BAU PROJECT - asia · Sey Seng, Ropih, Arong Bakit, and Juala West. Each of the 34 deposits or...

BAU PROJECT

Mineral Resource and Ore Reserve Updated to JORC 2012 Compliance

16 November 2018

Bau Project Mineral Resource and Ore Reserve Updated to JORC 2012 Compliance

November 2018 Page 1 of 21

Highlights • Bau Project Mineral Resource and Ore Reserve has been updated to comply with the requirements of

the JORC Code 2012 compliance • This is based on the previously released Mineral Resource and Ore Reserve estimates contained in

Besra’s 2013 Feasibility Study reported under JORC 2004. • Methodology used in the 2013 Feasibility Study is entirely consistent with the requirements of the

JORC Code 2012. • Table 1 (attached) is a tabulation of the reporting requirements necessary under the JORC Code 2012.

The total Mineral Resource (Measured and Indicated) is 21,285,300 tonnes @ 1.64 Au g/t for 1.125 Mil Oz on a 100% basis. (Inferred Resources estimate is 51,329,000 tonnes @ 1.32 Au g/t.) Total Mineral Reserves (Proven and Probable) is 10.662 @ 1.72 Au g/t and are included in the Mineral Resource estimate.

Bau Project Background The Bau Goldfield Projects on the Island of Borneo in Sarawak, Federation of Malaysia is a brown-field project comprising Mining and Exploration tenements that cover about 1,340 km2 of highly-prospective ground within the historic Bau Goldfield. Besra Gold Inc. currently owns and controls 92.06% of the Bau Project JV through its subsidiary, North Borneo Gold Sdn Bhd, (“NBG”) a Malaysian incorporated company. The other minority co-ventures are a Malaysian Mining Group, Gladioli Enterprises Sdn Bhd (“Gladioli”) and Golden Celesta Sdn Bhd in which Besra has a joint venture interest. Mineral resources in Malaysia are state owned. Exploration and mining rights are issued through the Minerals Ordinance 2004, effective as of 1 July 2010, and the Mining Rules (1995). The tenure types comprise a GPL (general prospecting licence), EPL (exclusive prospecting licence), MC (mining certificate) and ML (mining lease). Besra, through the Bau Project JV, holds a combination of 39 Mining Licensees, Certificates, and Prospecting Licenses covering around 134,000 hectares. Under the terms of the JV, Gladioli is required to maintain licences in good standing and renew expired licences with due diligence. The tenements are currently held by the relevant Gladioli entities, on behalf of the JV.

3D View of the Bau Project-showing sectors, deposits and prospects



During 1946-1984 small scale gold mining was carried by local miners in the Bau region. In 1983 Bukit Young Goldmine Sdn. Bhd. (BYG) consolidated many of the small mining leases and set up a centralized heap-leach plant introducing CIL in 1986. In 1991 BYG exploration drilling resulted in the reopening of the Tai Parit Pit, the introduction of Zadra gold elution, electro-winning and conversion to CIP in 1992. After producing 1.2 million Au oz at an average grade of 7 Au g/t, operations ceased in 1996 because of low Au prices. Being centred on the Bau township, and proximal to the provincial capital of Kuching (some 40 km away) the Bau Goldfield is favoured with extensive infrastructure development. The Bau Goldfield Project extremities and primary deposits are linked by road, within a twenty-minute drive from the established project base. The active quarrying and past gold mining industry supports a knowledgeable, experienced, and accessible workforce and management opportunity, as a well as earthmoving equipment service providers that support the quarrying and mining industries within the Bau district. All-weather sealed trunk roads connect Bau with deep water port facilities and an international airport at Kuching. There is no government royalty on gold produced in Sarawak, and no export duty or tariff for gold concentrate. NBG’s “Pioneer Status” also provides for 70% of project net income to be tax free for the first five years, with possible extension under certain circumstances. Import duties are 10-30% for most goods, although for certain drilling and mining equipment no import tariffs are payable. Exploration and prospecting costs are eligible for special tax allowances. Summary of Resource and Reserve Estimate Within the Bau Goldfield portion of the JV geological and resource modelling was undertaken on the individual Jugan and Sirenggok deposits; the Pejiru sector (Pejiru-Bogag, Pejiru Extension, Boring and Kapor deposits), the Bekajang sector (Bekajang North, Bekajang South, Johara, Karang Bila and BYG-Krian deposits), and the Taiton sector (Taiton A, Taiton B, Tabai and the Overhead Tunnel deposits). Mineral Resources for these deposits are reported, inclusive of Ore Reserves, accounting for all pertinent exploration and resource definition drilling and channel sampling results. The Mineral Resource and Ore Reserve statements are detailed in the Bau Project Pre-feasibility Study December 2013 (“technical report”). In keeping with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Part 7, Use of Foreign Code 7.1:

(1) Besra Gold Inc. the issuer, chooses to make disclosure and file herein that Besra Gold Inc. uses the mineral resource and mineral reserve categories of the JORC Code (2012), an acceptable foreign code, because the issuer (b) is incorporated or organized under the laws of Canada or a jurisdiction of Canada, for its properties located in a foreign jurisdiction.

(2) As the issuer is relying on subsection (1), the issuer confirms in the “technical report” that there are no material differences between the mineral resource and mineral reserve categories used and the categories set out in Part 1, Definitions and Interpretations, Sections 1.2, Mineral Reserves, and 1.3, Mineral Resources.

(3) Measured, Indicated and Inferred Resources estimated in accordance with the provisions of NI43-101 guidelines and CIM definitions are an accepted foreign code under JORC 2012.



The following figure depicts the Jugan deposit in 3D and its relationship in the Bau Gold Trend.

Jugan incremental Mineral Resource development

Mineral Resource Estimate The 2012 and 2011 resource updates, as well as the 2010 original resource definition, are based on resource drilling during 2010 to 2012. They incorporate all historic and recent drilling validation and geological re-interpretation. The mineral resource estimates are also inclusive of, and not additional to, the ore reserve estimates referred to below.

Category Tonnes (t) Grade (Au g/t)

Measured 3,405,600 1.52

Indicated 17,879,700 1.67

Measured + Indicated 21,285,300 1.64

Inferred 51,329,000 1.32 Mineral Resource (JORC 2012) by Category



Sector Deposit Category Cutoff (g/t) Tonnes (t) Grade (g/t)

Jugan Jugan

Measured 0.5 3,405,600 1.52

Indicated 0.5 14,505,700 1.51

Inferred 0.5 1,774,000 1.57

Bekajang-Krian

BYG-Krian Indicated 0.5 1,534,000 2.45

Inferred 0.5 2,972,000 1.39

Bekajang South Inferred 0.5 3,214,000 1.51

Bekajang North Inferred 0.5 1,250,000 2.33

Karang Bila Inferred 0.5 774,000 2.56

Tailings Inferred 0.5 3,138,000 1.00

Taiton

Taiton A Indicated 0.5 1,148,000 2.23

Inferred 0.5 690,000 1.37

Tabai (Open Pit) Indicated 0.5 119,000 2.87

Inferred 0.5 78,000 1.69

Tabai (Underground) Indicated 2.0 155,600 3.82

Inferred 2.0 40,000 2.75

Taiton B Inferred 0.5 1,848,000 1.56

Umbut Inferred 0.5 690,000 2.26

Overhead Tunnel Inferred 2.0 76,000 3.34

Sirenggok Sirenggok Inferred 0.5 8,346,000 1.14

Pejiru

Pejiru-Bogag Inferred 0.5 11,800,000 1.10

Pejiru Extension Inferred 0.5 7,053,000 1.14

Kapor Inferred 0.5 4,849,000 1.59

Boring Inferred 0.5 2,096,000 1.10

Say Seng Bukit Sarin Inferred 0.5 1,110,000 1.27

Say Seng Inferred 0.5 244,000 3.24 Resource Update Summary by Sector/Deposit (100% basis)

Geology and Geological Interpretation The Bau Goldfield deposits are characterized by four distinctive gold mineralisation styles that exhibit both lateral and vertical geochemical and economic mineralogical zonation with respect to the Bau Trend intrusives:

• Sediment rock-hosted disseminated deposits, e.g. Jugan; Bukit Sarin; • Silica replacement (jasperoid) and open space siliceous breccia deposits, e.g. Tai Parit; Bukit Young

Pit, Bekajang; • Mangano-calcite-quartz vein deposits, e.g. Tai Ton; Pejiru, Kapor; and • Magmatic – Hydrothermal porphyry related deposits with/without calc-silicate skarn, e.g. Sirenggok,

Sey Seng, Ropih, Arong Bakit, and Juala West. Each of the 34 deposits or prospects comprising the Bau Project contains one or more of these styles of mineralisation which extend over 15 km in a NE-SW direction and 7-8 km in a NW-SE direction.



The Bau Project geology is distinguished by calcareous sedimentary host rocks whose preferential permeability for mineralization development is commonly associated with deep basement related faults, Tertiary-aged dacitic intrusives, solution collapse breccias and accompanying epithermal association. Mineralisation style includes silicic-argillic-carbonate hydrothermal alteration, fine grained arsenopyrite-pyrite Au common and associated trace element geochemistry, (As, Sb, Hg, Tl). Lateral zoning is related to the proximity of the Bau Trend felsic intrusives where they crop out in the up-domed portion of the Bau Limestone. Outwards, from intrusive centres, the zonation is typically skarn/calc-silicate porphyry environment grading to silica rich mineralised breccias then silica replacement/calcite limestone contact to the more distal disseminated styles such as found at Jugan. Based on the identification of zonation patterns at Tai Parit, Bau’s deepest mine, it is assumed that similar vertical zonation is also present. A component of the observed surface variations in zonation is interpreted to reflect post-mineralisation differential vertical displacements, arising as a consequence of variations in uplift, erosion and unroofing and on this basis the more distal deposits such as Jugan, Taiton, and Pejiru are considered to have excellent potential for locating Tai Parit/Bekajang style mineralisation analogues, at depth, and beneath the current surface levels of exposure. Because of the large existing exploration database, geological and mineralisation continuity from core examinations, exposed geology in mining pits and underground workings, as well as archived historic information, overall confidence in the geological interpretation is high to moderate. Drilling Techniques The interpretation was completed along sections typically at spacings of 25m (Jugan/BYG-Krian) to 50m although 100m to 200m spacing was used on some sections where there were scarce drilling results. Early sampling by BYG/Menzies used RC for much of their drilling. Early Diamond Drill Core (DDC) holes were predominantly NQ and later NBG/Besra drilling used triple tube, angled and orientated, HQ3 drill core with PQ3 collars. NQ3 was only used when poor ground conditions dictated. Metallurgical holes were drilled with PQ3/PQ. All drill holes were initially routinely surveyed with a HKCX single shot, then replaced by a Camteq ‘ProShot’ electronic multi-shot, down-hole camera. Where geological conditions allowed, DDC was oriented at the end of each 3m run, measured on a run by run basis, and marked out in 1m intervals. Core recoveries were documented and any discrepancies between drill runs, as recorded and measured, were rectified. Readings were taken every 25mdown-hole and surveyed at termination. Drill runs were normally conducted with core barrel lengths of 1.5m and 3.0m, sometimes 6.0m. BYG-Krian was drilled with BQ core and RC. These holes were checked for accuracy and integrity by infill and/or twinned holes with PQ/HQ. Analysis of drill hole data in the resource estimates showed little or no difference in results with or without these holes. This observation, combined with their low percentage contribution, deemed them not to have any material impact on the resource estimate. Sampling and Sub-sampling The analytical results from the combination of Grab/Channel, RC and DDC sampling have been used to support the Mineral Resource and Reserve estimations. RC drilling samples were collected at 1m down-hole intervals, within the mineralised intersection, by cyclone into sample bags. The samples were weighed to determine representivity of the material being sampled by



establishing sample recovery. Samples for assay were pulled with a 4-inch diameter tube “spear”, inserted in the centre and pushed to the bottom of the sample bag. The sample was then placed into another 1m sample bag from which a second split was collected using a 2-inch spear. These second splits were composited into 4m intervals, of around 1 to 4 kg, from which 30g to 50g was used for assay. When composite results assayed greater than 0.5 Au g/t, the original 1m samples were re-assayed. DDC sample intervals were determined by geology and mineralisation. Geologists selected the mineralized intercepts and marked out the intervals for sampling based on geological contacts and/or at 1m intervals, whichever was least. In the absence of contacts, sample intervals were on a metre by metre basis. General practice was to sample several metres either side of mineralized intercepts. Standards and blanks were inserted, and the intervals selected for duplicate sampling. The core was sawn by diamond saw or split into halves, with one half sent for analysis and the remaining labelled and retained for future reference. The core was cut along the apex of any veins or significant mineralized structure to prevent bias. Density determination was done on 10 cm whole core cylinders taken at 10m and 20mdown-hole intervals or where there was a change in lithology. Samples were air dried, weighed, and polyurethane sealed, re-weighed in air then in water and the density determined by water volume displacement formula. Logging was carried out both qualitatively and quantitatively recording lithology/oxidation, hydrothermal alteration, mineralisation, sulphide types, mineralised zone contents, recovery, density as well as structural and vein orientation related to oriented core for dip and plunge of veins, faults, joints and breccias. Percentages of veining and sulphide content were also noted. The half core samples were dried at approximately 100°C, primary crushed to minus 10 mm, then secondary crushed to minus 4mm; the samples were then riffle split twice, with half sample pulverized at 90% passing 75µm. Industry best practices were applied to QC procedures by insertion of certified standards, blanks, umpire sampling, with field and laboratory duplicates taken from the coarse crushed material and preparation duplicates from the pulverized splits. QC control samples were inserted at a nominal interval of 1 in 10 samples, except for blanks and standards which are inserted at 1 in 30 samples. Sample Analysis Method From the half core, N/PQ 4-5 kg and smaller 1-2 kg was crushed, split and pulverised from which 150g used for fire assays; 150g retention and 50g for IPC analysis. Each Au fire assay used a 50g charge with an AAS finish; SGS-FAA505 detection limit of 0.01 ppm. All fire assay Au analyses was of a total assay nature and appropriate for the Bau Project deposit Au mineralisation types. Other elements (23) were analysed by SGS - ICP12S, IMS12S, AAS12S & CSA06V; where values exceed detection limit these were analysed using AAS42S. Cut-off Grade The Au mineralised zone grade boundaries of ≥0.5 Au g/t lower cut-off were drawn on all cross-sections and the grade boundaries correlated from section to section and cross-checked on plan. The applied cut-off grade of 0.5 Au g/t, used to define boundaries between mineralised and unmineralized domains for the Mineral Resource estimate, was based on economic parameters supported by the Pre-feasibility Study 2013.



Datamine’s CAE NVP Scheduler performed pit optimisations using the Lersch-Grossman algorithm which defined the cut-off values based on iterations for planned economic extraction to arrive at optimisation shells considering cost parameters and a long-term Au price of $US1,500 per ounce. The cost parameters were derived mostly from NBG/Besra in-house studies and metallurgical test work conducted by SGS Perth and HRL Brisbane, Australia. Estimation Methodology Block model interpolation used appropriate statistical data and continuity analysis of domains applying kriging oriented ellipsoidal search radii, specific to the domain and minimum and maximum number of samples which varied respectively, with the major and minor radii Mineral Resource estimation and modelling used Ordinary Kriging from 1m composites into specific, appropriate estimation domains for the style and nature of mineralisation. Orebody solids were interpreted at the 0.5 Au g/t grade boundary reflecting the interpreted geology considered a natural domain for mineralised material within the Bau Project deposits under review. Variography was implemented to:

• Establish the extent of anisotropy in the deposits; • Determine the spatial continuity of mineralization along the principal main anisotropic orientations; • Develop variogram model parameters for geostatistical grade interpolation; and • Direct selection of optimum search parameters for Mineral Resource estimation.

Directional semi-variograms for strike, dip and down-hole directions were generated for Au for each of the Bau Project deposits/sectors using the drill hole composites constrained by orebody solids. Downhole, horizontal and vertical increment semi-variograms were generated with the best semi-variograms selected that defined the strike, dip angle and dip direction reflecting the hole composite spacing. These semi-variograms determined the nugget, sill values and ranges. The modelled log semi-variogram values were back calculated to normal semi-variograms for use with Ordinary Kriging. Search ellipse and Ordinary Kriging Parameters were derived from the variogram analysis. A total of 2,085 density values, taken from core measurements, were used for delineating the density distribution within the models. These ranged from 1.53 to 3.16 t/m3 and had a mean of 2.64 t/m3. The block densities were determined by Inverse Distance Squared using a search radius large enough to fill the model. Through a combination of visual examination of the database and assessing histograms, top cuts values were assigned to remove anomalous high-grade outliers for each deposit or sector. High grade cutting applications used in the Mineral Resource estimate resulted from the analysis of drill hole data related to the grade variability coefficient. The decision to apply grade cutting was based on log normal probability plots of grade distribution in each domain with the appropriate cuts being selected to minimise the influence of high-grade outliers without impacting the mean grade of the overall deposit. For each Bau deposit/sector all assays within the mineralised zone volume were used in the zonal estimate. All samples with assays above the top cut in Au g/t were truncated to this value. Top cuts were applied to composite assays constrained by orebody solids prior to grade estimation in Datamine. Resource Classification The Mineral Resource classification is based on confidence in the geological model, continuity of mineralised zones, drilling coverage, confidence in the underlying database and the density information. The data spacing, and distribution was considered adequate to demonstrate spatial and grade continuity of the mineralised domains and to support the definition of Measured, Indicated and Inferred Resource categories according to JORC 2012 code once all other Modifying Factors had been adopted.



Mineral Resource classification was derived from the geostatistical analysis of grade, hole data and spacing, geological, structural and lithological continuity. Cross and longitudinal sections were interpreted from drill hole spacing, together with variography and estimation statistics, using sample quantity, kriging efficiency, and slope regression. In assigning the Mineral Resources classifications consideration was given to known site specific and relevant technical factors; specifically, geology/mineralisation control and grade continuity, reliable spatial distribution of input data and overall interpretation. Geological and Mineral Resource modelling undertaken for the Jugan and Sirenggok deposits, as well as the Taiton, Pejiru and Bekajang-Krian sectors, were classified as Measured, Indicated and Inferred based on the following criteria:

• The Pre-feasibility Study 2013 demonstrated that the Jugan and BYG-Krian deposits have the potential for eventual economic extraction;

• Enough exploration drill coverage provided quality sampling and assaying data of sufficient precision and accuracy, as well as confidence in domain interpretation, to support the appropriate resource classifications;

• Measured Mineral Resource categorization denotes that sufficient sample assay analysis and density data exist, and that further drilling and sampling would not increase the confidence in the quality of the Mineral Resource estimate;

• Indicated Mineral Resources categorization denotes that sufficient confidence level to support this classification based on drill coverage, a strong understanding of the mineralisation, including its continuity, and its controlling geology;

• Inferred Mineral Resources categorization denotes that the geology and grade continuity have been established, but to the extent that mineral grade continuity only be inferred or extrapolated from insufficient drill coverage;

• Some mineralised areas were not classified as Mineral Resources on the basis that grade, and geological continuity had not been established to the required confidence levels of Measured, Indicated or Inferred Mineral Resources and as such, and for the purposes of the Project, are considered exploration potential.

Mining Method, Parameters and Modifying Factors The Bau Goldfields mineralisation’s challenging geometry and proximity to surface favours conventional drill and blast open pit, over bulk underground, mining methods. The faulted and fractured nature of the mineralised zones, as well the host rock, introduces challenges to underground mining that are less relevant in open pit mining. The parameters used to derive the economic models for Jugan and BYG-Krian assume a production capacity of 8,000 tpd. Using the economic models for each mining/process option, and applying the ultimate pit parameters, a set of ultimate pits was defined. These were identical for Jugan and BYG-Krian, save for the overall slope angles of 45° and 47°, respectively. The basis for eventual economic extraction optimised shells, using Gemcom/Datamine/CAE Mining software, considered all-in cost parameters and a base gold price of US$1,500. A blast hole pattern was designed to achieve the smallest mining unit (SMU) of 10m by 24m, using a 3.3m burden by 3.5m spacing providing enough manoeuvring space for a 7m3 shovel matched to 4 or 5, 100t haul trucks. A minimum downhole length of 2m was used in the interpretation of the mineralisation, which equates to 1.5m width. The assumed mining method would use 2.0 to 2.5m mining lifts. Mine benches will be typically



15-20m wide and final at 5m. Bench heights will be at a maximum of 15m with face slopes defined by the Rock Mass Rating (RMR) model. The mineralisation domains were assigned 5% mining dilution of non-economic low-grade material into the interpreted domains to maintain continuity. A 5% weight loss of economic grade material in digging was applied at 95% mining recovery. Reported Mineral Resources contain no allowances for unplanned dilution, or mining recovery. Metallurgical Methods, Parameters and Modifying Factors The metallurgical method, and the appropriateness of that process, is driven by the style of mineralisation of the Bau Project Au deposits. Mineralogical analysis indicates that the dominant mineral phase in the Jugan Au mineralisation is arsenopyrite whereas it is pyrite in some other deposits of the Bau Project. The assumption is that all the Au mineralisation is deleterious; refractory being “fresh” sulphides with little or no oxidation characteristics even at, and near, the surface. Diagnostic direct cyanidation leach results, typical of arsenopyrite-pyrite refractory ores, indicated that the Au occurrence in Jugan is low in free Au, based on the low percentage of Au recovered. Detailed flotation tests of key parameters were carried out on refractory gold representative samples. Typically, about 90% to 95% of the Au was recovered in rougher/scavenging stages at mass pulls between 10 and 33 wt% depending on slime entrainment, the effect of which will be reduced by the proposed desliming circuit. S and Au extraction kinetics were slow due to the inhibiting effects of slimes. Mineralogical composition of a cleaner (deslimed) concentrate showed that arsenopyrite and pyrite account for 67.4 wt% of the cleaner flotation concentrate. Metallurgical process factors for As, Fe and S in-situ were modelled in 3D for the resource estimate, along with the Au. From the level of resource definition, the production of an Au bulk flotation concentrate is the most viable means of recovering Au. This is based on the size of the Jugan orebody, the highly refractory nature of its Au content and its response to flotation. It follows that the preferred metallurgical process is to produce a Au concentrate from a crush, grind and flotation facility followed by an oxidation process on the sulphide Au concentrate. Three oxidation processes options were considered in the test work for further treatment of the Au concentrate; Albion®, POX or BIOX®. POX delivers the highest Au extraction at 98%. Au extractions for both BIOX® and Albion® are at around 90%. Cyanide consumption impacts the operating costs, in addition to the Albion® process being a severely uncommon Au sulphide oxidation process. Any of these processes result in oxidized concentrate that would be treated by conventional cyanide leaching, elution, Au electrowinning and Au doré melting. Following review of a cost/benefits of the oxidation processes, the option was taken to produce a Au concentrate, followed by drying/bagging for shipment to off-shore smelters, appropriate for the sulphide style of mineralisation encountered at Jugan, BYG-Krian and throughout the Bau Goldfield. The base case option used in the Pre-feasibility Study 2013 accounted for flotation test work results, standard smelter contract terms and applied the overall Au recovery from flotation concentrate and a smelter concentrate recovery estimate at 77%. Besra’s objectives, and indeed its assumption for production, is the delivery of a saleable concentrate will be produced, free from unmanageable penalties and deductions; and a reasonable “Smelter Contract” negotiated.



Ore Reserve Estimate In the Pre-feasibility Study completed in December 2013 Besra Gold/North Borneo Gold demonstrated that the Jugan and BYG-Krian deposits have the potential for eventual economic extraction. The Ore Reserve definition and assessment, limited to the Jugan and Bekajang (BYG-Krian) deposits, were based on the criteria of their Measured and Indicated Mineral Resources having enough confidence for Ore Reserves to be defined. The Ore Reserves are included within the overall Resource figures. Additionally, mineralised blocks below cut-off grades are reported as waste and assigned with no grade, notwithstanding that they contain low Au values. Representative “post card” sections that outline the mineralised zones intersected by drilling at Jugan and BYG are shown below respectively.

Jugan Section W-E Jugan Section N-S

BYG Section Mineralisation Material Assumptions The mineralisation was defined by drill sample logging and assay data, supported by surface mapping, outcrop locations, and channel sampling. Together these data enabled development of a geological framework for the interpretation of the mineralised domains. A geological relationship was developed from the Au g/t versus logged geology to facilitate mineralisation interpretation in zones of uncertain grade continuity. The drilling data base, plan views, and sections containing lithology and structure were all used to interpret the geological modelling, which is considered reliable. The validity of the original historical DDC and RC logged geology, surface mapping and data related to the geological interpretation is taken as assumed, the confidence of which is based on it having been verified by several previous Competent Persons.



The Ore Reserves are predicated on the assumption that the most favourable options, based on preliminary economic estimates, are for Contractor-Mining and Owner-Operator; 8,000 tpd, crush, grind, float Au concentrate for off-shore smelting are accounted for in the Pre-feasibility Study December 2013. All aspects of the Project, related to the Jugan and Bekajang (BYG-Krian) deposits including the Ore Reserves, are deemed to be defined by studies at the Pre-feasibility level, which determined that a practical mine plan is technically achievable and economically viable. Subsequently all material Modifying Factors have been considered and additional post-pre-feasibility technical work continues. Besra plans to update the current study to Feasibility Study level prior to assessing the Bau Project financing options. The following general site layout figure for Jugan identifies waste landform, mining pit, Run-Of-Mine (ROM) stockpile, Tailings Storage Facility and associated infrastructure.

