Kryso Resources plc - Pakrut Gold Project

Pakrut Gold Project

The Pakrut gold project lies within the southern portion of the Tien Shan Fold Belt, a belt of folded rocks that extends from near the Aral Sea in Uzbekistan through the northern part of Tajikistan into China and then into Mongolia. Pakrut is located northeast of the capital city of Tajikistan, Dushanbe, from which it can be accessed in around three and a half hours by road.

LLC Pakrut, a wholly owned subsidiary of Kryso, was granted an exploration and trial mining licence over the Pakrut Licence Area, which comprises the Pakrut and Eastern Pakrut gold deposits and a surrounding 6,300 hectare exploration area containing a number of other deposits and mineral occurrences, in April 2004. This licence is valid until 1 April 2014. The Pakrut Licence Area is located within the Tien-Shan Fold Belt, which contains the world’s second largest known gold resources after the Witwatersrand in South Africa.

The reserves of the Pakrut project, which total 1,257,454oz Au at a cut off grade of 0.5g/t (under the Russian classification system), were approved by the State Committee for Reserves (GKZ) of the Republic of Tajikistan on 15 December 2008. This approval gives Kryso the exclusive right to a full mining licence valid for 20 years.

A bankable feasibility study on a mining operation at the Pakrut deposit is underway, a positive pre-feasibility study has been completed and the results of exploration and resource development drilling by Kryso have been highly encouraging.

Kryso has appointed the Beijing General Research Institute of Mining & Metallurgy (BGRIMM) to complete the Pakrut gold project bankable feasibility study. The BGRIMM is a highly reputable Chinese consulting group active in the fields of mining engineering, mineral processing and metallurgy, and has completed substantial work for well known international companies including Kazakhmys, El Dorado Gold, SinoGold, ArcelorMittal and Griffin Mining. The BGRIMM is ISO9000 certified.

In completing the Pakrut project BFS the BGRIMM will build on work previously completed by other consultants to Kryso including GeoLogix Mineral Resource Consultants (resources), GBM Minerals Engineering Consultants (metallurgical test work review and preliminary process design), Prime Resources (social and environmental), Scott Wilson Group (tailings dam design), SGS Group (metallurgical test work) and Turgis Mining Consultants (mining and infrastructure).

There are three additional mineralized systems within five kilometres of the main Pakrut gold deposit. These are the Eastern Pakrut gold deposit, the Sulfidnoye gold and silver prospect and the Rufigar prospect. For more information on the Sulfidnoye and Rufigar prospects please see the Pakrut Satellite Prospects section of the website.

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Resources

Pakrut and Eastern Pakrut Deposits

Total JORC Code-compliant resources of 3,024,000oz Au, assuming a 0.0g/t cut-off grade, have been defined at the Pakrut gold project. The Pakrut deposit remains open and is expected to yield further JORC Code-compliant resources over time.

Total JORC Code-Compliant Resources – Pakrut Gold Project

Cut-off Au (g/t)	Tonnes (metric)	Au(g/t)	Ag(g/t)	Au (oz)
0.0	46,380,000	2.03	0.95	3,024,000
0.5	41,723,000	2.23	0.83	2,990,000
1.0	36,600,000	2.42	0.82	2,852,000
3.0	7,878,000	4.66	0.81	1,181,000
5.0	2,334,000	6.72	0.88	504,000

Total JORC Code-Compliant Measured & Indicated Resources – Pakrut Gold Project

Measured + Indicated
Cut-off Au (g/t)	Tonnes (metric)	Au (g/t)	Ag(g/t)	Au (oz)
0.0	22,038,000	2.38	0.73	1,690,000
0.5	21,827,000	2.40	0.72	1,687,000
1.0	18,964,000	2.64	0.71	1,610,000
3.0	5,288,000	4.99	0.81	848,000
5.0	1,920,000	6.94	0.90	428,000

The total resources and reserves of the Pakrut deposit under the Russian classification system stand at 2,055,047oz Au, assuming a 0.5g/t cut-off grade.

