. Polimetal currently plans to utilize a contract mining company to move the ore and waste from the mine.

Ore Processing
Oxide ore is processed via heap leaching and sulfide ore is processed via floatation circuit to generate marketable copper and zinc concentrates.

Cut-off Grade
The cutoff grade for material sent to the crusher is $15.16/tonne Net of Smelter for oxides and $14.55/tonne Net of Smelter for sulfides. These are “internal” cutoff grades because they correspond to the sum of the processing and G&A costs. The estimate of processing + G&A costs for oxides was $15.16/tonne and the estimate of processing + G&A costs for sulfides was $14.55/tonne.

Estimation Methodology
Mining dilution was accounted for in the block estimation process and no additional factor was added or applied to the block model.

Oxide gold recoveries have been calculated by an equation dependent on head grade. The maximum recovery for gold is 87.5%. Oxide silver recovery is estimated at 45%. Sulfide recoveries are dependent on the process stream entering either the zinc or copper concentrate. Sulfide gold recovery is estimated at 15.7% in the zinc concentrate and 17.2% in the copper concentrate. Sulfide silver recovery is estimated at 21.5% in the zinc concentrate and 12.3% in the copper concentrate. Sulfide zinc recovery is estimated at 81.5% in the zinc concentrate. Sulfide copper recovery is estimated at 69.2% in the copper concentrate.

Material Modifying Factors
Gold and silver from the heap leach process will be produced in the form of dore and sent to refiners for separation. Sulfide ore will produce gold, silver, copper, and zinc to be sold as either copper or zinc concentrate. The metallurgical testing to date indicates that the gold-silver dore and both concentrates will be of marketable quality.

The project will require the development of a number of infrastructure items in order to operate. The current approach to the project is a combination of oxide heap leaching followed by sulfide flotation. Therefore, both heap leach facilities and tailing storage facilities will be required.

Most of the project area falls into forest land and will need forestry permits from the General Directorate of Forestry and Prime Ministry. The project as shown in the PFS will require a total 379.2 hectares of forest permit area over the life of the mining operation.

Appendix 2 - JORC Code Table 1

The following tables are provided to ensure compliance with the JORC Code (2012) edition requirements for the reporting of exploration results, Mineral Resources and Ore Reserves.

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections)

Section 2 Reporting of Exploration Results

Section 3 Estimation and Reporting of Mineral Resources

Section 4 Estimation and Reporting of Ore Reserves