Jugan Infrastructure and MC/ML Boundaries

Classification Criteria The methodology of Ore Reserve classification for the Jugan and BYG-Krian deposits accounted for in the Pre-feasibility Study 2013 demonstrates it is entirely consistent with the requirements of JORC 2012. Besra Gold/North Borneo Gold carried out an Ore Reserve definition and assessment of local estimates for the Bau Project based on the Mineral Resources associated with the Jugan and Bekajang (BYG-Krian) deposits. These deposits, or parts thereof, (along with parts of the Taiton Sector) have resources at suitable confidence levels for classification of both Measured and Indicated Ore Reserves. At this stage no reserve definition work



has been conducted in the Taiton Sector. All Proven and Probable Ore Reserves were derived from Measured and Indicated Mineral Resources, respectively. Global Ore Reserve Tonnes Summary by Category (November 2013)

Reserve Category Tonnes (t) Grade (Au g/t)

Proven 3,418,650 1.47

Probable 7,243,920 1.81

Proven + Probable 10,662,570 1.70

Prospect Ore Reserve Summary by Sector/Deposit (November 2013)

Sector Reserve Category Tonnes (t) Grade (Au g/t)

Jugan Proven 3,418,650 1.47

Probable 6,368,190 1.61


BYG-Krian Proven 0 0

Probable 875,730 3.31

Proven + Probable 875,730 3.31

In compliance with JORC Code definitions, Mineral Resources have been converted to Proven and Probable Ore Reserves. 13,050t of Indicated Resources and 3,405,600t Measured Resources have been converted to 3,418,650t Proven Reserves (Jugan). Jugan Proven Ore Reserves were estimated at 3,418,650t taking in 3,405,600t (100%) of the Measured Mineral Resources. The Jugan and BYG-Krian combined totals of 7,243,920t of Probable Ore Reserves were classified from 3,405,600t (100% Jugan) Measured, and 3,838,320t Indicated (53% Jugan) out of a total of 14,505,700t Indicated, Mineral Resources after consideration of the modifying factors that were applied to exploitation of those deposits. Probable Ore Reserves for Jugan and BYG-Krian total 7,243,920t, derived from 14,505,700t of Indicated Mineral Resources, or about 47%. Mining Method and Assumptions The results of analysing the orientation, width, depth and grade of the Au mineralisation modelled, indicate that an open pit mining method would be the most reasonable means of extracting the Au mineralised material. The mining operation is driven by the geology, drilling and blasting practices, subject to stringent grade control procedures during mining. Small areas of internal waste, with no or minor Au grade, which could not be modelled discretely were incorporated within the overall ore zone represented in the grade model. These areas contributed the highest percentage to dilution. The mine design anticipates 10m by 24m Smallest Mining Units (SMU) with bench heights at maximum 15m for face shovels matched to haul trucks extracting 8,000 tpd ore plus waste in 2.0 to 2.5m lifts. Mine benches will be typically 15-20m wide and final at 5m. The reality is that ROM stockpile management to blend styles of mineralisation from different zones and deposits will result in as close to an optimal feed quality as is practical. External, footwall and hanging mining dilution was applied to the Ore Reserves. Internal dilution, zero or sub-ore grade, is included in the Mineral Reserve. Mining extraction estimates 5% of the ore will be lost during



excavation at the waste/ore contacts, representing 95% mining recovery. No additional mining dilution or mining recovery factors have been applied to the pit optimisation as these are largely accounted for in the recoverable resource methodology used in the formulation of the current Mineral Resource model. At Jugan Hill ore “daylights”, at surface, require minimal pre-production overburden stripping. As with the waste, the ore will be free digging, eliminating drill and blast. With depth the ore will need to be ripped first, then eventually the ore and waste will require drilling and blasting. In waste separation best practice drilling and blasting will minimise throw and displacement, followed by a strict ore grade control regime, combined to maintain dilution at or below 5%. Different ore grades will be selectively reclaimed for ROM stockpile process for feed blending. The geotechnical data for the Jugan deposit indicated there would be areas with poor Rock Mass Rating (RMR) located at the north and south-east side of the deposit. The geotechnical data for the BYG-Krian deposit indicated fair to good RMR, especially at depth. Poor RMR starts at 0 mRL, more so at the southern end of the deposit. More detailed mine design will identify a minimum mining width, dictated by the SMU in the mining fleet, balanced with productivity and the mine’s economic production requirements. The preferred pit design is based on the highest average cash flow pit shell using a discount factor of 8%. The assumption is that 8,000 tpd is the most cost-effective daily production rate and that the geometry of the pits can accommodate the equipment size required to meet the designed production capacity. Processing Method and Assumptions Flotation tests on refractory gold representative samples were carried out on key parameters. Typically, about 90% to 95% of the Au was recovered in rougher/scavenging stages at mass pulls between 10 and 33 wt% depending on slime entrainment, resulting in slow S and Au extraction kinetics. Mineralogical composition of a cleaner (deslimed) concentrate showed that the arsenopyrite and pyrite account for 67.4 wt% of the cleaner flotation concentrate. The head grade assumed for the process plant is in the 1.5-1.9 Au g/t range. The reality is that ROM stockpile management, to blend styles of mineralisation from different zones and deposits, will result in as close to an optimal feed quality as is practical. Supporting this assumption is that post-Pre-feasibility flotation work indicates that the metallurgical response of other deposits, like BYG-Krian, Julia, Taiton, Pejiru and Sirenggok with estimated flotation recoveries in the range 41% to 94%, are closely related to total S and Au associated with the sulphides resulting in higher Au concentrate grades than Jugan for equal contained Au gold, despite the lower overall flotation recovery. In relation to the Jugan/BYG-Krian base case of 8,000 tpd (2.92mtpa) and flotation concentrate process option, the process plant will likely have the following configuration:

• Crushing • Grinding/Primary Cyclone • Cyclone or Continuous Knelson Desliming • Rougher/Scavenger Flotation • Regrinding/Secondary Cyclone • Cleaner Flotation • Concentrate Filter feed Thickener • Filter Press



• Reagent mixing, storage and distribution • Services. • Control room & Facilities • Support Facilities.

The process plant is planned to produce a flotation concentrate filter cake and the Au recovered from an offshore smelting facility. Cut-off Grade The Ore Reserves are included within the overall Resource figures. Additionally, mineralised blocks below cut-off are reported as waste with no grade, although they contain low Au values. Datamine’s CAE NVP Scheduler generated pit optimisations using the Lersch-Grossman algorithm which defined the cut-off values based on iterations for planned economic extraction to arrive at optimisation shells considering cost parameters and an Au price of $US1,500 per ounce. The cut-off calculation includes all operating costs associated with the extraction, processing and marketing of concentrate. Derived cut-off grades vary with each deposit/sector and for owner-operator Vs contract-mining options. Based on the optimisation runs and the applied parameters the cut-off for two of the most developed deposits, Jugan and BYG-Krian, are shown below:

• Cut-off grade of 0.39 to 0.44 Au g/t was applied to Jugan Ore Reserves, with a strip ratio of 1.60/1.47 for owner-operator and contract-mining options, respectively.

• Cut-off grade of 0.58 to 0.65 Au g/t was applied to BYG-Krian Ore Reserves, with a strip ratio of 4.41/3.94 for owner-operator and contract-mining options, respectively.

Estimation Methodology Measured and Indicated Resources within the final pit design were converted to Proven and Probable Ore Reserves. Some inferred blocks were “caught up” and included but assigned as waste and as such will be re-classified, as appropriate, during excavation by grade control best practices. Internal or host rock contact waste within the Mineral Resource kriging model is deemed to be enough to account for the 5% reduction in the contained quantity of the Mineral Resources within the pit designs allowing for mining ore loses. The Ore Reserves present as delivered to the process plant. Major assumptions are that the extensive data validation, cross checking and rectification process undertaken prior to resource modelling used to verify the fidelity of all the data and sources were the most appropriate, particularly with respect to the historic data. As such this enabled the inputting of “clean”, reliable and accurate data into the Mineral Resource model. Likewise, it is assumed that the ore zone wireframes generated in Gemcom/Datamine/CAE Mining and imported into Datamine/CAE Mining and validated before assigning orthogonally oriented block model cells, are reliable. A revision to the Mineral Resource estimate was made in the February 2012 Resource estimate release. No changes or further modelling was undertaken, save for a change to the cut-off grade, and therefore the other assumptions concerning the information remain valid. The cut-off grade was lowered because preliminary pit design and costing identified the possibility that the reserve cut-off grade could be lower than the resource cut-off grade creating a situation where there could be Ore Reserves not in the corresponding Mineral



Resource. The initial cut-off grade was 0.75 Au g/t and subsequently reduced to 0.5 Au g/t. The assumption is that preliminary Pre-feasibility work was appropriate. There are no known naturally occurring risks that would materially impact upon the estimation and classification of the Ore Reserves. Material Modifying Factors The Bau District has had long association with the gold mining legacy. Evidences of both past and current mining activities can be found throughout the district and interaction between the industry and the surrounding stakeholders. An ecological and social survey completed in 2014 found that local stakeholders identified and engaged are aware of and understand the risks and advantages of mining operations in their communities. The Ore Reserve is based on the Pre-feasibility Study 2013 but excludes subsequent work and an ongoing update to those studies. Most aspects of the Bau Project are at a Pre-feasibility Study level of accuracy and confidence particularly related to the Modifying Factors’ consideration of mining, processing, metallurgical, infrastructure, economic, gold price, legal, environmental, social and Malaysian Federal and Sarawak State governmental factors are documented. The assumption is that the Modifying Factors used for the conversion of the Mineral Resources to Ore Reserves are robust. All operating and capital costs, as well as revenue streams were included in the financial models. Sensitivity analysis was applied to capital costs, operating costs, gold grade, gold recovery, gold prices and foreign exchange. Inflation rate and price increases were not considered. Some key effects identified in the Sensitivity Analyses of the Bau Project are:

• Increases in mining and process cost variations caused drops in IRR/NPV, but did not go negative within the variations tested, showing a less sensitive impact.

• The capital cost variation showed a similar trend although a +20% increase scenario takes the project negative.

• Other than Au price, the grade and recovery analysis show much more sensitivity that the other parameters.

• Although the sensitivities show the negative impact of higher costs and lower grade; recovery and Au price also show a large upside for small positive increments.

• These sensitivities when combined have a compounded impact. • Overall the negative impacts are of lower value than the equivalent positive impacts.

In summary, the project is relatively insensitive to capital costs, due to the relatively extensive life of mine, more sensitive to operating costs and foreign exchange, somewhat sensitive to gold price and foreign exchange rates and most sensitive to gold grade, gold recovery, gold price. Competent Persons Statement The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr. Kevin J. Wright, a Competent Person who is a Fellow of the Institute of Materials, Minerals and Mining, a Chartered Engineer, and a Chartered Environmentalist. Mr. Wright is an independent consultant. Mr. Wright has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore



Reserves’ and a Qualified Person as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators. The information in this report that relates to metallurgical test work is based on information reviewed by Mr. Wright. Mr. Wright consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.



Signatures Signed: 16th November 2018

Kevin J. Wright, ACSM, FIMMM, C Eng, C Env

Effective Date of this Updated Report: 16th November 2018



Certificates of Qualified Persons

to accompany the updated report entitled “Bau Project Mineral Resource and Ore Reserve Updated to JORC 2012 Compliance”

Dated 16 November 2018

KEVIN JOHN WRIGHT Pahang, Malaysia Mobile: +60 (0)12 630 5870 Email: [email protected] CERTIFICATE of AUTHOR I, Kevin John Wright, ACSM Mining Engineering, FIMMM, C Eng, C Env do hereby certify that:

1. I am a qualified mining engineer and currently working as an independent mining consultant. 2. This certificate relates to the updated technical report entitled, "Bau Project – Mineral Resource and Ore Reserve

Updated to JORC 2012 Compliance" dated 16th November 2018. 3. I was awarded the ACSM in Mining Engineering, in 1975 from the Camborne School of Mines, (now University

of Exeter), Devon, England. 4. I am a Fellow of the Institute of Materials, Minerals and Mining. FIMMM membership number 461659. 5. I am a Chartered Engineer of the Engineering Council (UK). C Eng registration number 321765. 6. I am a Chartered Environmentalist of the Society for the Environment (UK). C Env registration number 9930. 7. I am a Member of the Canadian Institute of Mining, Metallurgy and Petroleum. MCIM membership number

705065. 8. I have practiced my profession continuously for a total of 43 years since my ACSM awarded from the Camborne

School of Mines. 9. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI43-101”) and certify

that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfil the requirements to be an “qualified person” for the purposes of NI 43-101.

10. I am responsible for the overall preparation of the technical report. 11. I have had prior involvement with the property that is the subject of the Technical Report having been on site

as an independent consultant. 12. I am not aware of any material fact or material change with respect to the subject matter of the Technical Report

that is not reflected in the Technical Report, the omission to disclose which makes the Technical Report misleading.

13. I am independent of the issuer applying all of the tests in section 1.4 of National Instrument 43-101, as I am an independent consultant to North Borneo Gold Sdn Bhd/Besra Gold Inc.

14. I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form.

15. I consent to the filing of the Technical Report with any stock exchange and other regulatory authority and any publication by them for regulatory purposes, including electronic publication in the public company files on their websites accessible by the public, of the Technical Report.

Dated this 16th Day of November 2018 Kevin J. Wright, ACSM, FIMMM, C Eng, C Env

Competent Person’s Consent Form

Pursuant to the requirements of ASX Listing Rules 5.6, 5.22 and 5.24 and Clause 9 of the JORC Code 2012 Edition (Written Consent Statement)

Report name


(Insert name or heading of Report to be publicly released) (‘Report’)

Besra Gold Inc

(Insert name of company releasing the Report)

Bau Project, Sarawak, Malaysia

(Insert name of the deposit to which the Report refers)

If there is insufficient space, complete the following sheet and sign it in the same manner as this original sheet.

16 November 2018

(Date of Report)

Statement

I,

Kevin John Wright

(Insert full name(s))

confirm that I am the Competent Person for the Report and:

• I have read and understood the requirements of the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code, 2012 Edition).

• I am a Competent Person as defined by the JORC Code, 2012 Edition, having five years experience that is relevant to the style of mineralisation and type of deposit described in the Report, and to the activity for which I am accepting responsibility.

• I am a Fellow of The Institute of Materials, Minerals and Mining and Metallurgy a ‘Recognised Professional Organisation’ (RPO) included in a list promulgated by ASX from time to time.

• I have reviewed the Report to which this Consent Statement applies.

I am a full time employee of

(Insert company name)

Or

I am a consultant working for

Wrightech Engineering


and have been engaged by

Besra Gold Inc.


to prepare the documentation for

Bau Project, Bau, Sarawak, Malaysia

(Insert deposit name)

on which the Report is based, for the period ended

16 November 2018

(Insert date of Resource/Reserve statement)

I have disclosed to the reporting company the full nature of the relationship between myself and the company, including any issue that could be perceived by investors as a conflict of interest.

I verify that the Report is based on and fairly and accurately reflects in the form and context in which it appears, the information in my supporting documentation relating to Mineral Resources and/or Ore Reserves.

Consent

I consent to the release of the Report and this Consent Statement by the directors of:

Besra Gold Inc.

(Insert reporting company name)

18 November 2018

Signature of Competent Person:

Fellow of the Institute of Materials, Minerals and Mining

Date:

461659

Professional Membership: (insert organisation name)

Membership Number:

Steve Wilson, Auckland

Signature of Witness:

Print Witness Name and Residence: (eg town/suburb)

JORC (2012) Table 1 – 16 November 2018

Bau Gold Project Page 1 of 92

JORC Code, 2012 Edition – Table 1 Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria JORC Code explanation Commentary (completed by Competent Person-Kevin J. Wright)

Sampling techniques

• Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.

• The analytical results from the combination of Grab/Channel (G/C), Reverse Circulation (RC) and Diamond Drill Core (DDC) sampling have been used to support the Mineral Resource and Reserve estimations reported in reference Pre-feasibility Study 2013.

• North Borneo Gold (NBG) have made considerable efforts and set systems in place in terms of the procedures followed for drill core and other sample handling and processing since 2010 that are consistent with industry best practice to reduce incorrect sampling errors to within acceptable boundaries.

• Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used

• The Competent Person is unaware if any specialized measurement tools, e.g. down hole gamma sondes, or handheld XRF instruments etc. or calibration of any tools were employed.

• Channel and trench sampling were extensively carried out across the mapped Jugan orebody surface to a depth of 1-3m. The base of the trench was “cored/slotted” in 1m sample lengths to correspond to the similar volume as HQ drill core and used to delimit the ore zone on surface. Samples followed similar logging and sample procedures as for drill holes. No duplicate trench “cored/slotted” samples were taken to assess the accuracy and integrity of the first samples, however, coarse reject samples were re-assayed. Similarly duplicate core and RC rock chip samples from the coarse reject samples were re-assayed.

• Renison Goldfields (RGC) was the only company to routinely take down hole surveys during the pre-2007 period and drilled most of the deeper holes indicating that their drill hole plots would be more reliable for geology and lithology interpretation.

• NBG did not carry out down hole surveys before 2010 but did so following the arrival of Besra Gold Inc, when with subsequent drill programmes down hole surveys became routine.

• For orientation/deviation, all holes were routinely surveyed initially with a HKCX single shot then replaced by a Camteq ‘ProShot’ electronic multi-shot down hole camera every 25m down hole and at termination.

• BYG/Menzies, about 1994 to 1999, RC drilling samples were collected at 1m down hole intervals within the mineralised intersection by cyclone into sample bags. Samples for assay were pulled with a 4-inch diameter tube “spear”, inserted in the centre until bottom the sample bag and placed into another 1m sample bag from which a second split was collected using a 2-inch spear. These second splits were composited into 4m intervals of around 1 to 4 kg from which 30g to 50g was used for



assay. All sample bags were appropriately labelled, ticketed and documented. When composite results assayed greater than 0.5 Au g/t, the original 1m samples were re-assayed.

• RC samples collected at 1m down hole intervals were weighed to determine representivity of the material being sampled by establishing sample recovery. The Standard Operating Procedures (SOPs) for RC sampling were used and are on file in the Bau exploration office.

• Selected samples some from RGC and BYG/Menzies were dispatched to the umpire laboratory MAS, Bangkok, Thailand. Most results matched, and those that did not were replaced by new result.

• Core trays were index marked for hole and tray number and depth metreage. Before logging and sampling the end of hole line was marked for reference.

• Core sample intervals were determined by geology and mineralisation. In the absence of contacts, sample intervals were on a metre by metre basis marked on the core and the intervals recorded with sample numbers. Standards and blanks were inserted, and the intervals selected for duplicate sampling.

• Geologists selected the mineralized intercepts and marked out the intervals for sampling based on geological contacts and/or at 1m intervals, whichever was least. General practice was to sample several metres either side of mineralized intercepts.

• Half-core was regularly taken from the same side of the core run. • The measures referenced here attest to the assurance of sample representivity and also that where

applicable, appropriate calibration of any measurement tools or systems used were done.

• Aspects of the determination of mineralisation that are Material to the Public Report.

• Early sampling procedures were variable and unclear due to the duration of historical exploration and numerous companies involved. Sampling procedures ranged from undocumented to industry best practice (most recently). The samples were presented to various commercial laboratories depending on project owner at the time for preparation and analysis for Au content using fire assay.

• In the recent programmes under NBG/Besra, discretion was used in sampling to ensure lithology and alteration boundaries had not been crossed. All DDC samples were selected based on mineral content and lithology.

• There were no intervals within the mineralised interpretations that were not sampled and assayed. • Mineralisation styles share characteristics with the Carlin Style in Nevada, USA hosted in calcareous

sediments, host rock permeability is important in mineralization, associated with deep faults, Tertiary-aged dacitic intrusives, solution collapse breccias and epithermal association.

• Similarities in Carlin mineralisation style include silicic-argillic-carbonate hydrothermal alteration, fine grained arsenopyrite-pyrite Au common and similar trace element geochemistry, (As, Sb, Hg, Tl).

• In cases where ‘industry standard’ work has been done this would be relatively simple (e.g. ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to

• From 2010/12 NBG/Besra holes were PQ collared and switched to HQ for good ground conditions and surveyed at 25m intervals down hole for resource and 50m intervals for exploration holes.

• In 2010/12 programme all NBG core drilling was HQ triple tube with either 1.5 metre or 3 metre core barrels.



produce a 30 g charge for fire assay’). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (eg submarine nodules) may warrant disclosure of detailed information.

• Core was placed into metre long core trays with the runs marked by core blocks. Core barrels range from 1.5 metres to 6.0 metres depending upon ground conditions.

• Half core was retained as evidence and the other half used for analysis. • The Bau project deposits do not contain any significant presence of free/coarse gold as the

mineralisation is contained in “fresh” rock domains and predominantly refractory.

Drilling techniques

• Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).

• Early sampling by BYG/Menzies used RC drilling for the majority of their drilling at Bau. • Early DDC drill holes were predominantly NQ diameter with additional holes in HQ/PQ. • All NBG/Besra drilling was DDC with triple tube; angled and orientated; drill core used was HQ3 with

PQ3 collars; NQ3 was only used when poor ground conditions dictated; metallurgical holes were drilled with PQ3/PQ. A mix of standard and triple tube drilling was used in the historical diamond drill holes.

• At Jugan 17 out of 82 RC holes (±5% of 252 total holes) were used in the resource estimate; some holes were drilled with BQ with only 24 out of 252 (9.5%) holes used in the resource estimate.

• All DDC core where geological conditions allowed, were oriented at the end of each 3m run. Early in the programme this was achieved by an orientation spear and then progressed to the use of an electronic ‘OriShot’ orientation device. The drillers mark the base of the drill core at the end of the run and marked the base line of the core axis. This was checked by the NBG site geologist for accuracy and consistency.

• A block was placed at the end of the run showing the measured rod depth and the amount of core lost had the subscript "L/C"; A block also showing nominal depth at the start of a run wherein a core orientation survey was taken had the subscript "C.O.";

• Orientation of all competent HQ and NQ core was conducted down hole by the Contractor as required by the Company.

• For orientation, all drill holes were initially routinely surveyed with a HKCX single shot then replaced by a Camteq ‘ProShot’ electronic multi-shot down hole camera.

• Readings were taken every 25m down hole for all holes and surveyed at termination. Orientation data was collected electronically with an Orishot orientation device routinely at the end of each HQ drill run where it was judged usable information could be obtained. Drill runs normally ran with core barrel lengths of 1.5m and 3.0m, sometimes 6m. Orientation data was recorded electronically to prevent transcription errors.

• Down hole surveys were checked mathematically and visually in the database, and in 3D in the CAE Mining Studio geological and mining software package. Any surveys with recorded errors of unacceptable deviations were excluded from the down hole survey database.

• Historic drill holes did not have down hole surveys done, only drill hole orientation surveyed at the collar; most of them shallow (<100m) and vertical, and according to Terra Mining Consultants/Stevens & Associates (TMCSA) any deviation was considered minor.



Drill Type: • Many pre-2007 era DDC holes drilled by BYGS/Menzies were BQ (some NQ) using Winkie rigs, NQ

using a Longyear 28 and HQ/NQ using a Hanjin rig. DDC drilling by RGC and Gencor was largely HQ using Longyear 44’s.

• The BYG/Menzies RC programme used Schramm T4 and a G&K850 rigs. • In 2007/8 era drilling was done with Boyles BBS-10 and Christensen-Boyles CS1000 rigs. All holes

were drilled in HQ triple tube. • NBG/Besra’s drilling contractor used Indodrill ID 500 track/skid mounted rigs on 16 holes averaging

approximately 100-200 metres each angled at between 90 and 40 degrees using a combination of PQ and HQ wireline core drilling.

Drill Metrics: • Prior to 2007, more than 175,000m in 2,156 drill holes averaging about 80m in depth is recorded in

the historic drill database and archived records. • In 2007/8 era NBG drilled 5,782m in 50 HQ DDC holes averaging 115m in depth. • Later in the programme NGB drilled AQ core for geochemical sampling 5 shallow holes, 2 at

Sirenggok, 2 at Pejiru and 1 at the BYG pit. • From 2010/12 NBG drilled 40,031m in 208 DDC holes averaging just over 190m deep for resource

(79%), exploration (17%), and metallurgical (4%) purposes.

Drill sample recovery

• Method of recording and assessing core and chip sample recoveries and results assessed.

• In 2010/12 programme each drill run was recorded in a log which and signed by the drill contractor and NBG’s representative each day.

• Jugan core recovery averaged 98% throughout; some historic recoveries averaged 96%. • Besra BYG-Krian core recoveries averaged 95% and slightly lower due to broken ground near the

collars of the ore zones. • TMCSA wrote that they observed no correlation between core recovery and Au grades, suggesting no

apparent bias in the assay grades from core recovery. • The acceptable high overall sample recovery and the lack of its relationship with Au grade underpins

that no sample bias might have occurred due to preferential loss/gain of fine/coarse material.

• Measures taken to maximise sample recovery and ensure representative nature of the samples.

• RC procedures required regular cleaning of cyclones, splitters and sampling equipment to reduce contamination.

• DDC is firstly measured on a run by run basis and marked out in 1m intervals. Core recoveries were documented and any discrepancies between drill runs as recorded and measured were rectified.

• Field logs were completed to include measured core recovery at the rig before transporting the core in secured tray boxes to the BYG/Menzies sampling facilities.

• Where difficult ground was encountered or where the sample recovery could be compromised,



controlled drilling speeds and short drilling runs (1.5m triple tube) were used. • The drilling contractor’s agreement with NBG/Besra was structured to ensure that the maximum

possible core recovery was achieved, with reasonable precautions being taken to prevent crushing, wearing or grinding of the core. Core loss deemed to be due to the Contractor's negligence was not paid and when excessive in the opinion of the Company, necessitated re-drilling;

• Driller was committed to apply the minimum force to liberate the core from the core barrel and make a minimum number of breaks in the core to enable fitting into trays.

• Each tray had blocks indicating the hole number and estimated depth, at both the start and end of the tray as well as measured rod depth at the end of each drill run, irrespective of the length of the run.

• A block was placed at the end of the run showing the measured rod depth and the amount of core lost had the subscript "L/C"; A block also showing nominal depth at the start of a run wherein a core orientation survey was taken had the subscript "C.O.";

• Orientation of all competent HQ and NQ core was conducted down hole by the Contractor as required by the Company.

• Cores misplaced, spilt or otherwise rendered unusable owing to the Contractor's acts or omissions necessitated re-drilling

• As can best be determined from historic accounts and recent reporting, measures taken during drilling aimed at maximising sample recovery to ensure representativity of all samples.

Logging

• Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.

• RGC, Gencor/Minsarco and BYGS/Menzies Gold logged and sampled core, which they documented in hardcopy, transferring to digital format.

• All the BYGS/Menzies Reverse Circulation (RC) holes were geologically logged and codes assigned on hardcopy logs. Data was manually entered and for the most part was systematically and accurately done.

• TMCSA which undertook the Bau Project - 2013 Pre-feasibility Study, stated that historic drill core logging data in hardcopy included geological descriptions, and sample intervals correlating to assay data represented that procedures had followed the accepted standard at the time.

• TMCSA also managed the review and re-logging/re-interpretation of historic core where appropriate and their observations showed that all previous companies undertook geological logging with adequate geological descriptions, sample intervals marked, and correlated to assay data, concluding that systematic procedures were followed in most cases to the acceptable standards at the time.

• In 2010, representative drill core from all the prospects used in the Mineral Resource estimation were reviewed by TMCSA, comparing drill core with lithological descriptions in the drill logs and checked against the lithological data entered into the database.