Pakrut Reserves/Resources - Russian Classification System - Categories C1+C2+P1

Oz Au	Cut-off Grade (g/t)	Grade (g/t)	Tonnage
2,055,047	0.5	2.44	26,211,495
1,789,803	1.0	3.17	17,579,081
1,664,213	1.5	3.98	13,009,893

Eastern Pakrut Resources - Russian Classification System - Category P1

Oz Au	Cut-off Grade (g/t)	Grade (g/t)	Tonnage
84,000	1.0	3.1	830,000

Pakrut Approved* Reserves - Russian Classification System - Categories C1+C2

Oz Au	Cut-off Grade (g/t)	Grade (g/t)	Tonnage
1,257,454	0.5	2.62	14,910,748
1,119,827	1.0	3.25	10,708,939
1,036,479	1.5	3.99	8,075,313

* Reserves approved by the State Committee for Reserves (GKZ) of the Republic of Tajikistan, giving Kryso the right to a full mining licence valid for 20 years.

Internal Prefeasibility Study Highlights

Operating cash flow before tax of US$345m
Post-tax NPV and IRR of US$115m and 67% respectively (10% discount rate)
Start-up capital requirement of US$65m
Average cash cost of US$291/oz Au
Average production of 100,000 oz Au per annum
Minimum mine life of 6 years, processing 1,460,000t of ore per annum
Combined open pit and underground operation

Note:

The internal prefeasibility study was conducted on the basis of a previous JORC Code-compliant resource estimate for the main Pakrut deposit of 1,056,587oz Au, assuming a cut-off grade of 0.5g/t. The ongoing bankable feasibility study will be based on the most up to date resource estimate possible. It is expected that the incorporation of additional resources into the bankable feasibility study will have a substantial positive impact on the forecast economics of the project.

Highlights of Drilling at Pakrut

123.7m	@	6.14	g/t Au
inc. 86m	@	8.48	g/t Au
42m	@	11.17	g/t Au
50m	@	5.67	g/t Au
41.4m	@	4.08	g/t Au
30m	@	13.32	g/t Au
6.5m	@	37.97	g/t Au
40m	@	8.56	g/t Au
7.8m	@	6.46	g/t Au
11.2m	@	4.81	g/t Au

By the beginning of 2009, over 15,700m of drilling had been completed by Kryso at Pakrut, over 1450m of pre-existing adit had been refurbished, over 600m of new underground development had been excavated, and over 28,000 samples had been analysed by Kryso’s laboratories in Tajikistan. To date more than 4,600 samples have been sent to South Africa and fire assayed at SGS Lakefield, Kryso’s independent assay laboratory.

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Metallurgical Testwork

Initial metallurgical testwork was carried out by Tajik Geology with reported gold recoveries, using rudimentary gravity recovery methods, of 47% to 98%. Consistently high gold recoveries above 80% and mostly above 90% were attained using a combination of gravity methods and cyanidation. Further metallurgical testwork has been carried out by SGS Lakefield and has confirmed the results of the work carried out by Tajik Geology.

Geological Setting

A large number of world class mesothermal gold deposits are hosted within the Tien Shan Fold Belt. The Pakrut area is included in this province, as well as in the rare-metal-polymetallic Zeravshan-Hissar belt of mineral deposits and the Kugiturinscky gold belt of low-sulphide gold-quartz mineralization.

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The rocks surrounding the Pakrut Licence Area are dominantly metamorphosed Palaeozoic marine sedimentary formations with subordinate Mesozoic sediments and intrusive rocks. An Upper Ordovician green schist horizon is the most important formation in the area, as it tends to have localised zones of hydrothermally altered, gold bearing rocks. This green schist unit is reported to be the eastern extension of the gold bearing formations of western Uzbekistan where sizable gold deposits including Muruntau, Daugystau and Zarmitan are located.

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