Kaapelinkulma Gold Project

The Kaapelinkulma Gold Project ("Kaapelinkulma”) is an advanced exploration project in the Valkeakoski municipality in southern Finland, 65 kilometres east of the Vammala Plant.

Regional Geology of the Vammala Production Centre

Kaapelinkulma represents an orogenic gold deposit located in the Palaeoproterozoic Vammala Migmatite Belt.  It comprises a set of sub-parallel lodes in a tight array hosted within a sheared quartz-diorite unit inside a tonalitic intrusive.

Two separate gold lode systems have been identified at Kaapelinkulma, the southernmost is the largest and extends over a strike length of 285 metres and defined to a vertical depth of 90 metres.  The northern lode system extends over 160 metres to a depth of 60 metres.  Both lode systems remain open in several directions, with additional drilling required down plunge and dip to further evaluate the lode systems.


Kaapelinkulma Gold Project Geology

The Kaapelinkulma deposit was discovered by the Geological Survey of Finland (GTK) after a gold bearing boulder was sent by an amateur prospector in 1986.  Since 1986 subsequent exploration carried out on the Kaapelinkulma Gold Project has principally involved drilling by the GTK, Outokumpu Oy (“Outokumpu”), and then by Dragon Mining.  A total of 231 diamond core drillholes for 18,564.63 metres and 135 percusion drillholes for 1,799.33 metres has been completed, resulting in the delineation of the small, medium to high grade gold lode systems.

In 2017 Dragon Mining completed an 80 hole, 2,548 metre RC program was undertaken across the planned open-pit area, where mining is scheduled to commence in 2018.  The drilling has improved the drill spacing in this area, confirming results from historic diamond core drilling and providing confidence in the interpretation of the extent and geometry of the deposit.  A number of significant intercepts were returned including 7.00 metres @ 18.49 g/t gold, 5.00 metres @ 11.31 g/t gold, 9.00 metres @ 9.97 g/t gold, 7.00 metres @ 30.47 g/t gold, 8.00 metres @ 7.48 g/t gold, 4.00 metres @ 11.19 g/t gold, 3.00 metres @ 17.50 g/t gold, 5.00 metres @ 12.59 g/t gold and the narrow high grade 2.00 metres @ 21.25 g/t gold, 2.00 metres @ 29.66 g/t gold and 2.00 metres @ 34.18 g/t gold.

Reserves and Resources

The Indicated and Inferred Mineral Resource for the Kaapelinkulma Gold Project totals 157,000 tonnes @ 4.1 g/t gold for 21,000 ounces as at 31 December 2016 at a reporting cut-off grade of 1.0 g/t gold and inclusive of Ore Reserves. With the successful completion of a Pre-Feasibility level study into the development of the Kaapelinkulma Gold Project the Proved and Probable Ore Reserves at Kaapelinkulma, as at 31 December 2016 total 79,000 tonnes grading 3.5 g/t gold for 8,900 ounces.  The study was based on the establishment of an open pit mining operation and the haulage of ore to Dragon Mining’s operational Vammala Plant to produce a high grade gold concentrate and the processing of this concentrate at Dragon Mining’s Svartliden Production Centre.  The current schedule indicates that the Company’s third gold mine in the southern Finland region could potentially deliver first ore to the Vammala Plant in early 2018.

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

Environment

The Company’s third gold mine in southern Finland, is now able to commence following the receipt of permission to process ore from Kaapelinkulma at the Vammala Plant. The Centre for Economic Development, Transport and the Environment (“ELY Centre”) considered this activity as acceptable and have provided the permission while the new Environmental Permit for the Vammala Plant is still under appeal.  The Environmental Permit to undertake mining at Kaapelinkulma has previously been obtained and the Mining Concession that encompasses the known deposits, granted.

Preparation to commence mining at Kaapelinkulma continues to advance.

No appeals were lodged in relation to the private road transaction or during the 30-day appeal period following the granting of permission by the Pirkanmaa Centre for Economic Development, Transport and the Environment (the “ELY Centre”) to allow a change in use of the Kaapelintie – Honkisuontie junction from private to industrial. Road improvement works can now commence as soon as needed.

Decisions remain pending for applications submitted during the period for the temporary storage of explosives, and to allow temporary offices and storage facilities to be established on the mine site area with the Finnish Safety and Chemicals Agency (“Tukes”) and the Valkeakoski city authorities, respectively.  Decisions for both applications are expected during the coming months.

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