• Hardcopy core logging was generally descriptive by all companies that worked at Bau to date. BYGS/Menzies and RGC coded on hardcopy logs then into the geological databases.

• Recoveries were measured and geotechnically logged by a qualified geologist in hardcopy logs after



which the data was electronically entered in the database. • For RC chip samples, BYGS/Menzies entered the geological descriptions onto hardcopy logs which

TMCSA reviewed and found generally consistent with geological descriptions essentially correlating with geochemistry.

• TMCSA was satisfied that the core logging had been carried out and the data recorded and entered into the database to accepted industry standards and that the logging supported geological continuity, and was able to define appropriate domains, based on geology, for resource estimates.

• Geologists selected the mineralized intercepts and marked out the intervals for sampling based on geological contacts and/or at 1m intervals, whichever was least. General practice was to sample several metres either side of mineralized intercepts.

• Geological logging for drill holes, channels and trenches for 2010/2012 followed the NBG/Besra logging and data validation procedures.

• Geotechnical observations of weathering, Rock Quality Designation (RQD), discontinuity types and frequency per metre were logged. Geomechanical logging by a geotechnical engineer determined Rock Mass Rating (RMR) and other geomechanical factors for the deposits.

• For the Jugan sector geomechanical and geological logging took in drill holes JUDDH-6 to JUDDH-81. While the geological logging was largely based on the lithology, alteration and mineralisation, veining and structures; the geomechanical logging was based on a maximum length of 3m per run and considered the mechanical, structural and the mineralogical properties of the rocks and rated them according to the Rock Mass Rating (RMR) parameters: o Rock Quality Designation (RQD) based on:

a. Recovered length b. Length of run

o Discontinuity per metre based on: c. Total number of discontinuities d. Recovered length of run

o Discontinuity roughness o Discontinuity alteration and fill based on:

e. Infill and mineralisation in the infill f. Alteration of the discontinuity walls g. Minerals present in the discontinuity walls

o Weathering state of discontinuities o Aperture of the discontinuities o R-values taken from the intact samples of each lithology units o Intact Rock Strengths (IRS) derived from the weighted R-values of intercepted lithologies in the



run • The RMR values were used to develop the block model RMR for Jugan. Together with the structural

model that was created, a slope design was developed for 15m high with 5m bench face slope. The slopes from the optimised pit design were generated using an overall 45-degree pit slope and adjusted based on the recommended slopes from the RMR block model.

• Similarly with BYG-Krian the geomechanical and geological logging took in drill holes BYDDH-01 to BYDDH-42 adopting the same methodologies and set of procedures as Jugan.

• Density determination was done on 10 cm whole core cylinders taken at 10m and 20m down hole or with a change in lithology. Samples were air dried, weighed, and polyurethane sealed, re-weighed in air then in water and the density determined by water volume displacement formula.

• The core and chip sample logging detail and protocol sufficiently covered geology and geotechnical properties to enable NBG/Besra to undertake a Mineral Resource estimation, mining studies and metallurgical studies to fulfil the minim requirement of the Pre-feasibility study published in 2013.

• Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography.

• Logging was carried out both qualitatively or quantitatively. Logs recorded lithology/oxidation, hydrothermal alteration, mineralisation, sulphide types, mineralised zone contents, recovery, density as well as structural and vein orientation related to oriented core to calculate dip and plunge of veins, faults, joints and breccias. Percentages of veining and sulphide contented were also noted.

• All NBG/Besra core in each tray was cleaned, clearly marked with drill hole identification and interval from beginning to end before being photographed (wet and dry) prior to being logged by geologists. All photos were collated electronically and indexed.

• Channels for sampling were 10 cm wide, 2 to 3 cm deep, 1m long and spaced one metre apart for the total length of the trench which could at some locations exceed one hundred metres. Logging followed similar qualitative and quantitative logging as with RC rock chips.

• The total length and percentage of the relevant intersections logged.

• Notwithstanding holes that encountered runs of broken and unconsolidated rock, 100% of the relevant recovered core and rock chips to the extent practical, were properly logged.

• In 2010, CPs from TMCSA reviewed historic core and rock chips; re-logged and re-interpreted the relevant logs as necessary in addition to core descriptions in the drill logs and checked them against the lithological data entered into the database. TMCSA’s documented observations noted that all pre-2010 core were logged with adequate geological and lithological descriptions, sample intervals, and correlated to assay data.

• From 2010 going forward CP, Graeme Fulton (TMC part of TMCSA), as General Manager of Bau Project, oversaw the drilling programmes and compliance with best practices logging protocol.



Sub-sampling techniques and sample preparation

• If core, whether cut or sawn and whether quarter, half or all core taken.

• RGC and Gencor set up the current sample preparation facility and their staff trained SGS. • Much of the early core drilling by BYG/Menzies was BQ size and split by core splitter. Since the late

1980’s all drill core was halved with diamond saws or for soft material a splitter was used. TMCSA authenticated this from their observations of remaining core.

• Early sample preparation was carried out by BYG/Menzies and the procedures are unknown to the CP, Kevin J. Wright. However, examination of a representative population of the vast drill log database by CP’s from TMCSA showed that core samples were collected based on geology and mineralised intervals. BYG/Menzies records showed that they had a rigorous and systematic sample collecting methodology in place for their largely RC drill programme. They prepared their samples at the sample preparation facility on site.

• Post-2010, the core was sawn by diamond “Clipper” saw or split (where too soft to cut) into halves, with one half sent for analysis and the remaining labelled and retained for future reference. To prevent bias, the geologist logging the core supervised core cutting and ensured that the core was cut along the apex of any veins or significant mineralized structure.

• The geologists filled out standard instruction forms for the SGS analytical laboratory and the samples were delivered to the SGS sample preparation and processing facilities.

• CP, Kevin J. Wright has reviewed the SGS Bau sample preparation, fire assay and AA facility, process and equipment as well as the SOP’s used by the SGS laboratory at BYG, and he is satisfied that due care and attention to precision and minimal contamination and loss of sample were executed to best industry standards.

• If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry.

• In 2007, BYG/Menzies RC programme; dry samples were collected through cyclones and sampled using a spear when dry. Initially air volumes at the RC rig were insufficient to keep samples dry below the water table, and samples were collected wet from the cyclone base. Fine material in suspension could not be captured in the overflow water exhibiting inherent shortcomings drilling in wet environments. The use of these sample results was identified and not included.

• Above the water table, RC dry samples were collected at 1m down hole intervals within the mineralised intersection by cyclone at the drill hole, into sample bags prior to sampling.

• The CP, Kevin J. Wright understands from geology staff with Besra that participated in the drilling programmes that the cyclone was cleaned routinely and always at the completion of each hole.



• For all sample types, the nature, quality and appropriateness of the sample preparation technique.

• In 2010 SGS Laboratories, accredited ISO17025, provided NBG/Besra with sample preparation and Au fire assay analytical services, with minor element (23) analyses by ICP in Perth and in 2012 at their new facility at BYG-Bau.

• Screen sieve tests were done for sample preparation on coarse minus 4 mm secondary crush and on the pulps following pulverizing in the LM2 ring mills. 5 % each of the minus 4 mm fraction was sieved for 90 % passing minus 75-micron in each case prepared from a sufficiently large and finely crushed sub samples and homogenised to represent the whole sample taking into consideration likely gold sizing and grades.

• A unique number was assigned to each core sample for sample preparation: o Placed core/rock sample into numbered metal trays o Weighed and dried in a gas fired oven at 100 – 120 °C o Primary Crushed to approx. 8 mm top size as required o Secondary Crushed to approx. 80% passing minus 2 mm o Split to the required weight for pulverizing o Pulverised in an Essa LM1/B2000 or and Essa LM3.

• For all sample types, the nature, quality and appropriateness of the sample preparation technique are in line with industry best practices.

• The post-2010 drilling ½ core samples were dried at approximately 100°C, primary crushed to minus 10 mm, then secondary crushed used a Rocklabs Boyd crusher to minus 4mm; the samples were then riffle split twice, with ½ sample pulverized in an LM3 with 90% passing 75µm;

• Depending on the size of half core, for N/PQ 4-5 kg and smaller 1-2 kg was crushed, split and pulverised 150g for fire assay with AAs finish; 150g retention and 50g for IPC analysis.

• All sample pulps and coarse rejects were bagged and stored for usage as required (period of 3 months), and thereafter returned to NBG/Besra from the SGS laboratory for storage at Bau core yard.

• Sample preparation technique for drill core shown in the following flow sheet was typical and amended if there was likely to be visible gold present; unusual for Bau mineralisation.

• CP, Kevin J. Wright has reviewed the laboratory preparation process used and the proper implementation of SOP’s by the SGS laboratory.



Sample Preparation Flowsheet for Drill Core

• Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.

• To maximise representivity, RC sampling quality control was driven by tracking rock chip weight for variance and blowing the splitters clean between sample intervals.

• NBG/Besra DDC holes were sampled and assayed on nominal 1m intervals, except at geological or lithological boundaries. Historically, holes were sampled at 1.5 and 2m intervals with later holes nominally at 1m. These longer run intervals made up approximately 5-10% of the total drilled metres.

• Half-core was routinely cut along the same side of the re-oriented core, with the end of the hole line identified in the tray for reference. The assay-subsample was placed into the sample bags labelled



with assigned sample number and sealed. • Grab float, outcrop, trench/channel and soil samples were logged, photographed and data recorded as

for DDC applying representivity protocol including sub-sampling requirements. All primary samples were assigned x, y and z coordinate and recorded as drill holes for ease of data handling in geological and resource modelling software. Sampling protocols were filed in the NBG/Besra Bau exploration office archives.

• Measures taken to ensure that the sampling is representative of the in-situ material collected, including for instance results for field duplicate/second-half sampling.

• NBG/Besra introduced industry standard protocols for QC by inserting certified standards, blank samples, umpire sampling, field duplicates from the coarse crushed material and preparation duplicates from the pulverized splits.

• In addition SGS supplied NBG an analysis on a monthly basis of the laboratory’s performance with respect to their own internal QC procedures.

• NBG/Besra’s standard sampling procedures for RC rock chips with insertion of standards, blanks and duplicates, are applied in the same manner as for drill core.

• Standard “second split/coarse split” and pulp duplicates were introduced into the sample stream for the laboratory assays. The results returned were analysed providing an understanding of the proportions of the variance introduced and at this stage to optimise, and/or improve the process.

• Core sample intervals were selected through geology and mineralisation logging, and assigned numbers, as well as insertion of standards, blanks and duplicates for representative in-situ sampling.

Pulp Duplicates • NBG/Besra’s QC procedure included pulp duplicates retrospectively analysed at ten sample intervals

from the database and assigned a unique number to related back to the primary sample number. • Logarithmic Correlation Original of Original and Laboratory and Laboratory Repeat Samples, in

Section 11, Sampling-Assaying, of the Pre-feasibility Study 2013 illustrates the results for re-sampled duplicates Vs laboratory original duplicates. The ideal trend line for a perfect duplicate Vs original sample result are almost identical.

• Lower grades limits show sample dispersion for lesser grade replication of the original samples. The higher variation of duplicate Vs original sample grades is within the detection limit and considered appropriate.

Field Duplicates • Integral to sampling QC for sample reproducibility, crushing homogenization and gold distribution a

duplicate from every 10th sample was taken from the split after the second crushing to a nominal P80 -4mm whole sample. Each field duplicate is assigned a unique sample number in the sample stream for each batch.

• Log-log Plot graphs for Field Duplicates for each of the four areas drilled since 2010, Jugan, Bekajang, Taiton and Juala are presented in The Pre-feasibility Study 2013, Section 11, Sampling - Assaying.



• Comparison of the field duplicate plots shows that correlation coefficients for Taiton, Jugan and Bekajang are close to one, ranging from 0.9884 to 0.9923. In the case of Juala the R2 value drops to 0.8763 possibly reflecting a smaller data set and the number of samples below detection of 0.01 ppm Au that are set to 0.005 ppm.

Preparation Duplicates • Duplicate from every 10th sample was taken from the split after pulverizing a nominal P80 -75 microns

for sample reproducibility, crushing homogenization at the fine grinding and gold distribution and information on sampling for the fire assay by laboratory personnel and other factors like nugget effect by overgrinding etc.

• Log-log Plot graphs for Preparation Duplicates for each of the four areas drilled since 2010, Jugan, Bekajang, Taiton and Juala are presented in The Pre-feasibility Study 2013, Section 11, Sampling - Assaying.

• Comparison of the preparation duplicate plots shows that correlation coefficients for Taiton, Jugan, Bekajang and Juala are all close to one, ranging from 0.9638 for Taiton to 0.9987 at Juala.

• In the case of Taiton the R2 value is 0.9638 where disparity occurs in the original and duplicate lower grade ranges but are due to transposition errors. Overall the discrepancies lie mainly in the lower grade ranges where a small difference has a large effect especially where values below detection limit of 0.001 ppm are set at 0.005 ppm.

Laboratory Duplicates • QC procedure also monitored duplicate assays conducted by SGS on NBG’s samples also shown in a

Log-log Plot, SGS Duplicates Section 11, Sampling – Assaying showed a correlation coefficient of 0.98.

• Whether sample sizes are appropriate to the grain size of the material being sampled.

• For DDC the sub-sample sizes, around 3 to 5 kg as they relate to the Au mineralisation in the samples represents the style of mineralisation, estimated true width of the mineralised structures based on hole intersections, sampling procedures and Au assays.

• For RC drilling comparison of anomalous duplicates and 4m composite assays Vs 1m assays showed acceptable repeatability indicating sub-sample size is appropriate for the gain size. When 4m composite anomalous results were returned, the individual 1m samples were assayed for comparison and the corrected result was assigned appropriately.

• Au grain size of the Bau project deposits/sectors is predominantly fine and refractory. Samples were prepared from a sufficiently large and finely crushed sub samples and homogenised to represent the whole sample taking into consideration likely gold sizing and grades.

Quality of assay data and

• The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or

• Gencor and RGC used their own protocols of duplicates, standards, blanks and umpires that were to industry standards of the 1990’s. TMCSA stated that BYGS/Menzies Gold had rigorous QC protocols and all historic QC values available were analysed.



laboratory tests

total. • Historic assays: RGC and Gencor/Minsarco used commercial labs and their own QC systems; BYGS/Menzies Gold used Assaycorp initially in Australia and then in Kuching, Sarawak as well as McPhar, Analabs and Inchape for umpire sampling and QC.

• Au Fire Assay used a 50g charge with an AAS finish; SGS-FAA505 detection limit of 0.01 ppm. All fire assay Au analysis were of a total assay nature and appropriate for the Bau Project deposit Au mineralisation types.

• Other elements (23) were analysed by SGS - ICP12S, IMS12S, AAS12S & CSA06V; where values exceed detection limit these were analysed using AAS42S.

• This suite did not initially include sulphur which was added late in the Jugan programme to provide geo-metallurgical information.

• Additionally, tungsten and thallium were added to the suite using ICP-MS to get the low detection limit for soil sampling while total sulphur values above 2.5 % were determined by method CSA06V utilisng high temperature combustion with Infrared measurement. Arsenic values above 0.5 % were determined by AAS.

• All the sample data for the 2010/12 programmes were assayed initially by SGS either in Perth and/or later at the new BYG onsite SGS ISO 17025 compliant laboratory, conducting data verification and QC procedures on the assay data.

• Besra/NBG also conducted QC and verification procedures on the data. All sample data and returns were stored electronically and in hardcopy for future reference and checking. One blank was submitted with every batch of around, up to one hundred samples. Standards were inserted for every thirty samples.

• Umpire samples were not routinely collected through the programme. At Jugan all holes drilled by NBG and assayed at Mineral Assay & Services (MAS), Bangkok were re-assayed by ALS in Orange, NSW, Australia, an accredited laboratory and used as an umpire population to identify any major precision and accuracy issues with MAS. Some selected samples were also checked at SGS Waihi, New Zealand.

• CP, Kevin J. Wright has not reviewed any of the above identified laboratory preparation process used at that time and the proper implementation of otherwise sound SOP’s by the laboratory have not been verified.

• For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.

• Because NBG outsourced early geophysical survey work, they were not privy to the details of parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.

• Planetary Geophysics from Toowoomba, Queensland, Australia carried out the geophysical 3D offset pole-dipole induced polarisation (IP) considered the best technique to characterize the chargeability and resistivity of a known orebody and determine any other areas with similar response to Jugan-style orebodies.



• Similarly Besra outsourced an extended 3-D IP survey to cover Bukit Sarin and extensions to Jugan from interpolation of all data sets and defined drill targets.

• Nature of quality control procedures adopted (e.g. standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (i.e. lack of bias) and precision have been established.

• NBG/Besra, introduced a non-certified “standard” from a homogenized mineralised sample. The assay results from this NBG “standard” are shown in The Pre-feasibility Study 2013, Section 11, Sampling - Assaying.

• The 120 plus NBG standards analysed gave a mean of 10.645 Au g/t with a standard deviation of 0.288 g/t Au. Apart from four (4) samples all results lie within the 95th percentile.

• Reliance on assay integrity was largely placed on the protocols adopted by MAS and their assay values are shown in Section 11, Sampling – Assaying, with the gold scatter plots of the standards used by MAS during 2007 to 2009.

• NBG/Besra sourced certified geochemical standards from Rocklabs, New Zealand which were inserted into the sample stream at a ratio of 1:30. A variety of standards were used of different grades.

• NBG/Besra introduced industry best practices for QC procedures involving the insertion of certified standards, (e.g. Rocklabs SE58, SG56, SK52, SN60, and SG40 & SG50), blanks, umpire sampling, field and laboratory duplicates from the coarse crushed material and preparation duplicates from the pulverized splits. QC control samples were inserted at a nominal interval of 1 in 10 samples, except for blanks and standards which are inserted at 1 in 30 samples.

• TMCSA stated that most of the standards performed reasonably well reporting plus or minus 5% within the expected based on the 95 percentiles.

• SGS also insert its own duplicates, blanks and standards and reported these in its monthly analysis siting their own internal QC procedures which included percentage passing/not passing 75µm with associated duplicate assays in the Au assay return. Log-log plots of SGS laboratory duplicates by TMCSA showed an acceptable correlation coefficient of 0.9848 for precision.

• In NBG’s quality control procedure, duplicates of the pulps were retrospectively analysed at intervals of ten (10) samples from the NBG database. Duplicate samples were assigned unique numbers that could be related to the primary sample number and tracked.

• NBG used logarithmic plots of the duplicates verses the laboratory duplicates which showed the ideal trend for a perfect original-duplicate sample result, derived from the equation y=mx+b where m is the slope, which is equal to one, and b is the y-intercept equal to zero.

• Sample points for the duplicates showed a good correlation between the original and replicate samples. The distribution closely patterned the ideal linear trend line. Grades in the lower limits, however, showed more sample dispersion signifying lesser replication of grades of the original samples. The higher variation between the original and duplicate grades of samples near and within the detection limit zone can be considered normal.

• The QC elements of the Pre-feasibility Study 2013 did not identify that the integrity of the test work and assay results were significantly impacted by sampling bias errors related to the uncommon



existence of coarse free gold, with the conclusion that the levels of accuracy and precision were achieved.

• It is noteworthy at Jugan that the amount of sulphur did not vary significantly, and by inference, the weight percent of sulphide mineralisation was virtually independent of the gold grade in the composite. There is an increase in arsenic content of some 40%, for an increase in the composite gold content of 500%. The amount of arsenic found in the Jugan mineralisation is a strong indicator of the gold content.

Verification of sampling and assaying

• The verification of significant intersections by either independent or alternative company personnel.

• During the 2010 audit process of historic drill holes, TMCSA randomly selected a sample group for independent verification by SGS Waihi, New Zealand. No significant discrepancies were found.

• Historic data with suspected discrepancies were re-sampled (quarter core or coarse rejects) and validated against discrepancies and resolved, then re-assayed at SGS laboratory in Bau.

• NBG/Besra routinely sent pulps from approximately 10% of all its samples to an independent laboratory for umpire analysis and the results compared, with no significant bias that would affect any resource classification

• As part of verification TMCSA sent representative samples of drill core from several projects to be analysed independently at SGS Waihi, New Zealand in the case of core from Jugan, Pejiru and Sirenggok. The SGS Waihi results are reasonably consistent and the variations are likely caused by ¼ core used reflecting natural inhomogeneity.

• CP, Kevin J. Wright has not reviewed the laboratory preparation process used at that time and the proper implementation of otherwise likely sound SOP’s by the laboratory.

• At Taiton, a new project that had not been modelled, samples were selected by TMCSA from historic holes at Taiton A, Bungaat and Tabai using drill logs, assay data and physical examination. The remaining core sample was ¼ cut using a diamond saw, prepared on site and sent to MAS Thailand for analysis.

• The Taiton assay data range is higher in the original than in the check samples, and overall high values in the original data showed high values in the check data. The original samples were ½ BQ whereas the checks were of ¼ cores from BQ core. The aim of the check sampling was determined in the first instance that the gold content of the core was real. Similar orders of magnitude in comparative samples were generally observed.

• CP Kevin J. Wright has found no specific documented evidence that “significant intersections” have been independently verified.

• The use of twinned holes.

• BYG-Krian was drilled with BQ core and RC. These holes were checked for accuracy and integrity by infill and/or twinned holes with PQ/HQ;

• TMCSA’s analysis of drill hole data in the resource estimates showed little or no difference in results with or without these holes; this and their low percentage contribution, deemed them not to have any material impact on the resource estimate.



• Around 1996, BYG/Menzies raised issues with potential smearing of values in the RC drilling at Pejiru when comparative results between twinned DDC and RC holes were examined, especially below the water table. Consultant, Mr. Mustard evaluated the issue and concluded that the amount of smearing was not significant.

• Kevin J. Wright, Competent Person has taken the view that this issue remains unresolved and therefore agrees with TMCSA that this is one reason the resource at Pejiru is categorized as Inferred and identified as unreliable to be included for future resource estimate work.

• He also recommends that core from holes with significant intersections be re-assayed and also twinned.

• Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.

• NBG stored all historic hard copy records including dispatch sheets, original signed assay result sheets, and geological logs on the site office in Bau.

• TMCSA reviewed several original surface and underground channel sampling maps and sections and documented that they found them adequate for resource estimation where survey control could be verified. Where data could not be verified, it was excluded from the database. TMCSA stated that analyses of data used in the resource estimation showed little or no difference in results with or without these samples and deemed appropriate to use.

• They identified field duplicates within the database. Whilst variations existed on a sample by sample comparison, the overall results they stated were acceptable.

• NBG/Besra logging was entered directly into electronic spreadsheets, containing data validation routines and code tables and uploaded to master spreadsheet and subsequently uploaded to a fully integrated GeoMIMS platform with further data and code validation and checking. Data was transferred twice daily to the server.

• Historic data on hardcopy log sheets were captured on Excel spreadsheet format, validated and checked by TMCSA.

• Data verification was carried out by TMCSA on the primary data: o Access Database on a project by project basis and recent data not in current database, e.g. NBG

data o Checked collar surveys against original survey data sheets, duplications and omissions. o Checked assays in database against original data logs for BYG/Menzies, RGC and Gencor. o Compiled existing BYG/Menzies drill assay database, using original primary data laboratory assay

certificates and/or from drill logs, including fire, roasted fire assay, and AAS, roasted AAS. Compared with data in Access database, corrected omissions, errors etc., and derived an accepted interval value resource modelling.

o Check geological log codes on Access database, on project by project basis. Modified codes where necessary; developed consistent coding system based on the existing BYG/Menzies coding system. Input data from NBG hard copy logs into new database for each project.



• Overall 1,614 drill holes within the resource areas were verified in terms of collar, survey, geology, density, assay values and intervals, including validation of 63,694 drill hole assay records and 1,610 channel/trench assay records.

• Issues including missing assay data, missing drill collars, miss-plotted drill holes, different drill holes with same collar and survey data, etc., were systematically reviewed, rectified where possible or discarded if not.

• From the database validation carried out, TMCSA stated that it was satisfied with the data integrity used for the resource estimation.

• Database validation was conducted regularly and when the resource definition began, used the standard mining software packages (Datamine/CAE Mining) tools.

• Discuss any adjustment to assay data. • Following reviews and audits of available sampling and assay data by company staff and consultants, no justification was apparent to warrant adjustment of assay data.

Location of data points

• Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.

Drill Hole Collars • All hole collars drilled by NBG before 2010 were surveyed by Resource Surveys Services, registered in

Kuching, Sarawak using theodolite or total station. • Most of the drill holes were resurveyed and checked by Resource Surveys Services and found to be

within reasonable survey tolerances, with outsiders being adjusted to the re-surveyed value. • Subsequent NBG/Besra hole collars were surveyed by registered surveyors using differential GPS

and/or total station and recorded in the database. All surveys are based on registered and recognised survey stations in the area, including the Sarawak Land & Survey check station on top of the Jugan deposit.

• Channels/trenches were surveyed by registered surveyors; with orientation and dip along the channel recorded; then checked against the topographic surveys.

• In 2010 TMCSA inspected a population of NBG drill hole locations and found the collars set in concrete with the drill hole number, in addition to depth, declination, control pegs, and survey control start, and completion date recorded. A selection of drill holes was checked with GPS identifying small discrepancies of the surveyed positions in the database consistent with accuracy limits of the GPS.

• BYG/Menzies drill holes were also surveyed and converted from the local grid verified by registered surveyors. These drill hole collars were cross-checked where available and according to TMCSA are within reasonable tolerances and TMCSA expressed a greater level of confidence in drill hole locations for all phases of past work than was previously available.

• During the 2010, 2011 and 2012 drilling programmes and field work, all historic drill holes were resurveyed, and their coordinates updated where applicable. Where original records or information was at hand the original coordinates were compared to the current coordinates and verified. Some of these were in other recognised coordinate systems allowing the update of drill holes and other data, particularly those in local grid coordinates.



• Updated topographic data was sourced from Malaysian government accredited aerial survey agents by registered surveyor, Resource Surveys. This topographic information was based on radar aerial surveys and has an elevation accuracy of 1-5m depending upon vegetation cover. This topography covered all the areas of interest for the Bau Project. Local survey updates were incorporated where applicable.

Down-the Hole • All drill core, where geological conditions allowed, were oriented at the end of each 3 metre run. Early

in the programme this was achieved by an orientation spear and then progressed to the use of an electronic ‘OriShot’ orientation device. Drillers marked the base of the drill core and base line of the core axis at the end of the run. This was checked by the NBG site geologist for accuracy and consistency.

