Fäboliden Gold Project

The Fäboliden Gold Project ("Fäboliden") is an advanced exploration project in northern Sweden, 30 kilometres by road southeast of Dragon Mining’s Svartliden Production Centre and 750 kilometres north of the Swedish capital Stockholm. It represents a potential source of open pittable material that could be trucked to, and processed at the Svartliden Plant.

Project Location

The 2,195.53 hectare project area comprises the Fäboliden K nr 1 Exploitation Concession that hosts the Fäboliden Gold Deposit and a series of contiguous Exploration Permits that encompass the immediate strike extensions of the Fäboliden deposits host geological sequence.

Fäboliden Gold Project Geology

The Fäboliden Gold Deposit represents an orogenic gold deposit, with mineralisation hosted by Paleoproterozoic meta-sediments and meta-volcanic rocks, surrounded by granitoids. The host sequence is cross-cut by a set of northwest-southeast striking, flat lying undeformed and unmineralised dolerites.  The deposit has been is defined over a strike length of 1,295 metres and includes a 665 metre vertical extent from 485mRL to -180mRL.  Gold displays a strong association with sulphides and most abundant gangue minerals.

Exploration at Fäboliden commenced in 1993 and has primarily involved drilling, with 333 holes (64,770.45 metres -  322 diamond core drill holes; 11 reverse circulation drill holes) completed prior to Dragon Mining’s acquisition of the project.  In addition to drilling, other activities undertaken by the previous owners include test mining and processing, resource estimation and compilation of a Definitive Feasibility Study for a large tonnage low grade mining and processing operation.

Dragon Mining completed the conditional acquisition of Fäboliden in December 2015.

In 2015, Dragon Mining completed a 34 hole (2,941.50 metres) diamond core drilling program to evaluate the near surface, higher grade zone in the southern portion of the deposit.  This program yielded a series of significant intercepts including highlights 4.00 metres @ 20.70 g/t gold, 7.00 metres @ 18.24 g/t gold, 14.00 metres @ 11.05 g/t gold, and 13.00 metres @ 8.37 g/t gold. The results from the drilling program have shown that the high grade zone displays good continuity both down dip and along strike, the grades received from drilling commensurate with the results from historic drilling.

Reserves and Resources

The Mineral Resource for the Fäboliden Gold Project totals 10,632,000 tonnes  grading 3.0 g/t gold for 1,019,000 ounces, inclusive of Ore Reserves as at 31 December 2016 and reported at a 1.25 g-t gold cut-off.  It represents the Mineral Resource for the higher grade material at Fäboliden that occurs within the broader lower grade envelope.  It incorporated all results from the diamond core drilling campaign completed in 2015 that confirmed and better delineated the extent and geometry of the near surface, higher grade zone of gold mineralisation in the southern portion of the deposit.  It formed the basis of the Pre-Feasibility level study for the Fäboliden Gold Project. 

The Company achieved a positive outcome for the Pre-Feasibility level study for the development of  the Fäboliden Gold Project, generating an Ore Reserve of 1,160,000 tonnes grading 3.1 g/t gold for 115,000 ounces as at 31 December 2016, a gold price of US$1,260 per ounce and gold recovery of 82%. The study was based on the establishment of a multiple open-pit mining operation and the haulage of ore to Dragon Mining’s operational Svartliden Plant to produce doré bars.  The Fäboliden Ore Reserves demonstrate a base case operation, which the Company expects to be able to further enhance.

For further information on the Ore Reserves and Mineral Resources for the Fäboliden Gold Project refer to the Reserves and Resources page.

Metallurgy

The company completed the second phase of bench scale metallurgical test work for the Fäboliden Gold Project, returning gold recoveries higher than that obtained in earlier test work programs.

In summary the second phase of test work has shown that:

- Comminution results yielded moderate levels for abrasion and hardness with an Abrasions Index of 0.239 and Ball and Rod Mill Work Indices of 14.8kWh/t and 18.4 kWh/t, respectively.  Values for abrasion and hardness are similar to levels obtained in previous test work;

- Diagnostic leaching returned values similar to those in previous test work, with the master composite showing approximately 80% of the gold available for cyanide leaching at a grind P80 of 75 µm;

- Whole ore leaching on variability samples returned overall gold extraction levels at 83%, higher than obtained in previous test work.  Cyanide and lime consumption were moderate at approximately 0.7 kg/t and 0.4 kg/t, respectively; and

- Gravity regrind tests resulted in a 3% recovery increase to 86%, compared with the standard whole ore leach test.

The whole ore leach tests showed the material to be grind sensitive, with increasing recovery at decreasing grind size.  The addition of lead nitrate was shown to improve leach kinetics and as such will be considered for inclusion in the Svartliden Plant reagent regime.  In order to improve overall gold recovery a gravity (sulphide rich) concentrate was produced, reground and leached separately to the gravity tail.

Based on the results obtained a preliminary flow sheet has been developed for the Svartliden Plant, for the processing of Fäboliden material.  Engineering evaluation is now being conducted to assess the economics for the inclusion of a gravity circuit, regrind and gravity leach facility, which could result in additional gold being recovered.

Environment

The Company has commenced activities to secure a Test Mining Permit and a new Environmental Permit for Fäboliden..

An application for a Test Mining Permit for the mining of 100,000 tonnes of ore from Fäboliden was submitted on 3 June 2016 with the County Administration Board (‘CAB”).  The CAB sent out the first round of questions and clarifications on the Test Mining Permit Application during the first quarter of 2017, the Company responding to the CAB in May 2017.  After further review by the CAB, a second round of questions and clarifications were received by the Company in mid-June.  The Company responded to the second round of questions on 30 June 2017.

The Fäboliden Full Mining Permit Application is continuing with submission of the application planned before the end of 2017.  The supplementary consultation was distributed and advertised and a number of responses have been received with no significant issues raised to date.

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