• For orientation, all drill holes were initially routinely surveyed with a HKCX single shot then replaced by a Camteq ‘ProShot’ electronic multi-shot down hole camera.

• Readings were taken every 25m down hole for all holes and surveyed at termination. Orientation data was collected electronically with an Orishot orientation device routinely at the end of each HQ drill run where it was judged usable information could be obtained. Drill runs normally ran with core barrel lengths of 1.5m and 3.0m, sometimes 6m. Orientation data was recorded electronically to prevent transcription errors.

• Down hole surveys were checked mathematically and visually in the database, and in 3D in the CAE Mining Studio geological and mining software package. Any surveys with recorded errors of unacceptable deviations were excluded from the down hole survey database.

• Historic drill holes did not have down hole surveys done, only drill hole orientation surveyed at the collar. Because most of them shallow (<100m) and vertical, according to TMCSA any deviation was considered minor.

• Co-ordinates of individual samples in 3D was appropriately determined for and consistent with the needs of Mineral Resource estimating.

• Specification of the grid system used. • In 2010 prior to Mineral Resource estimation, issues with historical survey control were identified in that BYG/Menzies had their own Universal Transverse Mercator (UTM) based coordinates; but conversions were inconsistent and could not be duplicated largely from the use of various grids and datum by past explorers.

• Discrepancies included elevation differences on holes collar coordinates, and rotational errors with azimuth. The 3D Digital Elevation Model (DEM) and 3D Digital Terrain Model (DTM) models were mainly 10m or 20m contours accurate to +/- 10m in elevation leading to topography smoothing so hole collars could not be projected accurately on steep relief.

• NBG moved to existing aerial photography, established survey control points and produce a DEM; carried out by a registered surveyor. Survey control points were established at existing locations at the time the air photos were taken and that could be verified. In addition, they surveyed several



historic as well as all of NBG’s, drill holes. • BYG/Menzies had retained all the original hard copy survey records, so it was possible to reconstruct

their original survey control by traditional survey methods, establish local grid, Borneo Rectified Skew Orthomorphic (BRSO) and UTM coordinates for the same control points, drill holes, etc. and convert the old local grids to UTM. Where the orebody outcrops the ground, surveyed topography was used as picked up by Resource Surveys or the previous registered surveyors.

• Quality and adequacy of topographic control.

• Data was captured in BRSO survey coordinates and converted to UTM coordinates 84 Zone 49 (Northern Hemisphere). Elevations were left as BRSO as there were no consistent control points for accurate conversion to UTM.

• These control points were used by Precision Aerial Surveys, New Zealand to produce a DEM of 1-2m accuracy and despite the model being DEM, for the purposes of the resource modelling, the data was closer to actual elevations.

Data spacing and distribution

• Data spacing for reporting of Exploration Results.

• Exploration results are not being reported in this issue but for reference the following is provided: • NBG/Besra drilling at Jugan was on a nominal NW-SE 25m spaced section lines with most of the

historic drilling at Jugan and BYG-Krian vertical on a nominal 25-50m grid, and over time creating a near surface hole spacing of less than 25m.

• At BYG-Krian the spacing was on a nominal W-E 50m section lines, with infill drilling in the main part of the orebody at 25m intervals; drilling of orebody extensions to the W were partially infilled with 25m spaced holes.

• Whether the data spacing, and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

• The overall 25m drill hole collar spacing, and corresponding data spacing achieved, based on geological interpretation and assigned Au grades is considered sufficient and appropriate for Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

• Downhole, horizontal and vertical increment semi-variograms were generated with the best semi-variograms selected that defines the strike, dip angle and dip directions. These semi-variograms were used to determine the nugget, sill values and ranges.

• A log semi-variogram and two-range spherical model were used. A best fit model in the downhole semi-variogram was used to define the nugget. Subsequent model fitting was applied to the strike and dip/dip-direction to define the sill values by varying the ranges in these directions.

• The Downhole Semi-Variogram and Dip/Dip Direction Semi Variogram for As demonstrate the similarities with the Au variograms.

• Whether sample compositing has been applied. • 93-94% of all NBG/Besra era holes intercepted mineralisation at Jugan and BYG-Krian 1m assay composites were used, except where ore mineralisation boundaries limit the hole length to less than 1m. Samples within the Bau Gold Project sectors and deposits were composited to 1 metre lengths, resulting in the following composites which were set at 1m as this was the predominant sample length and close to the average sample length. Composite samples are:



• Byg-Krian 2,116, Bekajang 743, Sirenggok 3,704, Pejiru-Bogag 8,037, Boring 973, Pejiru extension 2,329, Kapor 1,723, Taiton A 547, Taiton B 332, O/H tunnel Tabai 405, Orezone Tabai 422, Umbut 775 , Bukit Sarin samples were 1m, so no composites were needed, and Say Seng 148 composites.

Orientation of data in relation to geological structure

• Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.

• Drill hole orientation varied by year and location within the Bau Project deposits depending on the thrust of the different explorers. Most of historic drilling at Jugan and BYG-Krian were drilled vertical and as such the longer intersections would have had to have been corrected to represent true width.

• All NGB/Besra’s Jugan and BYG-Krian DDC holes were angled and orientated predominantly at 60° angle, with some at 45-55° and 70° to optimise intercepts of mineralisation with respect to width and distribution, or for practical and access reasons. Holes were angled to the extent possible to intersect the lithology and mineralised structures normal to their dip and strike.

• Channel/trench was nominally orientated perpendicular the long axis of the hill outcrop at Jugan and spaced at 20-25m laterally; a few ad-hoc trenches were orientated obliquely due to practical, access reasons and orebody outcrop orientation.

• Pejiru is almost flat, the rest have moderate to steep dips.

• If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.

• Jugan mineralization is interpreted to be largely constrained between hanging wall and footwall shears that strike NE-SW and dip between 55° and 75° NW. There is a higher-grade zone that plunges NE within the plane of the NW dipping ore body. The BYG mineralised structures are developed in the eastern side of the NNE trending Krian Fault and plunge South and dip about 60° toward the Krian Fault. The Krian deposit’s mineralised structures generally trend NW-SE, and also dip at about 60°.

• The drilling orientation is considered appropriate for sampling the principal mineralization orientation. Sufficient data density exists, and enough drill core logging, detailed mapping and statistical analysis has been done to consider sampling to be unbiased.

• The steeply dipping mineralisation intersected by steep drill holes results in long intersections and as long as, in most cases mineralised width between host hangingwall and footwall contacts were sampled, any bias resulting is not considered material to this estimate.

• TMCSA reported in the Pre-feasibility Study 2013 Section 11-Sampling Assaying, that there is no expected bias due to the orientation of the drilling and the orebody strike continuity.

Sample security

• The measures taken to ensure sample security.

• Since 2007, all drill core was moved from drilling sites to the secure sample preparation facilities in Bau as soon as practical by geological staff.

• All drill core and RC chips are stored at the core shed in Bau, along with sample pulps and coarse rejects.

• The core logging and sample preparation areas were manned during working hours and had security patrols at night. Samples were stored in a fenced, locked and guarded core yard.

• More recently, only authorized NBG personnel were allowed access to the SGS sample preparation and laboratory areas and release of data could only come from the authorized laboratory manager to



identified, authorized senior personnel at NBG. • At the NBG Bau preparation area, all samples were packaged in secure cloth bags and taken over to

the Bau SGS laboratory where samples were recorded, batch numbers assigned and passed into SGS’s system. Samples were stored in a secure and locked area specifically for NBG samples.

• NBG sample dispatch and SGS batch numbers were used for track and cross-checking through a Chain of Custody protocol.

• For “off-shore” analysis, the split samples for Fire Assay were retained at SGS, while the splits for ICP were sealed in plastic bags, received in Kuching by NBG staff accompanied with sample dispatch sheets and bills of lading, and copies retained with the sample ledger following a Chain of Custody protocol.

• NBG/Besra samples were air freighted using DHL to the MAS laboratory in Bangkok, Thailand or other laboratories as appropriate, and SGS in Bau in 2012. The laboratory was required to notify NBG if the samples did not arrive with the NBG/Besra seals intact and to retain all seals so that a probable Chain of Custody would be available.

• Information regarding sample security, submission, storage procedures, Chain of Custody are described in Section 11, Sampling -Assaying of the Pre-feasibility Study 2013.

Audits or reviews

• The results of any audits or reviews of sampling techniques and data.

• TMCSA used all NBG original signed assay sheets from its programs extensively for checking and validating the databases. They checked these against physical drill core from current and historic drill holes.

• Historic data was audited in 2010 by TMCSA which noted that no matters of a serious nature, or nature likely to impair the validity of the sampling data and any subsequent use in the Mineral Resource estimates or Ore Reserve work.

• TMCSA wrote that it was confident the sample data had been verified to an acceptable level of confidence. Issues remained with some of the early fire assay data from the BYG site laboratory when converting from pennyweights to grams, and with the background/detection limits used. TMCSA took the approach that with early fire assay data issues, AAS data was applied instead. Later assaying by the BYG site laboratory was independently checked by RGC and BYG/Menzies and issues identified, remedied or other independent and certified laboratories used.

• SGS conduct its own internal audits and reviews which are relayed to the COO of Besra. • NBG used MAS in Thailand and ALS in Australia and TMCSA’s investigations show this sample data to

be valid. • CP, Kevin J. Wright had not reviewed the audits at that time and the otherwise findings of the audits

have not been verified. • CP, Kevin J. Wright has reviewed a population of the SGS assay certificates. • According to TMCSA, previous validation and review of the historic data was conducted by a number

of parties including Snowden & Associates, Australia and Ashby Consultants, New Zealand with no



material problems being raised.



Section 2 Reporting of Exploration Results (Criteria listed in the preceding section also apply to this section.)

Criteria JORC Code explanation Commentary

Mineral tenement and land tenure status

• Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.

• Besra’s interest in Bau is through its indirect shareholding in North Borneo Gold Sdn Bhd (a Malaysian company, hereinafter referred to as “NBG”) through two subsidiary companies: Bau Mining Limited (“BML”) which owns 55% of the shares in NBG; and Besra Labuan Limited (“BLL”) which owns 37.01% of the shares in NBG. Besra holds a 91% ownership stake in BML, (the other 9% of the shares in BML are held by Golden Celesta Sdn Bhd (“GCSB”)). Besra 100% of the shares in BLL.

• NBG is governed by a joint venture agreement between the Company and a local Malaysian company, Gladioli Enterprises Sdn Bhd (“Gladioli”) and is the operator of the Bau Gold Project. Gladioli is owned by the Ling family of Kuching. See attached summary.

Structure • The main joint venture company is NBG. • BML owns 55% of the ordinary shares in NBG, BLL owns 37.01% and Gladioli Enterprises Sdn Bhd

(“Gladioli”) owns the remaining 7.99%. BLL has an agreement with Gladioli to acquire an additional 6.49%.

• NBG does not own the Tenements or any of the land owned by the Gladioli companies, it simply has rights to use such land and Tenements in accordance with the JV agreement. BML & Labuan or NBG can call for the Tenements to be transferred into the name of NBG, at which point those Tenements cease to be governed by the below structure.

Operations • NBG is to undertake all exploration and mining activities of the JV. Once a final feasibility study has

been undertaken in relation to a particular area and a decision to mine has been made then a milling company (“Milling Company”) will be incorporated to process the ore mined by NBG. The Milling Company is the company in which the “profit” of the JV will reside. As with NBG, the Milling Company will be owned by BML, BLL and Gladioli in the same respective shares as they own in NBG. In the alternative NBG can acquire the sole economic and beneficial ownership of the mined ore from Gladioli for RM10.00.

Tenements • The Tenements are currently held by the relevant Gladioli entities. BML/Labuan or NBG can at any

time direct Gladioli to transfer the Tenements to NBG. • The Tenements and the Specified Assets (being office buildings, the tailing dam, etc) are to be made

available to NBG and the Milling Company in order to enable them to carry out their functions.




• Gladioli is required to pursue renewal of the Expired Licences with due diligence.

• The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.

• For the duration of the JV the Gladioli companies must not sell, transfer or mortgage the Tenements other than with the consent of BML and Labuan. The Gladioli companies are obliged to maintain the Tenements in good standing and to renew the Tenements as and when required. All rentals and renewal fees are for the account of NBG.

• A potential impairment occasioned by the potential revocation of four Mining Leases (MLs) to facilitate the establishment of the Dered Krian National Park (“Park”) has a near-term adverse impact upon the Bau project, however the bulk of the resources and reserve reduction remain external to the Park, so much of these potential reductions will be preserved under an excision proposal or new tenement applications if required. In which case the resources within these new MLs, external to the Park would contain the bulk of the resources and reserve of the four potentially revoked original MLs.

Exploration done by other parties

• Acknowledgment and appraisal of exploration by other parties.

• Gold was reported to have been exported from Bau from the 12th Century and gold mining activities have been reported from the Indonesian southern extension of the Bau District from as early as 1760.

• Mining in the Bau District dates from the 1820s, when Chinese prospectors exploited gold ores. Historical recorded gold production from the Bau area is 1.46 million Au Oz though the actual figure is thought to be 3-4 million Au Oz when production prior to 1898, unreported and recent production by Gladioli Group in the mid to late 1990’s, is considered.

• In the late 1970’s the Ling family consolidated tenements into a holding covering most of the prospective ground in the Bau Goldfield and re-opened the Tai Parit reporting production at 700,000 Au Oz, including 213,000 Au Oz by Bukit Young Goldmine Sdn Bhd (“BYG”) between 1991 and 1997.

• A joint venture between BYG and RGC in 1985 conducted regional work around Bau as well as drilling several deep diamond drill holes at the Tai Parit mine and the central intrusive contacts.

• Minsarco, (subsidiary of GENCOR), carried out a Pre-feasibility study at Jugan in 1994. Resource estimates were prepared by Resource Services Group (“RSG”) of Western Australia. BYG/ Menzies replaced Minsarco in 1996 acquiring a 55% interest in all tenements held by Gladioli.

• In 1996, BYG/Menzies initiated a Pre-feasibility study based on Bau, Jugan, Pejiru, Kapor and Bekajang deposits.

• Resource estimates for Jugan and Pejiru, were prepared and the subsequent estimate for Jugan reported significantly lower estimates than the 1994 estimate.

• BYG/Menzies continued with an extensive exploration programme throughout the field with largely shallow RC drilling, but withdrew by 2001.




Geology • Deposit type, geological setting and style of mineralisation.

Bau Project Geology • The exposed rocks in the Bau district are dominated by a sequence of Late Jurassic to Early

Cretaceous aged marine sediments. These comprise the lower Bau Limestone, unconformably overlain by the flysch sequence, Pedawan Formation dominated by shale.

• The oldest rocks in the Bau Goldfield are the Triassic-aged Serian andesitic volcanics that do not crop out but lie beneath the Bau Limestone. The Jagoi Granodiorite intrusive is thought to be co-eval with the Serian volcanics and it crops out SW of Bau on the Indonesian border.

• The Bau Goldfield deposits are characterized by four distinctive gold mineralisation styles that exhibit both lateral and vertical geochemical and mineralogical zonation with respect to the Bau Trend intrusives:

• Sediment Rock-Hosted Disseminated Gold Deposits, e.g. Jugan; Bukit Sarin; • Silica replacement (jasperoid) and open space siliceous breccias, e.g. Tai Parit; Bukit Young Pit,

Bekajang; • Mangano-calcite-quartz veins, e.g. Tai Ton; Pejiru, Kapor; • Magmatic – Hydrothermal porphyry related deposits with/without calc-silicate skarn, e.g. Sirenggok,

Sey Seng, Ropih, Arong Bakit, and Juala West. • Each of the 34 deposits or prospects contains one or more of these styles of mineralisation covering

an extent of 15km NE-SW by 7-8km NW-SE.

Bau Generalised Cross-Section




• The Bau Project geology and mineralisation styles share characteristics with the Carlin Trend in

Nevada, USA, hosted in calcareous sediments, host rock permeability important in mineralization, associated with deep faults, Tertiary-aged dacitic intrusives, solution collapse breccias and epithermal association.

• Similarities in Carlin mineralisation style include silicic-argillic-carbonate hydrothermal alteration, fine grained arsenopyrite-pyrite Au common and similar trace element geochemistry, (As, Sb, Hg, Tl).

• Lateral zoning is related to the proximity of the Bau Trend felsic intrusives where they crop out in the up domed portion of the Bau Limestone.

• The trend outward from intrusive centres is skarn/calc-silicate porphyry environment to silica rich mineralised breccias to silica replacement/calcite limestone contact to the more distal disseminated styles such as Jugan.

• Similar zonation patterns exist vertically within deposits such as Tai Parit, the only deposit mined to any depth.

• Previous exploration focused on the deposits in the central part of the field, less refractory as the deposits become more arsenopyrite rich further away from the intrusive centres.

• The zonation present is partly a function of the level of exposure and more distal deposits such as Jugan, Taiton, and Pejiru have excellent potential for locating mineralisation similar to Tai




Parit/Bekajang vertically beneath the current levels of exposure. • The Jugan deposit is hosted within the Pedawan Formation, predominantly in highly deformed and

sheared carbonaceous shale, laminated shales, mudstones and interbeds of fine to medium grained sandstone. The shearing and fold axes are dominantly NE trending with the gold mineralisation forming within acicular arsenopyrite and arsenian pyrite disseminated throughout the sediments and within carbonate (ankeritic) veinlet stockworks.

• Typically, the arsenopyrite content ranges between 1 % and 5 % and arsenian pyrite from trace to 5 %. Overall sulphide content in the ore zone can be in the 5 % to 7 % range. Sulphide content and gold grade have a close correlation. The deposit has been drilled to approximately 350 metres vertically without the limestone-shale contact being intersected. Several NW trending dykes of post mineral microgranodiorite porphyry transect the ore zone and are invariably strongly hydrothermally altered.

• The currently defined resource is largely constrained between hanging wall and footwall shears that strike NE-SW and dip between 55° and 75° NW. In addition, a number of NW-SE trending shear zones have been identified some which appear to be post mineralisation although it may have been developed prior to or during the mineralizing event. There is an interpreted dextral sense of movement on these and opens the possibility of offset extensions and repetitions of the deposit. A well-developed NW-SE trending shear is interpreted to dip at approximately 70° to the NE and appears to cut of the ore body.

• There is a higher-grade zone that plunges NE within the plane of the NW dipping ore body. This correlates with a slight increase in incipient silicification and sulphide content. Mineralisation remains open at depth and to the NE.

• Structural analysis by NBG geologists has identified that in the eastern part of the ore body there may be a displacement to the ESE by dextral-movement of the traversing NW-fault. This is based on analysis of oriented drill core and interpretation, but no direct evidence exists at this time however the hypothesis needs to be tested with further drilling.

Bau Deposit/Sector Geology • The Jugan deposit is hosted predominantly in highly deformed and sheared shales, laminated

shales, mudstones and interbeds of sandstone with the gold mineralisation associated acicular arsenopyrite and arsenian pyrite disseminated throughout the sediments and within ankeritic stockworks.

• Sulphide content and gold grade have a close correlation. Dykes of post mineral microgranodiorite porphyry transect the strongly hydrothermally altered mineralised zone.

• The currently defined resource is largely constrained between hangingwall and footwall shears and other post mineral shear zones may have developed prior to or during the mineralising event that




possibly offset extensions and repetitions of the deposit, while further shears cut off the deposit. • Higher grade zone that plunges within the plane of the deposit correlates with a slight increase in

silicification and sulphide content. Mineralisation remains open at depth and on strike. • The Sirenggok deposit’s gold-arsenic-antimony mineralisation is hosted by veins, stockworks and as

disseminations within a quartz diorite porphyry. A younger phase diorite porphyry intrudes the earlier porphyry. A funnel shaped host composite porphyry has concentric phases that intrude the Bau Limestone and flattened out at higher elevation. The currently defined resource is open along strike and at depth.

• The Pejiru deposit’s mineralisation controls developed within the horst and graben style block faulting at the Bau limestone-shale contact and within the limestone. The deposit outlines show that the most extensive mineralization occurs at the intersection the limestone structures in arsenopyrite or within arsenian pyrite in a sulphide rich zones, often brecciated and silicified lying beneath a massive calcite zone. Sulphide content and gold grade have a close correlation.

• Where karst development is greatest, collapse breccias are common with highly auriferous clay produced from weathering of the primary mineralisation.

• The Boring deposit’s northern area consists of several gold mineralization structures and since drill holes were vertical it is unclear if mineralisation is flat lying, has steep dipping structural control or a combination of both.

• The geology of the southern area of the Boring deposit consists of mineralization dominated by the Boring Fault against which a block of Pedawan formation is down thrown against Bau Limestone. The mineralization is found within veins in the limestone and within sulphidic breccia along the karstic limestone shale contact.

• The Kapor deposit’s mineralisation is hosted in limestone as is the case at Pejiru but with much higher arsenic levels recorded. Gold grade is associated with arsenopyrite and records show arsenic can reach to around 30 % in isolated samples, antimony is strongly anomalous with values in the 100’s and 1,000’s of ppm.

• The Tabai deposit’s mineralisation is developed on a vein system mostly composed of brecciated mangano-calcite, frequently vuggy with quartz infilling and silicification, auriferous clay, arsenopyrite, realgar, stibnite and native arsenic. The drill programmes and subsequent modeling traced the mineralization north to Taiton A.

• There are four sub-parallel gold mineralised structures that persist to depths of 300 m below surface. The vein system remains open at depth and along strike to the South.

• Mineralisation is largely confined to structures within the Bau Limestone; however, there are instances of gold being developed within vuggy drusy quartz veins along contacts with intrusive dacite porphyry dykes.




• The Taiton A deposit has several mineralised fault structures trending toward, intersecting and cross cutting the Tai Parit fault zone. At the Taiton A pit mineralisation passes from an upper auriferous secondary clay deposits into primary deposits of mangano-calcite veining with abundant native arsenic, realgar, arsenopyrite, some silicification and drusy quartz veining, brecciation and massive calcite.

• Mineralization persists to at least 300m vertically and is open at depth. The mangano-calcite vein style is most common within the Bau Limestone but there is also a common association with the contact zones of NW trending dacite porphyry and andesite porphyry dykes and often weathering of auriferous clay to depths of 100m plus vertically below surface.

• The Bungaat deposit’s zone of mineralisation is made up of with native arsenic, realgar and coarse calcite vein material in a steep dipping structure with a sub-horizontal set of mineralised calcite veins peripheral to the main structure.

• The Taiton-B, including Taiton C mineralisation, is confined to mangano-calcite, quartz with bands and pods of realgar, arsenopyrite and stibnite and trends NW-SE of which 700 m of this vein was an underground mine. Strike and depth extensions remain unexplored. Vein rock chip sample assays ranged from 0.16 to 62.0 Au g/t, with 48 % reporting above 1.0 Au g/t averaging being 7.85 Au g/t.

• The vein is generally steep dipping to the NE with some flatter lying zones in the hanging wall composed of banded fine-grained silica, native arsenic, arsenopyrite, realgar and stibnite.

• The Umbut area lying NW of Taiton B has mineralisation within quartz calcite structures within the shale limestone contact.

• Bekajang mineralisation is bound by the BYG-Krian-Johara Fault. Several deposits are known to occur at the shale/limestone contact and are shallow dipping with mineralization developed in siliceous breccias within the shales on the contacts between shale and limestone. Vuggy quartz veins in limestone host gold mineralization as well as a dacite porphyry dyke with strong quartz sericite alteration and disseminated with similar paragenesis to the gold mineralisation at Sirenggok.

• The Gunong Krian prospect is located on a steep up faulted block of Bau Limestone based on surface and underground expressions of quartz calc-silicate and calcite veining historically mined for antimony (Lucky Hill mine) and gold and thought to be derived from a deep source.

• The Bukit Young Gold Pit (BYG Pit) deposit is developed in the eastern side of the NNE trending Krian Fault where it abuts on the western side against up thrown blocks of Krian Sandstone and adjoining felsic porphyry intrusives.

• Gold mineralisation is associated with auriferous quartz-mangano carbonate-sulphide veins, stockworks, and tectonic/hydrothermal breccias within fault “hinges” at major fault intersections in limestone. Ferruginous auriferous clays as cavity fill and microcrystalline silica as breccia matrix and




limestone replacement show similarities to the ore mined at the adjoining Tai Parit Pit. • To the immediate west of the BYG Pit, a separate zone of disseminated and vein stockwork gold

mineralization within an adjacent intrusive dacitic stock and Krian coarse sandstone. Veins with quartz pseudo morphing carbonate along with sphalerite indicate deeper and hotter conditions during gold deposition, as compared to the deposits further south along the Tai Parit Fault.

• Exploration to date at Sey Seng has been insufficient to define a resource. Mineralisation appears to be controlled by steep structures within limestone, shallow dipping bedding plane parallel features, limestone shale contacts with the Sey Seng fault and intrusive contacts. The Borneo Geological Survey logs describe altered porphyry intrusives and calc-silicate alteration of wollastonite and garnet exoskarn. Mineralisation is associated with high sulphide content.

• Bukit Sarin lies near the intersection of the NW-SE Kojok Fault and the NE-SW trending Say Seng Fault. The area comprises quartzose Sb-Au mineralisation in a quartz-shale breccia. Significant gold mineralisation occurs in many of the previous holes drilled and consists of very fine, arsenopyrite hosted in shale, sandstone and to a lesser extent limestone. Better grade intersections are in sandier and more deformed beds, adjacent to intrusive contacts.

• The Juala West prospect surface sampling and trenching located several areas of quartz veined stock worked porphyry and some boulders of highly siliceous skarn and breccia that locally had grades of as high as 95 Au g/t and will need further confirmation sampling.

• The Arong Bakit is a limestone quarry and proximal to the Juala intrusives. Many quarried boulders comprise crackle brecciated marble averaging 10 Au g/t with the interstices between clasts infilled with arsenopyrite and pyrite.

• High grade gold was successfully intersected by drill holes at the marble/intrusive contact in an exoskarn zone. The altered limestone has rare radiolaria replaced by sphalerite/galena and inclusions of gold (<10 µm); while banded quartz-arsenopyrite-sphalerite-wollastonite-garnet veins. The arsenopyrite contains several gold grains (~25 µm in size).

Drill hole Information

• A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: o easting and northing of the drill hole

collar o elevation or RL (Reduced Level –

elevation above sea level in metres) of the drill hole collar

o dip and azimuth of the hole

• The objective of this exercise is to update the Bau Gold Project 2013 Pre-feasibility Study (JORC 2004) to comply with the JORC (2012) criteria.

• No material changes have been made to the Bau Gold Project 2013 Pre-feasibility Study’s Mineral Resource and/or Ore Reserves estimate, or the Modifying Factors that were applied.

• Exploration results are not being reported but are in support of Mineral Resource and Ore Reserve estimates. A table of all drill hole collars and relevant mineralised intersections are reported in the Pre-feasibility Study 2013.

• In summary, the drilling database consists of; o Prior to 2007 175,000m on 2,156 holes recorded in the database and archived records o 237 auger holes defined the resource in the BYG tailings dam




o down hole length and interception depth

o hole length.

o In 2007/8 era 5,782m on 50 HQ holes o 2010/12 40,031m on 208 holes

• The complete dataset of holes (historic and current) was used in the Mineral Resource estimate, with some selected holes excluded based on poor data confidence.

• All information has been reported in Pre-feasibility Study 2013. • No drill hole information has been excluded.

• If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.

• Information regarding all the drill holes has been included.

Data aggregation methods

• In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cut-off grades are usually Material and should be stated.

• The resource definition infill and extension drilling have been sampled predominantly at 1m intervals.

• For each Bau deposit/sector, all assays within the mineralised zone volume were used in the resource/reserve estimates. A top cut in Au g/t was applied to all samples above this value, values were different for each deposit/sector.

• Weighting averaging techniques were used for exploration drilling and channel sampling incorporating the sample length and Au grade for composite purposes, over the total length of the intersection.

• Where aggregate intercepts incorporate short lengths of high-grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail

• In the Au bearing material zone definition, isolated cases of assay values below the lower cut-off were only included where they fell within samples above the cut-off and could not be excluded due to their isolated nature, the effects being minor in nature.

• Typical examples of all aggregation of intercepts of short lengths of high-grade and longer lengths of low grade results, that have been applied are part of the drill hole database and its analysis in the Pre-Feasibility Study 2013, Section 11-Sample Preparation, Assaying and Security.

• The assumptions used for any reporting of metal equivalent values should be clearly stated.

• Metal equivalent values have not been used on these primary gold mineralised deposits.

Relationship between mineralisation widths and

• These relationships are particularly important in the reporting of Exploration Results.

• Exploration results are not being reported but are in support of mineral resource and ore reserve estimates but for the sake of completeness the following is recorded:

• For the shallower dipping mineralised structures the drill hole angle placement was selected to target both mineralisation orientations, and intersections approximate the true width.

• To intersect the main mineralisation trends at a high angle, holes were oriented to the extent




intercept lengths

possible normal to the mineralisation’s strike direction. • These high angle drill holes produced longer down-dip intersections than the largely sub-vertical

mineralised structure’s true widths. • The mineral domains were constructed in 3D, hence true widths were considered. • At Jugan 252 holes were drilled with 206 holes intercepting mineralisation (70%); of which 17 were

RC holes (7%). • At BYG-Krian 288 holes were drilled of these 203 holes intercepted mineralisation (70%); of which

59 were RC (20%); the latter used in conjunction with diamond holes to define the inferred zone areas.

• Overall the great majority of drill holes pierce the deposit mineralised structures.

• If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported.

• The Jugan defined resource is constrained between hangingwall and footwall shears that strike NE-SW and dip between 55° and 75° NW. Several NW-SE trending dextral shear zones possibly offset extensions and repetitions of the deposit. A NW-SE trending shear dips 70° NE and cuts off the ore body.

• The drill programme has helped define a higher-grade zone that plunges NE within the plane of the NW dipping ore body. Mineralisation remains open at depth and to the NE.

• All NGB/Besra holes (Jugan and BYG-Krian) were angled and orientated core drilling predominantly 60° angle hole, with a few holes drilled flatter at 45-55° and steeper up to 70° for practical and access reasons.

• Most of historic drilling at Jugan and BYG-Krian were drilled vertical. • The Sirenggok defined resource is open along strike and at depth trending NW-SE and steeply

dipping to the NE. There are two other areas of mineralisation picked up to the NE in surface samples and several drill holes and surface mineralisation in the SW.

• The Pejiru-Bogag deposit comprises a main zone on a NE-SW trend and a NW-SE trend ”hinged” zone forming a lobate V surface projection and continues to the NE. The flat lying Pejiru with dimensions of 1,500m in length,50m to 150m wide where angled drilling delineated up to 80m thick, averaging 15m to 20m of mineralised zone. The most extensive mineralisation occurs 20-30m below surface at the intersection of NW-SE and NE-SW structures.

• The Tabai is developed on a vein system between 4m and up to 23m wide, (observed). The drill programmes in 2010/11 traced the mineralisation to Taiton A with less than 100 m separation.

• There are four sub-parallel NE to NNW trending gold mineralised structures that persist to depths of 300 m in drill holes, remaining open at depth and along strike to the South and to the North merges with Taiton A.

• The Boring deposit comprises a northern area with intersections of gold mineralisation ranging from 3m to 50m in vertical down hole intersections. It is unknown if mineralisation is flat lying or has




steep dipping structural control or a combination of both. The southern area consists of a NW-SE trending mineralised zones defined by drilling within veins in the limestone and sulphidic breccia along the karstic limestone shale contact.

• Taiton A comprises Taiton A open pit, the NW striking Overhead Tunnel and several mineralised NW fault structures. The extensive drill core inventory shows mineralisation passes from an upper zone of auriferous secondary clay deposits into primary ore mangano-calcite veining.

• Drilling showed Taiton A mineralisation persists to at least 300m vertically and is open at depth.

• If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg ‘down hole length, true width not known’).

• True widths are known and have been used to estimate the mineral resource and Ore Reserves.

Diagrams • Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.

• Since exploration results are not being reported, representative sections are included in the Pre-feasibility Study 2013 in addition to relevant drill hole location plans and representative drill sections for each domain area have been included.

• All mineralised intersections used in the Mineral Resource estimate are tabulated in the Pre-feasibility Study 2013.

Balanced reporting

• Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced avoiding misleading reporting of Exploration Results.

• Exploration results are not being reported. • All relevant drill hole data is incorporated in the Mineral Resource estimate.

Other substantive exploration data

• Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.

• Based on positive results from the resource drilling programme and past reviews of the exploration potential surrounding Jugan, NBG combined programmes of soil geochemical sampling to provide a geochemical basis for follow-up geophysics particularly 3D IP along with soil/subcrop spectral analysis (Hychips) to delineate coincident geochemical anomalies and hydrothermal alteration minerals associated with “Carlin-style” or SHRGD deposits analogous to Jugan.

• hrltesting in 2013 compared the assay data for Jugan ore zones suggesting that there is very little difference in mineral distributions in these ore zones except for minor variations in arsenic and gold contents. This implies that the only visible difference may be that of minor variations in arsenopyrite content, and that the increases in arsenic correlate with increases in gold, caused by either a physical style of gold entrapment or more probably a solid solution gold component in the arsenopyrite lattice, in keeping with the inferred refractory ‘Carlin style’ gold emplacement advocated for the Bau Project deposits.




• Apart from minor variations in mineral textural fabrics and thus style of preferred mineral associations presented by the particle populations, the mineral assemblage is identical for all the Jugan ore zones.

• The 2013 programme consisted of close spaced 25m by 25m grid over surface expressions of the Jugan deposit and a more regional programme with samples collected at 50m centres and 200m between lines.

• Hand auger samples were collected from the C-horizon, and when the upper horizons were thicker than 3m were collected from the B-horizon. Some three hundred samples collected on the Jugan grid and a further six hundred plus were collected during the more regional phase.

• All samples went to the SGS laboratory in Bau for sample preparation and Au Fire assays, (AAS, 50g). The ICP analysis of 26 pathfinder elements was carried out in SGS Port Klang, Malaysia or Perth, WA.

• The data was analysed statistically to determine threshold and anomalous values and correlation of elements associated with Jugan style mineralisation.

• Jugan Hill and Bukit Sarin deposits showed Au correlation coefficients with arsenic (As), antimony (Sb), bismuth (Bi), sulphur (S) and thallium (Tl)

• Jugan grid soil sampling showed positive correlation to mineralisation in the geochemical distribution of anomalies of gold and these elements.

• Data from wider soil samples were amalgamated and analysed together with the Jugan grid soil samples identifying some twenty-nine gold anomalies have pathfinder element anomalies associated and subject to ground follow mapping are regarded as representing geochemical halos associated with gold mineralisation.

• At Bukit Sarin South an extensive geochemical anomaly was delineated outside the previously drilled area by BYG/Menzies, where a small gold resource was identified.

• Two other overlapping multi-element anomalies were also identified during this programme, one located SW of Jugan midway to Bukit Sarin, in association with Au-As-Sb and several smaller Au-Sb and Au-S anomalies. The second small anomalies in an area located ESE of the Jugan Hill consisting of Au-As-Sb-S and Au-Sb-Tl.

• Both anomalies require in fill grid-based soil sampling while the other point sample anomalies need ground truthing and follow-up geochemical sampling to understand their significance.

Further work • The nature and scale of planned further work (eg tests for lateral extensions or depth extensions or large-scale step-out drilling).

• The Bau Gold Project is a 346.94 km2 complex property with a gold resources lying within five “brownfield” deposits warranting a camp-scale exploration development (rather than deposit-by-deposit). Preparatory to a future more comprehensive Pre-feasibility Study, Besra is planning exploration and resource drilling programmes with the following objectives: o Extend the prospective “Mine-Life” (by lifting the global-resource above current figures).




o Reduce the “per ounce” cost of gold produced by enhancing the global-average gold-grade. o Reduce “risk” by upgrading currently “Inferred” resources to “Indicated”, or better category.

• The proposed exploration programme to achieve these objectives will focus on five central deposits (Jugan, Sirenggok, Say Seng, Bekajang and Pejiru), where results from prior exploration have enabled upside potential within specific deposit extensions.

• Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.

PEJIRU DEPOSIT: Existing resource wireframes are shown (in solid yellow). These all represent shallow, flat-lying mineralization within hydrothermal fluid out-flow zones

Forward exploration will focus on drilling mineralization extensions which will include both (a) mineralization postulated within the (red) flat-lying, near-surface, conductivity anomalies and (b) mineralization postulated within the circled deeper, subvertical (feeder) conduits.

JUGAN DEPOSIT The Jugan Hill deposit Consistent with the conceptual model, it is anticipated that deeper drilling will continue to encounter higher-grade mineralization, as the ore zone becomes progressively more constrained downwards towards the underlying contact with Bau Limestone. Drilling down-dip therefore offers potential for expansion of higher-grade resource. The forward exploration approach would be to




initially target scout diamond drilling on the depth extension, at about RL-370m (ie. 50m beneath the current drilling depth limit). Subject to positive results, step-out and in-fill drilling would follow. About 1.5 km along the Bau Gold Trend to the SW lies the A12 prospect area.

The forward exploration approach would be to initially target the A12 area with scout diamond drilling; some targeting RL -100m depth and some targeting the deep root zone to about RL -250m depth. Subject to positive results, step-out and in-fill drilling would follow.

SAY SENG DEPOSIT Resources have to date been delineated in two sub-deposits, the Say Seng deposit and the Bukit Sarin deposit. Say Seng deposit: Continued drilling along the steeply dipping Say Seng fault has the following indicative potential: 400m strike x 300m depth x 4m width. The forward exploration approach would be to initially target the previous high-grade drill intercept with a series of six scout diamond drill holes stepped-out at 50m intervals along the Say Seng Fault. Subject to positive results, systematic step-out and in-fill drilling would follow. Bukit Sarin Deposit: The forward exploration approach would be to initially scout-

Jugan Hill to A12 IP Anomaly Showing apparent fault offset SW of Jugan Hill and the deep root zone beneath A12 anomaly.




drill the Kojok/Say Seng fault intersection at a deeper level, together with a series of holes in each direction along the intrusive contact away from the existing deposit. These targeted zones are estimated to have the following indicative potential: 500m strike x 300m depth x 20m width. Subject to positive scout-drilling results, systematic step-out and in-fill drilling would follow.

SIRENGGOK DEPOSIT The Sirenggok deposit lies centrally within the Bau Gold Trend; 1.5 km NE of Bau Township and about midway between Say Seng and the historic Tai Parit open-pit mine. The deposit remains open, both at depth and to the NE and SW along structural strike and multiple drill targets exist, but two are of immediate interest:

SW Dighem Resistivity Anomaly.

This target offers potential: 500m x 300m x 3m. It is proposed that this zone initially be tested by two strategically sited scout diamond drill holes targeted below the historic drill intercepts. Subject to positive results, systematic step-out and in-fill drilling would follow.

Sirenggok Deposit Strike and Depth Extensions It is proposed that this potential initially be tested by six scout drill holes targeting the indicated depth and strike extensions and resistivity features. Subject to positive results, step-out and in-fill drilling would follow.

Sirenggok Dighem Resistivity Anomaly Indicating a steep-dipping tabular resistor that might represent a quartz-vein/breccia.




BEKAJANG DEPOSIT The Bekajang deposit is situated immediately south of Bau township and lies centre-most within the Bau Gold Trend. This area encompasses the old Bukit Young Mining area, which includes the old BYG open-pit, processing area and tailings deposit. The larger Tai Parit open-pit mine is situated on the western periphery. Four mineralization zones (Bekajang North, Bekajang South, Karang Bila and BYG Pit) have to date been partially defined by drilling. All four of the above mineralized zones (excluding tailings) remain open and offer additional resource potential at depth and along strike. The old BYG pit presently constitutes the most compelling target. The BYG Pit mineralization is thought to approximate an ovoid body, with steep south plunging axis extending downwards through Bau limestone to where the underlying Krian sandstone member constitutes a prime drill target.

Bekajang – Tai Parit Pit & BYG Pit Areas Showing relationship of Tai Parit and BYG Pits. Note selected grade intercepts along fault zones.



Section 3 Estimation and Reporting of Mineral Resources (Criteria listed in section 1, and where relevant in section 2, also apply to this section.)


Database integrity

• Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resource estimation purposes.

• NBG stored all historic hard copy records including dispatch sheets, original signed assay result sheets, and geological logs on the site office in Bau.

• Overall 1,614 drill holes within the resource areas were verified by TMCSA and in terms of collar, survey, geology, density, assay values and intervals, including validation of 63,694 drill hole assay records and 1,610 channel/trench assay records.

• From the database validation carried out, TMCSA stated that it was satisfied with the data integrity used for the Mineral Resource estimation.

• Database validation was conducted regularly and when the resource definition began, CP, Graeme Fulton (GF) of TMC used the standard mining software packages (Datamine/CAE Mining) tools which imported the final database from MS Access which includes a final validation step that checks for consistency within the database prior to final loading.

• In 2011and 2012 gold only Mineral Resource estimate updates and the 2010 original Mineral Resource definition, were based on the 2010 through 2012 drilling results. TMCSA also reviewed, validated, and incorporated all historic and most recent drilling results including geological and lithological re-interpretation.

• The Jugan BYG-Krian deposits Mineral Resource assessment conducted by TMCSA in 2010 and by GF/Besra in 2012 resource updates included: o Reviewed and validated the Mineral Resource database and associated data;

Reviewed, input and validated information and data not captured in the above database (hardcopy format) including other digital data;

o Combined the above data into a clean and validated resource database-referential integrity, with associated data being verified ahead of final loading onto the Bau exploration office server;

• All data on the Bau exploration office server and GF’s laptop has been copied to the Besra server in Auckland, NZ.

• Data validation procedures used • Data analysis and validation was carried out by TMCSA on the primary Mineral Resource data: o Accessed the Database for each deposit and also recent data not in the then current database, e.g.

NBG/Besra data. o Checked collar coordinates against original survey data sheets, duplications and omissions. o Checked downhole surveys and extent of deviation. o Modified log codes where necessary; developed consistent coding system based on the existing

BYG/Menzies coding system. o Checked assays in database against original data logs for BYG/Menzies, RGC and Gencor for missing,




outlier, and negative values. o Compiled existing BYG/Menzies drill assay database, using original primary data laboratory assay

certificates and/or from drill logs, including fire, roasted fire assay, and AAS, roasted AAS compared with data in Access database, corrected omissions, errors etc., and derived an accepted interval value Mineral Resource modelling.

o Input data from NBG/Besra hard copy logs into new database for each deposit, checking sample and log overlapping, log continuity, anomalous densities, and hole termination agreement.

o Checked geological log codes on Access database for each deposit. o Any suspect information encountered while validating the data to be used for the Mineral Resource

estimate was discussed with NBG/Besra’s senior project geologist and the CPs with TMCSA.

Site visits • Comment on any site visits undertaken by the Competent Person and the outcome of those visits.

• CP, Graeme Fulton, as General Manager for NBG/Besra spent all of his time, (except for R&R) at the Bau Project site overseeing the exploration drilling, sampling, data management as well as the geological and resource modelling.

• Site visits have been undertaken on five occasions by CP, Kevin J. Wright, in September and December 2017 and April, August and September 2018 for an average duration of six working days.

• The Competent Person, Kevin J. Wright visited the site for due diligence related to this report in September 2018 and; o Discussed the drilling programme, sampling, geology and mineralisation interpretation for the

Mineral Resource estimate. o Discussed environmental and community relations challenges with respective employees. o Visited the Jugan, Bekajang, Taiton, Sirenggok, Pejiru, and Juala deposits/sectors and assessed the

deposits’ amenability to mining related to access and topography. o Visited the BYG TSF, core yard and SGS laboratory and NBG/Besra metallurgical facilities during test

work activities. o Visited the NBG/Besra Bau exploration office, observed the computer hard and software, server and

hardcopy document archives. • CP, Kevin J. Wright has reviewed in some detail the relevant sections of the Pre-feasibility Study 2013

that apply to the Mineral Resource estimate and has a workable understanding of NBG/Besra’s exploration achievements related to drilling sample and data analytical integrity, and the basis for the Mineral Resource estimate stated in the Pre-feasibility Study 2013’s technical support and conclusions.

• If no site visits have been undertaken indicate why this is the case.

• Site visits have been undertaken on five occasions by CP, Kevin J. Wright.

Geological interpretation

• Confidence in (or conversely, the uncertainty of) the geological interpretation of the mineral deposit.

• The confidence in the interpretation of the geology is high to moderate because of the large systematic drill hole database and sound knowledge of the geological and mineralisation continuity from core examinations, exposed geology in mining pits and underground working as well as the abundance of




archived historic information. Little local knowledge of the deposits has been lost over the years despite changing ownership.

• However, there is a degree of uncertainty in the grade continuity with the drill hole spacing, especially the 50m to 100m range, which is a result of the many mineralisation styles, orientations and in particular the types of faulting.

• The major mineralisation domains for each deposit/sector were defined using grade constraints and a nominal cut-off grade of 0.5 Au g/t was used to define boundaries between mineralised and weakly-mineralised or unmineralized domains. The interpretation was completed along sections typically at spacings of 25m (Jugan/BYG-Krian) to 50m and some sections 100m to 200m spacing where there were scarce drilling results. The interpretation was triangulated to form 3D solids, the mineral domains.

• At Jugan and BYG-Krian, As, S and Fe were included in the block model. Historically, the Fe was not analysed systematically in shallow holes, S was rare in these holes but As was common.

• When NBG/Besra engaged, they systematically assayed for Fe and As; and S was included part way through. Drilling focused on infill and confirmatory holes for shallow and systematic patterns for the deeper zones.

• In individual 1m samples the S, Fe and As varied at specific mineralised Au intersections depending on the arsenopyrite and pyrite content and averaged out over the mineralised interval. Au generally increased with arsenopyrite quantity but not always as high arsenopyrite and low gold were found in some instances. At Jugan when drilling neared the orebody the pyrite content picked up and arsenopyrite appeared, then Au picked up when the arsenopyrite level went above 1-1.5%.

• The amount and volume of oxide or partially oxide transition material was included in the Mineral Resource estimate but made up a small portion of said resource.

• Nature of the data used and of any assumptions made.

• The mineralisation was primarily defined by logging and assay data from DDC and some RC, supported by surface mapping, outcrop locations and channel sampling to the extent that historical and recent geology data together developed a geological framework for the interpretation of the mineralised domains.

• A geological relationship was developed from the gold grade Vs logged geology to facilitate mineralisation interpretation in zones of uncertain grade continuity; considered assumptive.

• This drilling data base, plan views, and sections containing lithology and structure were used to interpret the geological modelling. The assumption here is that the interpretation is reliable.

• The validity of the original historical DDC and RC logged geology, surface mapping and data related to geological interpretation must be considered as assumed, notwithstanding verification by TMCSA.

• The effect, if any, of alternative interpretations on Mineral Resource estimation.

• There are no significant alternative interpretations of geology that would effect the Mineral Resource estimate using the current data but may be developed with further drilling.

• All previous geological interpretations undertaken by others have been reviewed considering the most




recent drill hole and other sources of information were only taken in to consideration as appropriate for Mineral Resource estimation.

• The only scenario for alternative interpretation related to mineralisation controls would be local variations along strike, dip and thickness but unlikely to materially impact the Mineral Resource estimate.

• The use of geology in guiding and controlling Mineral Resource estimation.

• The mineralised structures throughout the Bau Project deposits/sectors vary in understanding and where the drilling coverage is adequate, geological continuity is understood enough between sections.

• The geological relationship which was developed to facilitate mineralisation interpretation took into consideration logged hole Au assay cut-off, geology, control structure type and orientation, lithology and alteration.

• As it relates to Mineral Resource estimation, the geology of the primary deposits/sectors was defined in the following manner: o From drill hole and exploration trench sections, interpreted faults, and geological and mineralised

zone grade boundaries were correlated between sections along strike, and compiled for interpretation;

o The granodiorite dykes were also interpreted from drill holes and surface mapping; o The grade boundaries were correlated from section to section and cross-checked in plan; o In the absence of zone continuity, extrapolations were made in between the two drill sections, and

up/down dip, using standard methodologies; o The definition of the mineralized zones and the methodology used was validated visually on each

section, and in 3D, and samples within the zone wireframe were analysed; • The Au bearing material zones and intrusive dyke wireframes were generated using well known software

and validated. These were then filled with block model cells orientated orthogonally and given a separate zone code to differentiate the Au bearing zones during the estimation process (i.e. no Au estimation in dykes). The block model parameters are listed in the Section 14 of the PfS 2013

• The factors affecting continuity both of grade and geology.

• The predominant factors affecting continuity of Au grade appear to be structural orientation both localised and on a project scale, such as faults and fractures that cut and displace the zone(s). Continuity manifestation varies by deposit/sector based on the aforementioned comment and in some cases the necessitates further drilling.

Dimensions • The extent and variability of the Mineral Resource expressed as length (along strike or otherwise), plan width, and depth below surface to the upper and lower limits of the Mineral Resource.

• The Jugan deposit’s mineralised zone constrained between hanging wall and footwall shears striking 200m NE-SW, averaging 150m across and dips between 55° and 75° NW.

• The Pejiru-Bogag deposit’s main mineralization is essentially flat lying over 1,500m length, 50m to 150m wide and up to 80m thick, averaging 15m to 20m. It has a NE-SW and a NW-SE trend, giving a lobate V surface projection.

• Pejiru Extension is a NE continuation of the Pejiru-Bogag zone and the main mineralised zones lie at 20-




30m below surface being thickest at fault intersections and where semicircular collapse features within limestone.

• The Sirenggok deposit’s main trend is NW-SE, 700m is open along strike and at depth of 300m steeply dipping to the NE. Two other mineralization zones outcrop to the NE and SW.

• The Boring deposit’s northern area covers around 150m square and consists of several intersections of gold mineralization ranging from 3m to 50m. The southern mineralization trends NW-S within veins in the limestone and sulphidic breccia along the 1,500m karstic limestone shale contact.

• The Kapor deposit’s mineralisation can be traced 2.5 km along strike to the SW hosted in limestone. • The Taiton sector’s mineralisation is aligned in the South with the Tai Parit Fault and the North with

Tabai, Taiton A, Overhead Tunnel (over a strike length of ~1.2 km), Bungaat and Saburan. In the NE, aligned with the Taiton Fault, are the Umbut, Taiton B and Taiton C deposits.

• The Tabai mineralisation is developed on a vein system between 4m and up to 23m wide. Four sub-parallel NE to NNW trending gold mineralised structures that persist to depths of 300m below surface. The vein system remains open at depth and along strike to the South. To the North it merges with Taiton A.

• Taiton A mineralisation persists to at least 300m vertically and is open at depth and lies along the Tai Parit Fault Structure comprising the Taiton A pit, the NW striking Overhead Tunnel Adit above Taiton A Pit and several adits. Several mineralised NW fault structures lie vertically above the Taiton A pit and continue to the SE for several hundred metres.

• The Taiton-B mineralisation has been mapped over a 1.5 km of strike length and includes Taiton C. It trends NW-SE and a 700m section of this vein has been underground mined.

• The Bekajang mineralisation has been traced on strike for 1,500m SE and approximately 700m across strike.

Estimation and modelling techniques

• The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters and maximum distance of extrapolation from data points. If a computer assisted estimation method was chosen include a description of computer software and parameters used.

• Block model interpolation used appropriate statistical data and continuity analysis of domains applying kriging oriented ellipsoidal search radii specific to the domain, and minimum and maximum number of samples varied respectively.

• The extrapolation distance varied inconformity with drill hole spacing for the deposits. • The basis for using high grade top cutting is addressed more appropriately below. • TMCSA executed the resource estimation and modelling using Ordinary Kriging from 1m composites into

specific, appropriate estimation domains for the style and nature of mineralisation for the Jugan, Sirenggok, and the Taiton, Pejiru and Bekajang-Krian sectors. o The Taiton sector includes Taiton A, Taiton B, Tabai and the Overhead Tunnel deposits. o The Pejiru sector included the Pejiru-Bogag, Pejiru Extension, Boring and Kapor deposits. o The Bekajang-Krian sector included the Bekajang North, Bekajang South, Johara, Karang Bila and

BYG-Krian deposits.




o Jugan and Sirenggok are individual deposits. • Orebody solids were interpreted at a 0.5 Au g/t grade boundary reflecting the interpreted geology

considered a natural domain for mineralised material within the Bau Project deposits. • The mineralised zone wireframes were generated in Gemcom/Datamine/CAE Mining and imported into

Datamine/CAE Mining and validated then filled with block model cells orientated orthogonally. • Variography was implemented to:

o Establish the extent of anisotropy in the deposits; o Determine the spatial continuity of mineralization along the principal main anisotropic orientations; o Develop variogram model parameters for geostatistical grade interpolation; o Direct selection of optimum search parameters for Mineral Resource estimation.

• Directional semi-variograms for strike, dip and down hole directions were generated for Au for each of the Bau Project deposits/sectors using the drill hole composites constrained by orebody solids.

• Downhole, horizontal and vertical increment semi-variograms were generated with the best semi-variograms selected that defined the strike, dip and dip direction reflecting the hole composite spacing. These semi-variograms determined the nugget, sill values and ranges.

• A log semi-variogram and two-range spherical model were used. A best fit model in the downhole semi-variogram was used to define the nugget. Subsequent model fitting was applied to the strike and dip/dip-direction to define the sill values by varying the ranges in these directions.

• The modelled log semi-variogram values were back calculated to normal semi-variograms for use with Ordinary Kriging.

• Search ellipse and Ordinary Kriging Parameters were derived from the variogram analysis and are summarised in table below.

• The Au bearing mineralised zone and intrusive dyke wireframes were generated in Datamine/CAE Mining by TMCSA and validated.

• A total of 2,085 density values take from core measurements were used for distribution within the models ranging from 1.53 to 3.16 t/m3, with a mean of 2.64 t/m3. The block densities were determined by Inverse Distance Squared with a search radius enough to fill the model.




Ordinary Kriging Estimation Parameter Jugan Bekajang-Krian Bekajang-North Bekajang-South Sirenggok

Search Orientation 75° dip at 300° azimuth and 30°

plunge

85° dip at 285° azimuth

0° dip at 15° azimuth 0° dip at 45°

azimuth 50° dip at 40°

azimuth

Nugget 0.34 0.31 0.27 0.19 0.22

Variogram Type Spherical (2 range) Spherical (2 range) Spherical (2 range) Spherical (2 range) Spherical (2 range)

Sill (Range 1) 0.29 0.33 0.17 0.15 0.37

Sill (Range 2) 0.39 0.36 0.56 0.66 0.42

Range 1 7m x 10m x 7m 7m x 7m x 8m 8m x 5m x 5m 10m x 10m x 2m 5m x 5m x 5m


Search Volume/Factor

Range 2 & 2x Range 2 & 2x Range 2 Range 2

Minimum Samples 2 (1) 2 (1) 2 2 2

Maximum Samples 32 (32) 32 (32) 32 32 32

Ordinary Kriging

Estimation Parameter Pejiru-Bogag Boring Pejiru-Ext Kapor Taiton A

Search Orientation 0° dip at 30° azimuth 0° dip at 90° azimuth 0° dip at 60° azimuth 0° dip at 15°


azimuth

Nugget 0.23 0.25 0.23 0.24 0.24


Sill (Range 1) 0.32 0.21 0.33 0.32 0.36

Sill (Range 2) 0.45 0.54 0.44 0.44 0.4




2/2x

Minimum Samples 2 2 2 2 2 (1)

Maximum Samples 32 32 32 32 32 (32)

Ordinary Kriging

Estimation Parameter Taiton B Taiton B-Ext Tabai Overhead Tunnel Umbut

Search Orientation 60° dip at 90°

azimuth 140° dip at -80°

azimuth 135° dip at -75°



azimuth

Nugget 0.25 0.27 0.27 0.53 0.14




Criteria JORC Code explanation Commentary •

Sill (Range 1) 0.29 0.41 0.24 0.26 0.44

Sill (Range 2) 0.46 0.33 0.49 0.21 0.39




2/2x 2/2x

Minimum Samples 2 2 (1) 2 (1) 2 2

Maximum Samples 32 32 (32) 32 (32) 32 32

• The availability of check estimates, previous estimates and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data.

• Comparative check estimations used Inverse Distance Squared and Nearest Neighbour (3D polygonal) methods with the following parameters like those used in Ordinary Kriging, for example at Jugan.

Estimation Parameter Value Search Orientation 75° dip at 300° azimuth and 30° plunge Search Ellipse Range 40m x 80m x 40m Search Volume Range & 2x Minimum Samples 2 (1) Maximum Samples 32 (32)

• Both checks for Inverse Distance Squared Resource and Nearest Neighbour Resource comparative

estimates set at 0.25 Au g/t increments. • No substantial production metrics from historic operations were available, and probably, in any event

unreliable as they could not be validated.

• The assumptions made regarding recovery of by-products.

• By-product off-takes have not been considered here as are not a likely outcome from the Bau Project.

• Estimation of deleterious elements or other non-grade variables of economic significance (e.g. sulphur for acid mine drainage characterisation).

• In alignment with baseline work for the EIA, prepared cut core samples were sent to an accredited laboratory (SGS Environmental in Perth, Australia) to assess potentially acid forming (PAF) or non-acid forming (NAF) properties on non-grade mineralised material. Static geochemistry test results showed most of the non-grade or un-mineralized material had strong NAF properties or at least acid consuming characteristics.

• CP, Kevin J. Wright has not reviewed the laboratory preparation process used at that time and the proper implementation of SOP’s by the laboratory have not been verified.

• In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed.

• The Au bearing mineralised zones and intrusive dyke wireframes were filled with block model cells orientated orthogonally and given a separate zone code to differentiate the zones during the estimation process (i.e. no estimation in dyke). An example of Block Model Parameters seen below, for example at




Jugan. Each deposit was assigned specific and best-fit parameters.

Block Model Parameter Block Model Value

Parent Block Cell Size 5m x 5m x 2.5m

Zone Code Ore Zone=1 & Dyke=2

Sub-Cell Size 0.625m x 0.625m x 0.5m • An oriented ellipsoidal search was used on a domain by domain basis. • Due to inconclusive semi-variograms for the other elements, these were interpolated using the Inverse

Distance, though the search ellipse and other inverse distance parameters were as for Au. • As some Fe and S data was not consistent the search ellipse increments were increased to fill all cells as

with Au. • No adequate semi-variograms were definable for the Karang Bila deposit and thus estimated using

Inverse Distance Squared method and no Ordinary Kriging was undertaken.

• Any assumptions behind modelling of selective mining units.

• No assumptions were considered behind modelling selective mining units however for each deposit/sector the parent cell has been sub-celled for the easting, northing and elevation selected to reflect understanding of mineralisation. A Jugan example is shown earlier in a table with criteria block model interpolation.

• Any assumptions about correlation between variables.

• Geostatistical analysis and modelling were done on the geo-metallurgical elements As, Fe and S with mixed and inconclusive results in some instances.

• The variograms that could be generated, particularly for As, did show similar directions as for Au though the ranges appeared to be slightly shorter.

• The Downhole Semi-Variogram and Dip/Dip Direction Semi-Variogram for As demonstrate the similarities with the Au variograms.

• Description of how the geological interpretation was used to control the resource estimates.

• Geological interpretation guided constraining mineralised domains, the hard boundaries informed only by composited samples lying within the mineralised domains.

• Interpreted from drill hole sections showing faults, geological and mineralized zone grade boundaries were correlated from section to section, granodiorite dykes and surface mapping were used for control;

• In the absence of zone continuity, extrapolations were made in between the two drill sections, and up/down dip, using standard methodologies;

• The definition of the mineralized zones and the methodology used was validated visually on each section, and in 3D, and samples within the zone wireframe were analysed.

• Discussion of basis for using or not using grade cutting or capping.

• High grades cutting applications were used for Mineral Resource estimate and its necessity came from the analysis of drill hole data, related to the grade variability coefficient.




• Grade cutting of each domain applied log normal probability plots of grade distribution for the proper cut to minimise the influence of high grade outliers.

• For each Bau deposit/sector, all assays within the mineralised zone volume were used in the zonal estimate. A top cut in Au g/t was applied to all samples above this value, different for each deposit/sector.

• Top cuts were applied to mineralised zones to reduce the influence of high grade outliers. Through a combination of visual examination of the database and assessing histograms, top cuts values were assigned to remove anomalous high grade outliers without impacting the mean grade of the deposit.

• Prior to top cutting, assays considered anomalous were reviewed on sections to see if they were high grade narrow vein type.

• Top cuts were applied to composite assays constrained by orebody solids prior to grade estimation in Datamine.

Top Cutting Results • All Jugan assays within the Au bearing material zone used in the zonal estimation applied a top cut of

9.75 Au g/t to all samples above this value. • All BYG-Krian sector assays for Bekajang North deposit within the Au bearing material zone used in the

zonal estimation applied a top cut of 33.13 Au g/t and similarly for Bekajang South applied a top cut of 19.30 Au g/t to all samples above this value. A value of 10.00 Au g/t for Karang Bila was applied as the maximum grade.

• All Sirenggok assays within the Au bearing material zone used in the zonal estimation applied a top cut of 7.31 Au g/t to all samples above this value.

• All Pejiru sector assays for Pejiru-Bogag deposit within the Au bearing material zone used in the zonal estimation applied a top cut of 11.77 Au g/t, similarly for Boring 6.47 Au g/t, for Taiton B Extension 41.84 Au g/t and for Kapor Au 20.12 g/t to all samples above this value.

• All Taiton sector assays for Taiton A deposit within the Au bearing material zone used in the zonal estimation applied a top cut of 23.26 Au g/t, similarly for Taiton B 9.77 Au g/t, Taiton B Extension 33 Au g/t, for Tabai 41.84 Au g/t, for Overhead Tunnel 14.86 Au g/t and for Umbut 20.72 Au g/t to all samples above this value.

• All Say Seng sector assays for Bukit Sarin within the Au bearing material zone used in the zonal estimation applied a top cut of 7.00 Au g/t and similarly for Say Seng applied a top cut of 44.60 Au g/t to all samples above this value.

• The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation

• All data used for this resource and previous estimates was sourced from Besra/NBG or determined by TMCSA (in the case of previous estimates) from data compiled from the drilling since 2010. An extensive data validation, cross checking and rectification process was undertaken prior to all resource estimation




data if available. to verify all data and sources to the extent possible, particularly with respect to the historic data. • TMCSA put all data in digital format or input from hardcopy format through an extensive validation

process. Errors were checked and rectified where applicable or removed from the database if unverifiable. o Cross-checked data against original forms, documents, logs or field notes; o Checked drill hole and topographic survey data in the field Vs. database value; o Systematically checked all assay, geology, density, survey and collar information; o Used resource software validation tools to detect errors, e.g. sample from/to overlaps; o Visually verified where applicable; o Statistical and other parameters checked.

• The visual 3D comparison of composite sample and block grade in cross section and plan deemed the model to be generally considered to spatially reflect the composite grades.

• The statistical analysis of the block model for comparison against the composited drill hole data provided the check on the reproduction of the composite data mean grade against the model over the global domain.

• Plots by northing, easting and elevation were generated from the model for each domain by averaging both the composites and blocks along northings at 20m intervals for the Ordinary Kriged gold estimate and showed a generally close relationship where sample composite data density was high.

• Analysis of grade tonnage distribution • No Mineral Resource reconciliation data is available from historical production operations and could not

be verified and could not be applied to deposits that had not been in production at all.

Moisture • Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.

• Moisture was not applied in the density determination; tonnes were estimated dry.

Cut-off parameters

• The basis of the adopted cut-off grade(s) or quality parameters applied.

• The data incorporated in deposits defined in the 2010 resource was not updated in the interim except to the lower cut-off limit to be discussed below. TMCSA opine that these have not materially changed since the 2010 work and the associated reporting.

• The Au bearing material zone grade boundaries (≥0.5 Au g/t lower cut-off) were drawn on all cross-sections and the grade boundaries correlated from section to section and cross-checked on plan. The cut-off grade that was applied based on economic parameters supported by the PFS 2013 is 0.5 Au g/t and was assigned to the Mineral Resource estimate.

• Datamine’s CAE NVP Scheduler was used to perform pit optimisations using the Lersch-Grossman algorithm which defined the cut-off values based on iterations for planned economic extraction to arrive at optimisation shells considering cost parameters and a Au price of $US1,500 per ounce.

• The cost parameters that were derived mostly from NBG/Besra in-house studies and metallurgical test




works conducted by SGS Perth and HRL Brisbane, Australia. • The 2010 resource estimates for all deposits and sectors used a cut-off of 0.75 Au g/t, however further pit

design and costing, integral to the Pre-feasibility study 2013 showed that the reserve would be potentially less than this value, so in the 2012 resource estimates a 0.5 Au g/t cut-off was universally applied.

Mining factors or assumptions

• Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential mining methods, but the assumptions made regarding mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the mining assumptions made.

• Mineralisation’s challenging geometry and proximity to surface favours conventional drill and blast open pit over bulk underground mining methods. The faulted and fractured nature of the mineralised zones as well the host rock introduces challenges to underground mining that are less so with open pit mining.

• Using the economic models for each mining/process option and applying the ultimate pit parameters, a set of ultimate pits was defined. The ultimate pit parameters used to determine the ultimate pit for Jugan as an example, is shown below:

Ultimate Pit Parameters Units Flotation

Discount Rate % 8

Ore Extraction Rate (Minimum) tpd 4,000

Ore Extraction Rate (Maximum) tpd 12,000

Ore Extraction Rate (Increment) tpd 2,000

Pit Overall Slope Angle ° Azimuth = 0 ° 43

Azimuth = 45 ° 45 Azimuth = 120 ° 40 Azimuth = 180 ° 45 Azimuth =270 ° 45

• The parameters for BYG-Krian are the same but with an overall slope angle of 47° • A 24-holes Staggered Drilling Pattern layout achieves the smallest mining unit (SMU) of 10m by 24m

using a 3.3m burden by 3.5m spacing providing enough maneuvering space for a 7m3 shovel matched to 4 or 5, 100t haul trucks.

• The assumed mining method would use 2.0 to 2.5m mining lifts to a maximum vertical depth of 300m. • A minimum downhole length of 2m was used in the interpretation of the mineralisation, which equates

to 1.5m width. • Mine benches will be typically 15-20m wide and final at 5m. Bench heights will be maximum of 15m

with face slopes defined by the RMR model. • The mineralisation domains were assigned 5% mining dilution of non-economic low-grade material into

the interpreted domains to maintain continuity. A 5% weight loss of economic grade material in digging has been applied as 95% mining recovery.

• Reported Mineral Resources contain no allowances for unplanned dilution, or mining recovery.




• The basis for eventual economic extraction was the use of optimised shells using Gemcom/Datamine/CAE Mining software with all-in cost parameters and a base gold price of US$1,500.

• The parameters used to derive the economic model for the base case (8,000 tpd) for Jugan and BYG-Krian are summarized below:

Economic Model Parameters Units Flotation

Gold Price $US/oz $US 1,500

Selling Cost $US/g 0.16

Mining Recovery % 95

Mining Dilution % 5

Base Mining (Contractor) $US/t 1.74

MCAF – Ore 1.52

MCAF – Waste/Intrusive 1.34

Base Mining (Owner) $US/t 2.17

MCAF – Ore 1.62

MCAF – Waste/Intrusive 1.48

Incremental Cost per Bench $US/t 0.05

Rehabilitation $US/t 0.10

Processing $US/t 7.19

Process Recovery % 77

Concentrate Shipping $US/g 2.91

Metallurgical factors or assumptions

• The basis for assumptions or predictions regarding metallurgical amenability. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential metallurgical methods, but the assumptions regarding metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical

Basis for Assumptions Regarding Metallurgical Amenability • Based on historical metallurgical work, Besra undertook a metallurgical program specifically on the Jugan

Au mineralised material. Historical work had focused on flotation Au recovery in a reduced mass, but little work was done on downstream refractory Au extraction processing.

• The first phase of the test work was to confirm earlier results for the Albion Vs POX processes with the same flotation concentrate. The flotation concentrate was prepared by SGS Lakefield Oretest in Perth for the POX tests on half of the concentrate while the Albion process used the other half using hrltesting in Brisbane under Core Process Engineering.

• The second phase of the test work focused on flotation optimisation on Jugan samples at hrltesting Laboratories. Additional POX optimization work was performed on flotation concentrate bulk sample at SGS Lakefield Orestest. One additional Jugan sample was floated separately at the Maelgwyn laboratories in South Africa to produce concentrate for BIOX amenability testing at SGS South Africa under Goldfields




assumptions made. BIOX group (now Biomin).

Potential Metallurgical Methods • The location and depth ranges of the Jugan geo-metallurgical drill holes are shown in Section 13,

Metallurgical Testing in the Pre-feasibility Study 2013, conducted on composite core samples. • Bulk samples from surface and drill core along strike and depth of the deposits as well as geo-

metallurgical holes were used for metallurgical test work at recognised laboratories and NBG/Besra facilities at the BYG site managed by Dr. Erik Devyust, Metallurgist and Technical Services Director, NBG/Besra.

• Historical metallurgical test work and studies were done on the Bau Gold Project that focused on the Jugan (and Pejiru) deposit only and compiled in six previous metallurgical reports between 1994 and 1998.

• The reports detailing historical metallurgical test work for the Jugan deposits are listed below: o Flotation of Jugan Hill Core Samples, GENCOR Process Research, Report No: 94/13, 16 February

1994; o Metallurgical Testwork Conducted Upon Jugan Composite from Bau Gold Deposit for Project

Advisory Services Pty. Ltd., AMMTEC Ltd., Report No: A5517, April 1997; o Recovery of Gold from Bau Drill Core Samples, MIM-HRL Laboratory, Report No: 0616, 15 June 1997; o Bulk Sulphide Flotation Testwork Conducted Upon Samples of Ore from the Bau Gold Deposit for

Menzies Gold N.L., AMMTEC Ltd., Report No: A6324, August 1998; o Gravity Concentration of Bau Ore Samples, Lakefield Oretest, Report No: 8793, 23 October 2001;

• All work was conducted on composite core samples. Locations and depth ranges of the samples were reported only for the MIM and the GENCOR test work.

• In 1994 four east zone Jugan core and fifty-five ¼ core samples (1m interval from 5m to 60m) for a total of 57kg were sent to GENCOR.

• In 1997 core samples from two east locations for Jugan were sent to the MIM-HRL laboratory. • For the AMMTEC 1997 test work, 400 kilograms of Jugan composite samples were sent and for bulk

flotation work in 1998, 200 kilograms were sent. • In 2001 about 110 kg of Jugan mineralisation samples were used for gravity concentration work at

Lakefield Orestest. • The Jugan composite samples were reasonably representative of the deposit based on the assays given in

Section 13-Metallurgical Test Work Error! Reference source not found.of the Pre-Feasibility Study 2013. The documented samples were taken from the East area of the Jugan deposit from vertical drill cores, but no location variability test work was conducted.

Chemical Assay




• Chemical assays reported for Jugan showed high As content and relatively high As, Fe, and S levels indicating that a higher mass will be associated with the flotation concentrate in terms of arsenopyrite and pyrite with the Jugan feed.

• Mineralogical analysis indicated that the dominant mineral phase in Jugan Au bearing material is arsenopyrite. A significant amount of Au was associated with quartz in the samples.

• Jugan assay data from Au bearing zones indicates that there is little variation in mineral distribution other than minor variations in As and Au content. Increases in As and Au coincide evidencing a correlation.

• Sulphide S and As assays estimate that the Jugan Au bearing material contains 2 to 2.5 wt% arsenopyrite and 4.5 to 5 wt% pyrite with a combined arsenopyrite-pyrite feed of 6.5 to 7.5 wt%.

• The mineral assemblage is identical for all the Jugan Au bearing material zones tested. The bulk of the Au bearing material comprise non-sulphide gangue dominated by very fine grained illite (mica) and silica resulting in excessive slimes from fine grinding.

Cyanidation Test Work • Diagnostic leach results indicated that the gold occurrence in Jugan was low in free gold based on the

low percentage of Au recovered by direct cyanidation typical of arsenopyrite-pyrite refractory ores. • Jugan gold deportment testing, in 2017 showed that very little gold is leached in whole rock cyanidation

(0.6 to 2%). About 70% of the gold is associated with the arsenopyrite, 25% with the pyrite and 5% with silica.

Gravity Recovery Test Work • The amenability of Jugan Au mineralised samples to gravity concentration was carried out with varying

grind sizes (P80 106, 75 and 53 µm) on Flacon and Knelson concentrators and also a Kelsey Jig to compare the response.

• 100 kg samples were tested from Jugan deposit with a head grade of 3.43 Au g/t. • The Jugan sample demonstrated a positive response to gravity concentration; with gold recovery ranging

from 30% up to 36% as the grind was reduced from 106 µm to 53 µm. Further gravity test work was abandoned due to the more favourable results demonstrated by flotation.

Flotation Test Work • All the flotation work carried out until most recently was on mineralised material that must be

considered as high to very high grade and since recovery and grade have a relationship the results reflect this attribute.

• In 1994 Gencor test work was done for Jugan Au recovery into a flotation concentrate. Core samples were used in the tests and detailed information on the intervals sampled, the weight and grade of each interval were provided.




• The test work sample head grade was 2.55 g/t Au with 1.24 % As and the program covered grinding and flotation tests. The sample was found friable indicating a plant design with milling residence times low enough to avoid over grinding.

• Approximately, 95 % gold recovery to concentrate was reported for rougher flotation. The grades of the cleaner concentrate - 22.8 g/t Au; 24 % S; 10.5 % weight pull; 92.9 % Au recovery and tails - 0.20 g/t Au; 0.29 %S; 7.1 % Au to tails.

• In 1998 Ammtec, Perth WA undertook flotation test work for NBG/Menzies, and the referenced flotation test results, used in the Pre-feasibility Study 2013, Section 13-Metallurgical Testing, on Jugan Au mineralised samples are summarised below. o Feed: 2.36 Au g/t, 8.87 Au g/t in con; 0.26 Au g/t in tails; 91.4% Au rec; Mass pull: 29.8% o Feed: 2.55 Au g/t; 22.8 Au g/t in con; 0.20 Au g/t in tails: 92.9% Au rec; Mass Pull:10.5%; o Feed: 2.64 Au g/t; 12.8 Au g/t in con; 0.39 Au g/t in tails: 88.0% Au rec; Mass Pull:18 %

• As referenced in the Pre-feasibility Study 2013, the flotation test conditions and reagent schemes varied between the different laboratories. Overall, recoveries were higher for Jugan at 92 %. S and Au extraction kinetics were slow due to the inhibiting effects of slimes. Incremental dosage of flotation reagents will need to be employed with Jugan Au mineralisation types. Desliming and its effects on gold and sulphur extraction kinetics has been recommended.

• Detailed flotation tests on refractory gold representative samples were carried out on key parameters. Metallurgical process factors for As, Fe and S in-situ were modelled in 3D for the resource estimate along with the Au.

Concentrate Treatment • On site treatment options considered in the test work include further treatment of the concentrate in one

of three oxidation processes, Albion, POX or BIOX, detailed in Section 13-Metllurgical Testing in the PFS 2013.

• POX delivers the highest Au gold extraction 98% at the lowest cyanide consumption rate. Au extractions for both BIOX and Albion are at around 90 % with higher cyanide consumptions.

• Cyanide consumption has a large impact on the operating costs, and in addition the Albion process is an uncommon Au sulphide oxidation process.

• The oxidized concentrate would be treated by conventional cyanide leaching, elution, Au electrowinning and Au doré melting.

Basis for Predictions Regarding Metallurgical Amenability • The preferred Au metallurgical recovery option is to produce a float concentrate from a crush, grind and

flotation process, followed by drying/bagging the concentrate for shipment to off-shore smelters. • The objective is to produce a saleable concentrate free from unmanageable penalties and deduction; a




reasonable “Smelter Contract” to be negotiated. The concentrate Au g/t grade is driven by the S, pyrite and arsenopyrite content in the feed.

• The Jugan deposit contains a high ratio of As to S, and the production of a high-grade Au concentrate with high mineral purity will contain high arsenic levels resulting in production of a Au concentrate that grades say 20 Au g/t will also contain of the order of 10% arsenic resulting in a low percentage payment for the nominal value of the contained Au.

• The reality is that ROM stockpile management to blend styles of mineralisation from different zones and deposits will result in as close to an optimal feed quality as is practical.

• Supporting this assumption is that post-Pre-feasibility flotation work indicates that the metallurgical response of other deposits like BYG-Krian, Julia, Taiton, Pejiru, Sirenggok, with estimated flotation recoveries in the range 41 to 94% are closely related to total S and Au associated with the sulphides. The assumption based on this test work is flotation concentrate Au grades for all the samples will be higher than Jugan for equal contained Au gold, despite the lower overall flotation recovery.

• A further assumption is that concentrate grades up to 50 Au g/t are estimated for BYG – Bekajang type mineralisation.

• Historical and recent metallurgical test work on the Jugan deposit showed that about 95 % the Au is in refractory arsenopyrite and pyrite, the remaining Au in silicious gangue. Au recovery will require pre-concentration through crushing, grinding, desliming and flotation for a high Au grade concentrate. The preferred option of flotation concentrate will be to transport it to a Au smelting or refining facility.

• Preliminary trade off cost analysis demonstrated that the sale of concentrate offers the lowest Capital expenditure Operating costs as well as the a favourable return on investment Vs treatment of concentrate on site.

Tonnage Rate 8,000TPD

Process Methods (US$)

Flotation Concentrate 55,759,860

Biological Oxidation 161,122,700

Pressure Oxidation 196,828,100

Albion Process 174,783,800

Flotation Concentrate • Assay data from Jugan mineralised zones indicates there is little difference in mineral distributions, apart

from minor variations in As and Au content. Based on sulphide-sulphur and arsenic assays the ore is estimated to contain between 2 and 2.5 wt % arsenopyrite and 4.5 to 5 wt % pyrite with a combined




arsenopyrite-pyrite in the feed in the range 6.5 to 7.5 wt %. Therefore the maximum total sulphide upgrading factor is 15.4.

• The mineral assemblage is identical for all the Jugan Au mineralised zones within deposit comprising non-sulphide gangue, largely fine grained Illite (mica) and silica which causes excessive slimes after grinding.

• Gold deportment tests showed that about 70 % of the Au is associated with the arsenopyrite, 25 % with the pyrite and 5 % with silica.

• About 95% of the Au can be recovered in rougher/scavenging stages at mass pull between 17 and 33 wt% depending on slime entrainment its effect will be reduced by the desliming circuit.

• Without the feed desliming stage, rougher-scavenger followed by cleaner flotation tests shown that 90 % of the Au can be recovered in a mass pull of 10 wt % a Au upgrading ratio of 9:1. Mineralogical composition of a cleaner (deslimed) concentrate showed that the arsenopyrite and pyrite account for 67.4 wt% of the cleaner flotation concentrate.

• Based on flotation test work and standard smelter contract terms, the overall Au recovery from flotation concentrate and smelter concentrate recovery is estimated to be 77%.

• Preliminary analysis suggests that inclusive of a desliming step, possibly with an alternative cut-off grade, the flotation Au upgrade in the rougher and cleaner circuits produce a potential concentrate grade of up to 30 g/t Au.

• In an assessment by Mr. Jim King, metallurgical consultant for NBG/Besra in his 2017 report wrote that based on the metallurgical test work by HRL testing, he could not agree that a concentrate grade of 30 Au g/t could be produced from the Jugan average resource grade of 1.6 Au g/t. The test work showed that the grade of concentrate produced is related to Au grade, and that processing 1.6 Au g/t, would arrive at a cleaned concentrate grade considerably lower than that.

• Until further test work which is planned to go forward, substantiates this assessment with a substitute value or range of values for the interpretations of the Pre-feasibility Study 2013, CP, Kevin J. Wright does not propose that the Modifying Factors currently in place should be changed

• Mr. Jim King also wrote that the resource estimate done by Snowden and others is considered credible. The test work carried out on Jugan by HRL testing demonstrates that the gold recovery of saleable concentrate will be 90%.

• It is understood that additional optimisation metallurgical test work is required to “ground truth” metallurgical estimates that are based on existing and inconclusive results.

Environmental factors or assumptions

• Assumptions made regarding possible waste and process residue disposal options. It is always necessary as part of the process of determining reasonable prospects for

• The Bau District has long been involved in mining, directly or indirectly in supplies and services as part of the district legacy since the 1800’s. Current and historical land use in the district is limestone quarrying and gold mining, which has occurred at least since the early 19th century.

• Evidences of both past and present mining activities can be found throughout the district, as in the




eventual economic extraction to consider the potential environmental impacts of the mining and processing operation. While at this stage the determination of potential environmental impacts, particularly for a greenfields project, may not always be well advanced, the status of early consideration of these potential environmental impacts should be reported. Where these aspects have not been considered this should be reported with an explanation of the environmental assumptions made.

exhausted Tai Parit pit and Lake Bekajang, a tailings storage facility. Some limestone quarries for aggregate are currently active. Natural vegetative regrowth is rapid in this tropical environment.

• The realisation of past mining practices and lack of enthusiasm to identify and appropriately plan for a rehabilitative mine closure has since prompted an ever increasing awareness and the need to include environmental, social and economic issues into mine development planning.

• As such, the mitigation of impact of mining elements which will be addressed are: o Open pit, dry and wet waste material disposal and mine operations Infrastructure as they relate to

air, water and soil contamination and disturbance. • The Environmental aspects relating to the above are:

o Acid Mine Drainage (AMD) o Landform Stability (Slope stability and Erosional Control) o Land Rehabilitation (Re-vegetation & Conservation) o Dust and Noise o Ecological

• No assumptions have been made regarding environmental restrictions. • The location for Waste Rock Landforms, Tailings Storage Facility (TSF), haulage and access roads, power

transmission lines, the process plant and auxiliary infrastructure has been identified and appropriately placed and accounted for in section 18-Infrastructure of the Pre-feasibility Study 2013.

• A comprehensive Environmental Impact Assessment (EIA) will be required before a mining operating scheme is granted by the Department of Mineral Science and Geology. The assumption is that the EIA and associated Environmental Management Plan (EMP) and Erosion and Sedimentation Plan (ESCP) will be approved without excessive “Conditions Of Approval”.

• The Jugan prospect, amongst other deposits within the Bau Project, is generally low-lying with very distinct topographic relief such as steep-sided hills formed by limestone escarpments and pinnacles.

• These are a mixture of dispersed swampy areas and undulating hills. The typified drainage pattern is best characterized by dendritic system of creeks and riverine directed downstream towards Sungai Sarawak Kanan.

• The surrounding steep terrain and high-rainfall eventually causes high rates of runoff into streams creating alternate low suspended sediment carrying loads during base flow conditions developing to considerably elevated loads following heavy rainfall. It can be assumed that indigenous aquatic fauna in these local fluvial environments are resilient and have adapted to frequent and wide variation in streams flows and fluctuation in turbidity.

• At Jugan Hill, pre-production work includes removing vegetation; clearing the mining area, the old tailings area; pumping water from the existing ponds and diverting the streams in the immediate pit area; preparing ROM/stockpile sites and establishing permanent haul roads outside of the final pit limits




to the ROM/stockpile area and the TSF site as well as ancillary roads. An initial tailings impoundment area will also be constructed.

• At Jugan the orebody outcrops and Jugan Hill forms part of the orebody. Once the open pit has reached the hill toe, overburden and waste cutback will start and is planned the TSF containment bund. Excess waste, around 70%, will be placed on the waste disposal landform.

• The waste disposal landform will have a post-mining visual impact minimized by integration into the surrounding topography and environment.

• Diversion drainage channels will surround the waste disposal landform to regulate runoff to silt, settling ponds.

• The certainty of the potential for fresh sulphides associated with excavated material, as plant feed and overburden, as well as and tailings to generate low pH storm water run-off caused by oxidation of the sulphide minerals will call for the implementation of industry best standards to mitigate contamination and associated rehabilitation for Sarawak regulatory compliance.

• The use of local limestones to line or act as pH adjusting medium is assumed to be inappropriate because the high pyrite (Fe) content will precipitate and “armor” the limestone surface rapidly rendering its neutralization properties ineffective. Prior to any discharge outside the mining leases. the water flow will be detained in a silt ponds and pH adjusted.

• The Jugan and BYG-Krian waste disposal landform will be constructed in bottom-up compacted lifts with 5m catch berms to a projected height of 70m.

• All potentially acid producing mine waste (PAF) will be overlain by non-acid producing mine waste (NAF) and encapsulated with clay-lining and covered with topsoil for eventual re-vegetation.

Bulk density • Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size and representativeness of the samples.

• Density determinations were done routinely on drill core with 10 cm cylinders of whole core taken between 10 metres and 20 metres downhole or wherever there was a change in lithology

• Records showed that: Jugan-2,085, Bekajang-Krian-5,372, Sirengok-20, Pejrim-264 density determinations made.

• The bulk density for bulk material must have been measured by methods that adequately account for void spaces (vugs, porosity, etc), moisture and differences between rock and alteration zones within the deposit.

• The water displacement (Archimedes principle) method involved air dried sample weighing, sprayed with polyurethane seal to account for porosity and vuggy textures. The samples were then weighed again in air and again immersed in water.

• The density was determined using the standard formula. This has enabled comprehensive density models to be developed for each deposit that NBG had drill tested.

• Discuss assumptions for bulk density estimates used in the evaluation process of

• The Jugan density values ranged from 1.53 to 3.16 t/m3, with a mean of 2.64 t/m3. • Limited density values were found in a few drill holes from the Taiton and Bekajang-Krian deposits. For




the different materials. the 2010 resource definition the average density was determined by formation and applied to the Taiton data. The average was 2.59 t/m3 for Bau Limestone, 2.41 t/m3 for Intrusive, 2.59 t/m3 for Krian Sandstone, 2.37 t/m3 for Pedawan Shale, 1.98 t/m3 for Quaternary deposits and 2.75 t/m3 for Serian Volcanics; with a default of 2.5 t/m3 being applied as required.

• Limited, or no density values, were found in a few drill holes from the Bukit Sarin and Say Seng. For the Bukit Sarin resource definition, the average density was determined from the average value of the shales/mudstones/sandstones from the nearby Jugan deposit and is 2.63 t/m3. For Say Seng the average density for limestone (host rock) 2.6 t/m3was used.

• Statistical analysis demonstrated that the bulk density is consistent with the rock type and mineralisation of the deposits and is the basis for density assignment.

Classification • The basis for the classification of the Mineral Resources into varying confidence categories.

• Criteria for classification of resource categories was derived from a combination of the geostatistical analysis of grade, hole data and spacing, geological structural and lithological continuity from cross and longitudinal sectional interpretation and drill hole spacing, together with variography and estimation statistics using number of samples, kriging efficiency, and slope regression.

• The Mineral Resources that have been assigned resource classifications have considered all known and site specific and relevant technical factors specifically geology/mineralisation control and grade continuity, reliable spatial distribution of input data and overall interpretation.

• Geological and Mineral Resource modelling undertaken at Jugan and Sirenggok deposits, as well as the Taiton, Pejiru and Bekajang-Krian sectors, have been classified as Measured, Indicated and Inferred based on the following criteria: o A completed Pre-feasibility Study 2013 has demonstrated that the Jugan and BYG-Krian deposits

have the potential for eventual economic extraction. o Enough exploration drill coverage provided quality sampling and assaying data of sufficient

precision and accuracy, as well as confidence in domain interpretation to support the resource classifications.

o Measured Mineral Resources represents that enough sample assay analysis and density data exist, that further drilling and sampling would not increase the confidence in the quality of the Mineral Resource estimate.

o Indicated Mineral Resources represent where the geology continuity has established a confidence level from drill coverage, strong understanding of mineralisation control geology and estimation confidence to support this classification.

o Inferred Mineral Resources represent where the geology and grade continuity has been established, but only to the extent that grade continuity is inferred or extrapolated from insufficient drill coverage.

• There are mineralised areas that have not been classified in this issue as Mineral Resources on the basis




that grade, and geology continuity has not been established and for the purposes of the project are considered as exploration potential.

• Whether appropriate account has been taken of all relevant factors (ie relative confidence in tonnage/grade estimations, reliability of input data, confidence in continuity of geology and metal values, quality, quantity and distribution of the data).

• The Au mineralised areas of the deposits that show the most confidence in continuity of mineralisation (metal values) and structure and drill hole coverage in these zones is 25m by 25m, considered to sampled to the extent as to give confidence in geological interpretation for Mineral Resource estimation. Compared to the zones where the drill coverage is 50m and above, the confidence is less and is usually reflected in a lower tier category assigned.

• The geological interpretation was supported by geological mapping, channel sampling, and drill hole logging, and mineralogical analysis on a sufficient coverage of the drilling programmes completed over the years.

• Whether the result appropriately reflects the Competent Person’s view of the deposit.

• The classification considered and applied all appropriate and available data along with estimate quality. • From the perspective of the Competent Person, the mineral resource classification identified in the Pre-

feasibility Study 2013 geologic model; adequately represents the geologic and mineralisation attributes of the deposits documented therein.

Audits or reviews

• The results of any audits or reviews of Mineral Resource estimates.

• Some historic estimates were prepared pre-NI 43-101 and TMCSA neither audited nor made any attempt to classify them according to NI 43-101 standards.

• More recent resource estimates compiled to relevant AusIMM JORC Code at that time are presented because of their relevance and historic significance.

• Snowden Mining Industry Consultants in 1997 estimated an Indicated Resource (JORC 1996) of 7.74 million tonnes at 1.68 Au g/t using Indicator Kriging, based on a cut-off of 1.0 Au g/t and the 97.5 percentile mean value for each Au bearing material zone was applied as a top cut averaging 5.29 Au g/t (range of 4.51 to 6.82 Au g/t) for all zones.

• Information Geoscience upgraded (JORC 2004) the Snowden Resource Estimate in 2007 defining an Indicated Resource (JORC 2004) of 4.33 million tonnes at 2.04 Au g/t, using Indicator Kriging at 1.5 Au g/t cut-off.

• Ashby & Associates in 2008 defined an Indicated Resource (JORC 2004) of 9.23 million tonnes at 1.66 Au g/t and an Inferred Resource (JORC 2004) of 2.5 million tonnes at 2.20 Au g/t Au, at 1.0 Au g/t cutoff.

• Terra Mining Consultants/Stevens & Associates in 2010 defined an Indicated Resource of 10.96 million tonnes at 1.63 Au g/t, at 0.75 Au g/t cutoff.

• In 2012 Besra’s internal update defined a Measured Resource of 3.43 million tonnes at 1.44 Au g/t, an Indicated Resource of 10.26 million tonnes at 1.52 Au g/t, and an Inferred Resource of 0.507 million tonnes at 1.0 Au g/t, at 0.5 Au g/t cutoff.

• In 2012 NBG/Besra conducted metallurgical test work in-house and in outsourced laboratories, specifically on Jugan Au mineralisation. A summary of the historical test work overseen by Dr. Erik




Devyust, Metallurgist and Technical Services Director, NBG/Besra was discussed and reviewed by CP, Kevin J. Wright.

Discussion of relative accuracy/ confidence

• Where appropriate a statement of the relative accuracy and confidence level in the Mineral Resource estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate.

• The relative accuracy and confidence level of the Mineral Resource used the approach of applying qualitative criteria and the slope of regression to the estimate considered an industry best practice and appropriate.

• In addition, to quantify the confidence level limits, a conditional assessment was applied to the Mineral Resource estimate.

• The reported Mineral Resource is a combination of Measured, Indicated and Inferred estimates depicting the spacing and confidence level of the grade and mineralisation.

• There is a high level of confidence in post-2010 drill hole sample data and a medium level of confidence in the geological continuity. The is a medium to low confidence level in pre-2010 drill hole sampling and geological continuity respectively.

• The variography provided evidence of sufficient spatial correlation in Au grade which flows through to confidence in the interpretation of block estimates.

• Statistics were calculated for gold, density and sample length fields in the drill hole database within the defined mineralized zones. Tables in the Mineral Resource, section 14 of the Pre-feasibility Study 2013, show drill hole sample statistics lists within the mineralised envelope.

• Composite drill hole sample statistics within the mineralised zone took composites set at 1m as this was the predominant sample length and close to the average sample length.

• Quantile analysis was run for Au at ten primary percentiles (10% ranges) with four secondary percentiles (2.5% ranges) for the last primary percentile.

• The primary percentiles determined that approx. 39% of the metal percentage can be found in the top 10% range (top 830 samples), and that there is a significant jump in the mean grade and metal content from the previous range. The secondary percentiles indicate that the Au metal content changes abruptly at the 97.5 percentile and contains nearly 17% of the Au metal content.

• Review of log, cumulative log histograms and the quantile analysis suggested top cut (mean of the 97.5 percentile) should be applied to the samples above this value to remove any effect of the high-grade samples in the estimation.

• Geostatistical analysis and modelling were done on the geo-metallurgical elements As, Fe and S. The results were mixed and inconclusive in some instances. The variograms that could be generated, particularly for As did show similar directions as for Au though the ranges appeared to be slightly shorter. Downhole Semi-Variogram for As and Dip/Dip Direction Semi-Variogram for AS demonstrated the similarities with the Au variograms.

• Both checks for Inverse Distance Squared and Nearest Neighbour comparative resource estimates were set at 0.25 Au g/t Increments. The comparative resource estimate results compared well with the




Ordinary Kriging resource estimate and the minor differences probably reflect the interpolation techniques/application.

• The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.

• The area defined by the Measured Mineral Resource is considered a local estimate. • Those areas defined by Indicated and Inferred Mineral Resources are considered global estimates only. • The local estimate is based on using the daily production level of 8,00 tpd based on the anticipated

production of treatment rate for the Project in the PfS 2013.

• These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

• No substantial production metrics from historic operations were available, and probably unreliable as they could not be validated.



Section 4 Estimation and Reporting of Ore Reserves (Criteria listed in section 1, and where relevant in sections 2 and 3, also apply to this section.)


Mineral Resource estimate for conversion to Ore Reserves

• Description of the Mineral Resource estimate used as a basis for the conversion to an Ore Reserve.

• The Mineral Resource estimate used as a basis for the conversion to an Ore Reserve is described in Section 4 Estimation and Reporting of Mineral Resource in this issue.

• The Mineral Resource estimate is supported by the Section 14- Mineral Resource Estimates of the Pre-feasibility Study of December 2013 and is presented on a 100% basis.

• The Ore Reserve estimate was developed by Graeme Fulton, Competent Person, Terra Mining Consultants and General Manager, Bau Project with Besra Gold Inc., in association with Murry Stevens, Stevens & Associates and North Borneo Gold/ Besra staff.

• For open pit inventory, the resource block model estimation methodology incorporates adequate dilution and provides a reasonable estimate of mined tonnage and grades.

• Small areas of internal waste which could not be modelled discretely, were incorporated within the overall ore zone represented in the grade model with no or minor Au grade and be the highest percentage of dilution. Peripheral waste has been included at 5 % in the Ore Reserves in anticipation of stringent grade control procedures during mining.

• Each of the areas/sectors and/or the deposits that have Ore Reserves therein are discussed in more detail in Section 15, Mineral Reserve Estimates of the Pre-feasibility Report of December 2013.

• Clear statement as to whether the Mineral Resources are reported additional to, or inclusive of, the Ore Reserves.

• The Mineral Resources are reported inclusive of the Ore Reserves. • The Measured and Indicated Resources from Section 3 have been used as the basis for conversion to the

Ore Reserve. • Mineral Resources that are not Ore Reserves have not demonstrated economic viability.

Site visits • Comment on any site visits undertaken by the Competent Person and the outcome of those visits.

• If no site visits have been undertaken indicate why this is the case.

• CP, Graeme Fulton, as General Manager for NBG/Besra spent all of his time, (except for R&R) at the Bau Project site overseeing the exploration drilling, sampling, data management as well as the geological and resource modelling.

• Site visits have been undertaken on five occasions by CP, Kevin J. Wright, in September and December 2017 and April, August and September 2018 for an average duration of six working days.

• The Competent Person, Kevin J. Wright has visited the site for due diligence related to this report in September 2018 and; o Discussed the drilling programme, sampling, geology and mineralisation interpretation for the

Mineral Resource estimate. o Discussed environmental and community relations challenges with respective employees. o Visited the Jugan, Bekajang, Taiton, Sirenggok, Pejiru, and Juala deposits/sectors and assessed the

deposits’ amenability to mining related to access and topography.




o Visited the BYG TSF, core yard and SGS laboratory and NBG/Besra metallurgical facilities during test work activities.

o Visited the NBG/Besra Bau exploration office, observed the computer hard and software, server and hardcopy document archives.

• Kevin J. Wright has reviewed in some detail the relevant sections of the Pre-feasibility Study 2013 that apply to the Mineral Resource estimate and has a workable understanding of NBG/Besra’s exploration achievements related to drilling sample and data analytical integrity, and the basis for the Mineral Resource estimate stated in the Pre-feasibility Study 2013’s technical support and conclusions.

Study status • The type and level of study undertaken to enable Mineral Resources to be converted to Ore Reserves.

• All aspects of the Project related to deposits Jugan and Bekajang (BYG-Krian) are deemed to be at least to a Pre-feasibility Study of December 2013 level, with some components deemed to be Feasibility Report Study level.

• The Code requires that a study to at least Pre-Pre-feasibility Study level has been undertaken to convert Mineral Resources to Ore Reserves. Such studies will have been carried out and will have determined a mine plan that is technically achievable and economically viable, and that material Modifying Factors have been considered.

• Pre-feasibility Study determined that a practical mine plan which is technically achievable and economically viable, and all material Modifying Factors have been considered.

• Additional technical work to optimise certain factors related to gold process recovery proceeded the post-Pre-feasibility study, and the expectation is to update the additional study work into the Pre-feasibility Study prior to assessing Project financing options.

Cut-off parameters

• The basis of the cut-off grade(s) or quality parameters applied.

• The Ore Reserves are included within the overall Resource figures. Additionally, mineralised blocks below cut-off are reported as waste with no grade, although they contain low Au values.

• Datamine’s CAE NVP Scheduler was used to perform pit optimisations using the Lersch-Grossman algorithm which defined the cut-off values based on iterations for planned economic extraction to arrive at optimisation shells considering cost parameters and a Au price of $US1,500 per ounce.

• The cut-off calculation includes all operating costs associated with the extraction, processing and marketing of concentrate.

• Cut-off grades derived vary with each deposit/sector and also for owner-operator Vs contract-mining options. The cut-off for two of the most developed deposits, Jugan and BYG-Krian, are shown below: o Based on the optimisation runs and the applied parameters a cut-off grade of 0.39 to 0.44 Au g/t

was applied to Jugan Ore Reserves, with a strip ratio of 1.60/1.47 for owner-operator and contract-mining options, respectively.

o Based on the optimisation runs and the applied parameters a cut-off grade of 0.58 to 0.65 Au g/t was applied to BYG-Krian Ore Reserves, with a strip ratio of 4.41/3.94 for owner-operator and contract-mining options, respectively.




• The following graphs show the Reserve Tonnage and Reserve Au Ounces Vs Cut-Off Grade for the Proven and Probable Ore Reserve estimate respectively.




Mining factors or assumptions

• The method and assumptions used as reported in the Feasibility or Pre-feasibility Study to convert the Mineral Resource to an Ore Reserve (i.e. either by application of appropriate factors by optimisation or by preliminary or detailed design).

• The Mineral Resource modelling process assessed the exploration drill coverage manually and statistically using standard mining software to determine confidence levels for Measured and Indicated categories from drill sample analytical results to classify the reported Mineral Resources. Data quality was also factored into the classification process.

• The Mineral Resource was optimised using Datamine’s CAE NVP Scheduler incorporating the Lersch-Grossman algorithm followed by detailed final pit design.

• The Ore Reserve is the Measured and Indicated Resources within the pit designs, after allowing for ore loss.

• The input parameters to the optimiser were taken from the Pre-feasibility Study 2013. These include the geotechnical pit slope angles, operational costs, processing data and marketing information.

• The choice, nature and appropriateness of the selected mining method(s) and other mining parameters including associated design issues such as pre-strip, access, etc.

• Mineralisation’s challenging geometry and proximity to surface favours conventional drill and blast open pit over bulk underground mining methods. The faulted and fractured nature of the mineralised zones as well the host rock introduces challenges to underground mining that are less so with open pit mining.

• A typical open pit mining method best suits the mineralisation geometry, geology and Au grade of the ore deposits identified for exploitation.

• The Jugan and BYG-Krian pit designs were developed with CAE Studio 5D Planning software. The detailed design of benches (toe & crest) and ramps was undertaken using the selected pit shell for each scenario option as an outline guide; use of the geotechnical model defining the face angle value per RMR rock zone; the final pit design parameters (based on geotechnical input); and practical design judgments of the mine planner.

• Mine benches will be typically 15-20m wide and final at 5m for adequate equipment loading ore and waste. Bench heights will be maximum of 15m with face slopes defined by the RMR model.

• Pit ramps are designed at 10% gradient and 20m wide, then are cut back to 10m at -140 to -115 mRL. • At Jugan Hill ore “daylights” at surface requiring vegetation and topsoil removal and stockpiling but

minimal pre-production overburden stripping and the existing light vehicle infrastructure would be upgraded for the mining haul fleet.

• As with the waste, where practical the ore will be free dug, eliminating drill and blast as in the case of Jugan Hill. With depth the ore will need to be ripped first, then eventually the ore and waste will have to be drilled and blasted.

• Different ore grades will be selectively mined for ROM stockpile process feed blending. Also in waste separation starting with best practices drilling and blasting minimizing throw and displacement, followed by a strict ore grade control regime combined to maintain dilution at or below 5%.




• To manage dilution and selective mining, 2.0 to 2.5m mining lifts will be excavated for loading haul trucks. The lifts will progress down with the effective bench being the full hill area at that elevation. Thereafter, the ore blasted will be excavated in benches with similar configuration lifts.

• Sub-grade resources below cut-off will either be sent to the sub-grade stockpile area for blending or to waste landform/TSF.

• Similarly, BYG-Krian is near surface.

• The assumptions made regarding geotechnical parameters (eg pit slopes, stope sizes, etc), grade control and pre-production drilling.

Geotechnical Parameters • The optimal pit shell used geotechnical data and design parameters to detail an optimal pit used in the

subsequent pushback and optimisation scheduler to define the major extraction phases, pit schedules and Ore Reserves for the base case scenario and other scenario options.

• The Jugan and BYG-Krian open pit designs were developed using the CAE Studio 5D Planning software. The detailed design of benches and ramps used the selected pit shell as an outline guide; applied the geotechnical model defining the face angle based of Rock Mass Ratings (RMR) rock zone investigations; the final pit design parameters (based on geotechnical input); and practical design judgment.

• The geotechnical data for the Jugan deposit indicated there would be areas with poor 30 to 40 RMR located at the north and south-east side of the deposit.

• For BYG-Krian the geotechnical data for the Bukit Young deposit indicated fair to good RMR especially at depth. Poor RMR starts at 0 mRL, more so at the south end of the deposit.

• For pit designs, the SLOPE angle and BERMWDTH fields were added into the RMR Block Model and pit design, using CAE Studio5D, both fields used as incumbent parameters resulting in overall pit slope of BYG steeper than Jugan using the same design methodology.

• As part of the pit optimisation process the practical pit designs were incorporated along with the specific geotechnical parameters used the optimal pit as a guideline and comparison are listed in Section 16, Mine Planning & Scheduling of the Pre-feasibility Report of December 2013.

• Using the RMR model for pit design allowed the software to adjust the bench slope angle for each RMR zone. Of significance is where the zone changed within a bench lift and allowed for the detailed setting per zone. The overall slope angle settings and manual settings using Rosettes were used as a cross-check against the model option for Jugan.

• The Jugan pit overall slope without the ramp is from 36° to 39° and with the ramp is 32° to 36° on the N&SE side measured from bottom to top.

• The Jugan pit overall slope without the ramp is from 39° to 41° and with the ramp is 29° to 36° on the W side measured from bottom to top.

• The overall designed pit slopes at BYG-Krian are 47° without the ramp and 36° to 42° with the ramp. This BYG-Krian pit has steeper face angles than the Jugan pit due to the being primarily limestone host




rock as opposed to shale at BYG-Krian.

Grade Control and Pre-production Drilling • Grade control will be sampling blast hole drilling, collected in a cyclone and/or by trenching when

ore/waste is free digging or rip-able. The samples will be analysed and the ore and waste zones modelled and “flagged” by colour codes on the mining benches. In addition, the ore (and structures) will be delineated by geological mapping and best practices grade control procedures and zones “flagged” defined as waste or below cut-off. Grade control and the handling of ore and waste will be the same for BYG-Krian as is for Jugan.

• Likely categories would be high grade, low grade, sub-ore grade and waste. The latter removed to engineered landform dumps and the former three separately stockpiled at the ROM Pad for feed blending.

• The major assumptions made, and Mineral Resource model used for pit and stope optimisation (if appropriate).

• Major assumptions are that the extensive data validation, cross checking and rectification process undertaken prior to resource modelling verified that all data and sources were the best possible, particularly with respect to the historic data so providing “clean”, reliable and accurate data for the Mineral Resource model.

• Assume that the ore zone wireframes generated in Gemcom/Datamine/CAE Mining and imported into Datamine/CAE Mining and validated before assigning block model cells orientated orthogonally are reliable.

• A revision to the Mineral Resource estimate was made in the February 2012 Resource estimate release. No changes or modelling was redone only a change to the cut-off grade and therefore assumes that subsequent information is still valid. The grade was lowered because preliminary pit design and costing identified the possibility that the reserve cut-off grade could be lower than the resource cut-off grade creating a situation where there could be Ore Reserves not in the corresponding Mineral Resource. The initial cut-off grade was 0.75 Au g/t and reduced to 0.5 Au g/t. The assumption is that preliminary Pre-feasibility work was appropriate.

• Assumption is the Modifying Factors used for the conversion/upgrade of the Mineral Resources to Ore Reserves are robust.

• The mining dilution factors used. • The mining recovery factors used. • Any minimum mining widths used.

• A 5% external, footwall and hanging mining dilution has been applied. Internal dilution, zero or sub-ore grade is included in the Mineral Reserve.

• Mining extraction estimates 5% of the ore will be lost during excavation at the waste/ore contacts, representing 95% mining recovery.

• No additional mining dilution or mining recovery factors have been applied to the pit optimisation as these are largely accounted for in the recoverable resource methodology used in the formulation of the current Mineral Resource model.




• More detailed mine design will identify a minimum mining width dictated by the smallest units in the mining fleet balanced with productivity and the mine’s economic production requirements.

• The way Inferred Mineral Resources are utilised in mining studies and the sensitivity of the outcome to their inclusion.

• Pit optimisation was carried out on the total Mineral Resource model and the Inferred Mineral Resources blocks were considered to be inadequately defined.

• However, if during grade control drilling grade values met cut-off criteria and the mining sub-blocks fell within the pit outlines, they would be included in ROM ore feed to the process plant.

• For the purposes of Ore Reserves these sub-blocks are treated as waste and not included in the Ore Reserve estimate.

• Inferred blocks though reported as waste, will be further evaluated from grade control blast hole drilling assays and from production geologists’ observations at the time of excavation will determine whether to include the area as ROM feed or otherwise.

• Although the BYG-Krian pit is small when considering the Indicated Mineral Resources only, it has additional potential in terms of the inferred Mineral Resources both under the pit and Indicated Mineral Resource zone but also in shallow extensions around. As the Mineral Resource is Inferred, in this case it cannot be considered in the Ore Reserves, the potential for pit expansion is significant in terms of the current Ore Reserves.

• Considering the overall Mineral Resource estimate of 72,614,300t, 70% is in the Inferred Resource category, implying a future potential for upgrading to a higher Resource category.

• The infrastructure requirements of the selected mining methods.

• Haul roads will have to be designed, constructed and maintained to high standards because of the damaging impact of the combination of heavy trucks, shale and heavy rain.

• To ensure consistent haul productivity the fleet utilization is maintained during the tropical rains effective drainage infrastructure has to be installed. An estimated 8.2k drainage structures will be needed along the roads with additional drainage around building structures, ROM pads, plant area and other facilities.

• Outside the pit existing rural light vehicle infrastructure would be upgraded as well as construction of alternate routing for haul trucks to the ROM Pad stockpiles and waste landforms.

• Monsoon season will reduce available time for open pit mining, that can be mitigated by stockpiling sufficient process feed on the ROM stockpile in advance.

• Sufficient area is available for an adequately provisioned facility for the heavy equipment maintenance, fuel and lube storage, workshop, warehouse/stores, mining technical and management offices.

• Infrastructure for the mining method has been accounted for in the project costing.

• The metallurgical process proposed and the appropriateness of that process to the style

• The metallurgical process proposed, and the appropriateness of that process is driven by the style of mineralisation of the Bau Project Au bearing deposits and sectors.

• Mineralogical analysis indicated that the dominant mineral phase in Jugan Au bearing material is




Metallurgical factors or assumptions

of mineralisation.

arsenopyrite and with some other deposits in the Bau Project its pyrite. • Sulphide S and As assays estimate that the Jugan Au bearing material contains 2 to 2.5 wt%

arsenopyrite and 4.5 to 5 wt% pyrite with a combined arsenopyrite-pyrite feed of 6.5 to 7.5 wt%. • Diagnostic leach results indicated that the Au occurrence in Jugan was low in free Au based on the low

percentage of Au recovered by direct cyanidation, typical of arsenopyrite-pyrite refractory ores. • From the level of resource definition, the size of the Jugan orebody, the highly refractory nature of its Au

content and its response to flotation, the production of a Au bulk flotation concentrate is the most viable means of recovering the gold.

• There is no option therefore other than a metallurgical process to produce a Au concentrate from a crush, grind and flotation facility followed by an oxidation process on the sulphide Au concentrate. .

• Assume mass pull in flotation will be 10% based on test work. • Options considered in the test work for further treatment of the Au concentrate in one of three

oxidation processes, Albion, POX or BIOX, detailed in Section 13-Metllurgical Testing in the PfS 2013. • POX delivers the highest Au gold extraction at 98%. Au extractions for both BIOX and Albion are at

around 90 %. • Cyanide consumption impacts the operating costs, in addition to the Albion process being a severely

uncommon Au sulphide oxidation process. • Any of these result in oxidized concentrate which would be treated by conventional cyanide leaching,

elution, Au electrowinning and Au doré melting. • Following review of a cost/benefits of the aforementioned oxidation processes, the option was taken to

produce a gold concentrate from a crush, grind and flotation process, followed by drying/bagging the concentrate for shipment to off-shore smelters. Appropriate for the sulphide style of mineralisation encountered at Jugan, BYG-Krian and throughout the Bau goldfield.

• The objective and assumption are that a saleable concentrate will be produced, free from unmanageable penalties and deductions; and a reasonable “Smelter Contract” negotiated.

• Whether the metallurgical process is well-tested technology or novel in nature.

• The production of concentrate from a crush, grind and flotation process on a Au bearing sulphide ores is not novel in nature and a well-tested technology.

• The nature, amount and representativeness of metallurgical test work undertaken, the nature of the metallurgical domaining applied and the corresponding metallurgical recovery factors applied.

• The first phase of the test work was to for the Albion Vs POX processes with a common flotation concentrate prepared by SGS Lakefield Oretest in Perth for the POX tests on half of the concentrate while the Albion process used the other half using hrltesting in Brisbane under Core Process Engineering.

• The second phase of the test work focused on flotation optimisation on Jugan samples at hrltesting Laboratories. Additional POX optimization work was performed on flotation concentrate bulk sample at SGS Lakefield Orestest. One additional Jugan sample was floated separately at the Maelgwyn




laboratories in South Africa to produce concentrate for BIOX amenability testing at SGS South Africa under Goldfields BIOX group (now Biomin).

• Bulk samples from surface and drill core along strike and depth of the deposits as well as geo-metallurgical holes were used for flotation test work at recognised laboratories and NBG/Besra facilities at the BYG site managed by Mr. Erik Devyust, Metallurgist and Technical Services Director, NBG/Besra.

• Historical metallurgical test work and studies were done that focused on the Jugan (and Pejiru) deposit only and compiled in six previous metallurgical reports between 1994 and 1998.

• In 1994 Gencor core sample test work for Jugan reported Au 95% overall recovery a concentrate from a head grade of 2.55 g/t Au with 1.24 % As. The programme covered grinding and flotation tests.

• In 1998 Ammtec, Perth WA undertook flotation test work for NBG/Menzies on Jugan Au mineralised samples are summarised below. o Feed: 2.36 Au g/t, 8.87 Au g/t in con; 0.26 Au g/t in tails; 91.4% Au rec; Mass pull: 29.8% o Feed: 2.55 Au g/t; 22.8 Au g/t in con; 0.20 Au g/t in tails: 92.9 % Au rec; Mass Pull:10.5%; o Feed: 2.64 Au g/t; 12.8 Au g/t in con; 0.39 Au g/t in tails: 88.0 % Au rec; Mass Pull:18.0 %

• As referenced in the Pre-feasibility Study 2013, the flotation test conditions and reagent schemes varied between the different laboratories. Overall, recoveries for Jugan were 92 %. S and Au extraction kinetics were slow due to the inhibiting effects of slimes. Incremental dosage of flotation reagents will need to be employed with Jugan Au mineralisation types. Desliming and its effects on gold and sulphur extraction kinetics has been recommended.

• To support the Pre-feasibility Study 2013, detailed flotation tests on refractory gold representative samples were carried out on key parameters. Metallurgical process factors for As, Fe and S in-situ were modelled in 3D for the resource estimate along with the Au.

• About 95% of the Au was recovered in rougher/scavenging stages at mass pull between 17 and 33 wt% depending on slime entrainment, its effect will be reduced by the desliming circuit.

• Without the feed desliming stage, rougher-scavenger followed by cleaner flotation tests show that 90% of the Au was recovered in a mass pull of 10 wt% a Au upgrading ratio of 9:1.

• Mineralogical composition of a cleaner (deslimed) concentrate showed that the arsenopyrite and pyrite account for 67.4 wt% of the cleaner flotation concentrate.

• The base case option used in the Pre-feasibility Study 2013 accounted for flotation test work, standard smelter contract terms and applied the overall Au recovery from flotation concentrate and smelter concentrate recovery estimated at 77%.

• Any assumptions or allowances made for deleterious elements.

• The assumption is that all the Ore Reserves are deleterious, refractory ores being “fresh” sulphides with little or no oxidation characteristics even at and near surface.

• The existence of any bulk sample or pilot • No bulk samples or pilot plant metallurgical test work was carried out. All test work was of the




scale test work and the degree to which such samples are considered representative of the orebody as a whole.

laboratory and bench scale type.

• For minerals that are defined by a specification, has the ore reserve estimation been based on the appropriate mineralogy to meet the specifications?

• The specification per se for the Bau project have been to account for the assays reported for relatively high As, Fe, and S levels indicating that a higher mass will be associated with the flotation concentrate in terms of arsenopyrite and pyrite.

• Of importance is the dominant mineral phase in Au mineralisation, arsenopyrite, and the amount of Au associated with quartz in the samples.

• Jugan assay data from Au mineralised zones indicate little variation in distribution other than minor variations in As and Au content. Increases in As and Au coincide, evidencing a correlation.

• Sulphide S and As assays estimates for Au mineralisation wt% content of arsenopyrite and pyrite with the a combined arsenopyrite-pyrite feed wt%.

• Also to be considered is the specification requirements of the final Au concentrate for outsource refining.

• The mineralogical arsenopyrite and pyrite wt % composition for a cleaner flotation concentrate. • High clay content in the Au minerealised material before flotation was included in post-Pre-feasibility

Study completion optimisation work.

Environmental • The status of studies of potential environmental impacts of the mining and processing operation. Details of waste rock characterisation and the consideration of potential sites, status of design options considered and, where applicable, the status of approvals for process residue storage and waste dumps should be reported.

• In March 2014, Chemsain Konsultant Sdn Bhd completed a Pre-Environmental Impact Assessment (PEIA) Study for Ecology and Social Components. It meets only part of the EIA requirements.

• The current status is that the following, but not inclusive, will require State authority approval to proceed with mining operations.

• Ministry of Urban Development and Natural Resources (MUDNR) o Application of Mining/Prospecting Licenses. Currently in good standing

• Department of Mineral and Geoscience (DMG) o Application for Operating Mining Scheme (OMS). o The document includes some data used for the SNREB and DOSH below in addition but not limited

to the mining plan and schedule including blasting, waste landform dump design and residue storage/tailings containment. Mining specific data and adverse environmental impact mitigation measures are included in the EMP.

• Sarawak Natural Resources and Environment Board (SNREB) o Application for Mining and Process Plant o Prepare and submit an Environmental Impact Assessment (EIA) For example, the SNREB

(amendment) Ordinance 2005 addresses “Prescribed Activities” and requires an EIA to be submitted resulting in a Conditions of Approval for operating compliance. Together with the EIA would be the drawing up of an Environmental Management Plan (EMP) and Erosion and Sedimentation




Control Plan (ESCP). • Department Occupational Health Safety (DOSH)

o Application for industrial fixed plant, pressure, heating and lifting. o Data must be documented for the fixed plant structural conceptual design, including but not

limited to flow diagram, equipment list with brand, specifications, emissions related to air-dust, noise, gasses; water quality-sediment, hydrocarbon, chemicals; and land- hydrocarbon and chemicals. Application to include timeline for construction, operations and pollution mitigation measures, monitoring programmes; and application and maintenance of Management Best Practices.

• By identifying any potential environmental and social impacts throughout various stages of project progression, strategies to manage and mitigate impacts related to mining can be implemented such as techniques of remediation and reclamation, including best practice of land management planning and monitoring.

Mine Rock Characterisation • The source of the Acid Mine Drainage (AMD) at the Jugan, BYG-Krian and the other sectors originates

from the mineralized shale with disseminated arsenopyrite. On exposure to oxygen, by air or water the ore and waste rock will oxidize creating AMD. Natural occurrence of AMD is currently observable in Jugan Hill and BYG-Krian.

• The results of 205 field grab samples sent to SGS for static geochemical analysis to determine the Acid Neutralization Capacity (ANC) and Net Acid Production Potential (NAPP) showed: o 128 samples were categorized as Non Acid Forming (NAF) o 39 samples were labelled as Acid Consuming (AC) o 16 samples were categorized as Potential Acid Forming (PAF) o 22 samples were considered as “Uncertain”

• SGS lab analysis was limited to reporting of Static NAG (Net Acid Generation) at 0.50kg H2SO4 /t. Sample results exceeding > 0.50 kg H2SO4 / t and pH <4.5 were considered PAF. Results with zero H2SO4 / t and pH >4.5 were categorized NAF or AC.

• The NAF value showing strong alkali properties were NAG at pH 7.80 to 9.90. • PAF with NAG pH from 2.20 to 5.80 were categorized as high acidity.

Infrastructure • The existence of appropriate infrastructure: availability of land for plant development, power, water, transportation (particularly for bulk commodities), labour, accommodation; or the ease with which the infrastructure can be provided or accessed.

• The site is accessed from the main road from Kuching to Bau. Site access is within 1-2 kms via sealed roads which will need upgrading including two small bridges to handle heavy vehicles.

• The pit, process plant, tailings storage facility (TSF), waste landform and support facilities will be built within the Mining Leases covering the Jugan Hill and BYG-Krian projects. The facilities currently present at the site are the roads, power and communications, and housing is available in and around the Bau community.




• The Jugan TSF is sited near shale suitable for construction borrow and the topography is lower and flatter than the areas near the Jugan Pit.

• The plant site will be hill sited for gravity conveyance of the tailings to the TSF; Enough area exists for tailings storage for Jugan and Bukit Young pits considering the current tonnage estimated in the Mineral Resources and Ore Reserves.

• Grid power is available as the permanent power supply for Jugan process plant and mine. Sarawak Energy will provide a 3 phase, 132KV transmission line to the plant site.

• Water can be sourced from the main water pipeline along the Kuching-Bau road and piped a short distance to the mine site. Water sourced from the treated ponds and Sarawak River can be used to water rehabilitation plantings or dust suppression during dry weather.

• The mine site will include several offices and structures in addition to the process plant setup and other mining landforms (TSF, Waste landform, pit and stockpiles),

• Explosives will be stored in the designated explosives magazine constructed and maintained in line with Malaysian government’s appropriate mining codes.

• Pit water, collected in the pit sump, will be pumped to water treatment and silt retention ponds and re-cycled or discharged.

• Water from the TSF will be treated in the TSF ponds and wetland before discharge or usage. • Surface run off from the waste landform, roads and other areas within the mine site will be collected by

a network of drainage channels, and other water flow structures to appropriate areas for treatment, discharge and/or re-cycling.

Costs • The derivation of, or assumptions made, regarding projected capital costs in the study.

• Capital costs estimates have been mostly factored and as such are limited to the requirements for a Pre-feasibility Study.

• Mining equipment capital costs were based on owner-operator mining at the 8,000 tpd base case option.

• Referenced in Section 21-Capital -Operating of the Pre-feasibility Study 2013 (in $US).

Mining Capital Group Total Cost

(US$) Mobile Mining Equipment 18,635,200 Fixed Mining Equipment 196,150 Mining Construction 9,510,300 Mining - Other 336,700 Total – Owner-Operator 28,678,350

• The equipment estimate includes critical and major components ranging from 10-30 % of the total

capital cost. Mining infrastructure was included with the mining capital costs.




• The mine site rehabilitation costs were calculated for mine closure, post mine closure monitoring and ongoing rehabilitation during operations.

• A contingency of 10 % was applied to the major mining and processing capital items. Other minor contingencies and conservative costing has been applied throughout.

• An assumption is that 8,000 tpd is the most cost effective daily production rate and that the geometry of the pits can accommodate the equipment size required to meet the designed production capacity.

• An assumption is that the preference for owner-operator capital offsets the higher operating costs of using a contractor (though some Malaysian experience has demonstrated that this is not the case).

• Capital Expenses for Flotation Concentrate Production from Jugan Ore 8,000 tpd case.

Plant Equipment (US$) Crushing Plant 1,420,000 Primary SAG Mill 7,779,000 Knelson CVD 950,000 Primary Cyclone Cluster 310,000 Flotation Conditioner Tank 145,000 Flotation Cell Unit 8,110,000 Regrind Ball Mill 2,252,000 Regrind Mill Cyclone 346,000 Concentrate Filter Feed Thickener 355,000 Filter Press Unit 2,705,000

Subtotal Plant Equipment 24,372,000 Plant Ancillary Reagents 650,000 Water Supply System 450,000 Low/High Pressure Air System 450,000 Buildings/Cranes 1,550,000 Electrical Power System, Generator/Grid 4,300,000

Subtotal Plant Ancillary 7,400,000 Plant Materials and Services Structural Steel/Platform etc,8% 2,859,480 Pumps, Piping, Valves, Launders, Chutes, 7% 2,541,760 Civil works, 5% 1,588,600 Concrete works, 10% 3,177,200 Electrical Distribution, 12% 3,812,640 Instrumentation & Control, 4% 1,270,880 Customs/Taxes & Shipping/Transport, 10% 3,177,200




Engineering Cost, 2.5% 794,300 Contingency, 10% 3,177,200 First fill cost/Spare, 5 % 1,588,600

Subtotal Plant Materials & Services 23,987,860 Total Process Plant 55,759,860

• The TSF capital cost construction is split into three stages:

o Stage 1 = $8,125,866 o Stage 2 = $13,543,111 o Stage 3 = $5,417,244

• A capital cost was estimated for general offices, car park and warehousing and is $492,300 for 800m2 area.

• The fencing, water reticulation, surface water drainage, land valuation, excludes the mine offices and workshops which were included in the mining costs.

• Land valuation costing to purchase land (approx. 340 ha) and land improvement affected by the mining operations is $21,847,200. Estimate supplied by a qualified chartered surveyors Williams, Talhar, Wong & Yeo Sdn Bhd., and includes a 10% contingency to cover minor variations. Prior to actual land purchases a full land valuation will need to be performed.

• The sustaining Capital Expense is based on capital for the mining and capital for the process plant. o For mining the sustaining capital is based on 5% of the fixed mining capital items per annum. o For the processing the sustaining capital is based on 5% of the processing Opex cost per tonne

(excluding consumable spares) multiplied by the annualised tonnage. Also included is major mobile plant replacement parts based on operating hours.

o For the base case this is $1,963,102 ($53,300 mining, $943,500 mobile equipment & $966,300 processing).

• This amount caters for equipment upgrades and modifications, pump replacements, ancillary mining equipment, major spares for plant and mobile equipment, and other deferred capital e.g. future TSF expansion stages.

• The sustaining capital also included TSF extensions, costed individually and separately and are $18,156,320 for Stage 2 & 3 and are not part of the initial capital requirement.

• The mine site rehabilitation costs were estimated closure, post closure monitoring, and ongoing rehabilitation during operations. The total rehabilitation cost estimate is $6,365,750 made up from $2,403,780 for pre-closure/ongoing rehabilitation, $3,166,970 for mine closure activities and $795,000 for post closure monitoring.

• A contingency factor of 10 % has been applied to the major mining and processing capital items. Other




minor contingencies and conservative costing were applied throughout the estimate. • Excluded from the capital expenses are Inflation and escalation; protection against currency

fluctuations; and project financing.

• The methodology used to estimate operating costs.

• The derivation and assumptions of Bau Project cost estimates are detailed in Section 21 Capital – Operating Costs of the Pre-feasibility Study 2013 were based on: o Quotes for major process and mining items from Metso (process), CAT Tractors Malaysia (mining),

Sandvik Malaysia Sdn Bhd,(drilling), Orica,(explosives) and other suppliers. o Quotations are not available to review and not listed in the appendices of the Pre-feasibility Study

and cannot be authenticated which correctly classifies the study as Pre-feasibility ranking. o Costs where applicable were benchmarked against in-house costs at Besras’s other operations,

from costing database and from information from similar operations worldwide; a Pre-feasibility approach.

o Costs for locally sourced items obtained from local suppliers; no quotations documented, o Standard engineering rates and in line with normal engineering costing practice; source

unspecified o Standard rates and values were applied based on published information, e.g. import tariffs, etc.

source unspecified • The open pit operating costs along with the associated mining costs detailed in Section 21 Capital –

Operating Costs of the Pre-feasibility Study 2013. • The total mining cost/t was developed for ore and waste for owner-operator scenario. The contract-

mining cost was based on actual rates of local mining contractors. Source unspecified and evidence unavailable.

• All costs applied to mining assumed geology, survey, mine engineering, drilling, blasting, loading and hauling, allowing for some early stage upside potential for cost savings during free digging stages.

Mining Cost Description Total Cost Cost/Tonne

(US$) (US$/t) Total Drilling Cost-Ore $ 579,056 $ 0.20 Total Drilling Cost-Waste $ 877,584 $ 0.18 Total Blasting Cost-Ore $ 1,773,932 $ 0.61 Total Blasting Cost-Waste $ 2,552,718 $ 0.51 Total Loading Cost - Ore $ 1,324,752 $ 0.12 Total Loading Cost - Waste $ 0.12 Total Ore Hauling Cost $1,621,934 $ 0.39 Total Waste Hauling Cost $ 2,027,417 $ 0.29




Total Dozing /Ripping Cost $ 826,487 $ 0.09 Total Mine Ancillary Cost - Ore $ 2,865,409 $ 0.30 Total Mine Ancillary Cost - waste $ 0.30 Waste Dump Maintenance Cost $1,449,000 $ 0.22 Total Grade Control Cost $139,968 $ 0.05 Total Ground Support Cost $ 674,752 $ 0.23 Ore Mining Total – Owner-Operator $ 2.02 Waste Mining Total – Owner-Operator $ 1.72 Ore Mining Total – Mining-Contract $ 2.62 Waste Mining Total– Mining-Contract $ 2.23

Labour Cost Description Qty Total Cost (US$/mth)

Direct Labour 107 $116,992 Mine Overhead Labour 38 $149,627 Mine Services Labour 33 $35,409 Engineering Labour 4 $24,845 Admin Labour 12 $28,947 PAFI Labour 12 $33,377 Total Overhead Costs $133,138 Grand Total Labour/Overhead $410,267 Total Annual Labour Costs: $4,923,205 Personnel with PPEs 188

Labour Cost per tonne (for MCAF) $ 0.62

Engineering Cost Description Total Cost Cost/Tonne

(US$) (US$/t) Total Services: $156,091 $0.05 Total Electricity $53,894 $0.02 Total Sundries: $54,050 $0.02 Total Engineering Costs $264,035 $0.09

General Cost Description Total Cost Cost/Tonne

(US$) (US$/t) Health & Safety: $84,690 $0.02 Mining Services: $55,095 $0.02 Sundries: $36,638 $0.01




Total General: $176,424 $0.05 • Listed below 8,000 tpd Flotation Concentrate Option operating costs.

Item Unit Cost Flotation Concentrate

Consumption Cost US$/kg (kg/t) (US$/t)

Power 0.07/kWh 35kW/t 2.45 Steel Balls 1.6 0.74 1.18 CuSO4 2.45 0.2 0.49 CMC 2.00 0.2 0.40 PAX 2.13 0.15 0.32 Frother, MIBC 3.2 0.04 0.13 Promoter 3.2 0.035 0.11 Nutrients 0.7 0 0.00 Flocculent 5 0.015 0.08 Coagulant 2.19 0 0.00 Oxygen 0.02 0 0.00 Limestone 0.035 0 0.00 Lime 0.2 0.5 0.10 NaOH 0.7 0 0.00 NaCN 3.8 0 0.00 Carbon 2.8 0 0.00 Na2S2O5 0.8 0 0.00 LPG 0.58 0 0.00 HCl 0.47 0 0.00 Manpower 80 0.67 Maintenance 4% CAPEX/yr. $50.4M 0.69

Subtotal: 6.62 Spares 5.5% 0.95

Total Operating Cost: 7.57 • Overheads, G&A Costs were set at a rate of $0.55/t in line with the Besra operations in Vietnam at the

time and are considered acceptable for a Pre-feasibility Study order of magnitude.

• Allowances made for the content of deleterious elements.

• The costs anticipate all ore mined and processed will contain 100% deleterious elements. • Operating costs reflect treatment of a refractory ore.




• The source of exchange rates used in the study.

• The revenue from Au sales is effectively received in $US, exchange rates for the Malaysian Ringgit (MR) and to some extent other currencies, were used at the prevailing exchange rates when costs were estimated. The MR to $US exchange rate, from late 2013 until late 2018 went from 3.2 to 4.1 MR respectively meaning that the MR equivalent in estimated costs of goods and services purchased in $US, typical in the international mining industry, will be correspondingly understated.

• Derivation of transportation charges. • Transport and refining costs support are identified Section 21 Capital – Operating Costs of the Pre-feasibility Study 2013 under Non-OPEX items.

• The scenario in this report is that Au bearing concentrates will be shipped overseas to a refiner. Transportation charges were obtained as estimates from transport providers.

• The concentrate transportation costs from site to smelter in China was estimated at $32.76/mt and are inclusive of transport from mine site to port/warehouse, demurrage, re-handling and sea freight.

• Documentation was not supported in the Appendices nor available at time of CP, Kevin J. Wright’s due diligence and could not be verified.

• The basis for forecasting or source of treatment and refining charges, penalties for failure to meet specification, etc.

• The source of payment is for Au refined by the concentrate smelter, on a Net Smelter Return, fee per tonne treated plus a percentage of the gold held back. The costs were based on costs incurred at Besra’s Vietnam operations. Besra’s most recent gold production in Vietnam was refined in Switzerland though options for refining in Singapore and Perth are an option. The validity of this basis for the current evaluation is mostly obsolete.

• For the concentrate option the costs for transport from mine-site to processing/smelting facility are calculated based on standard transport and shipping rates respectively. Softcopy of quotation from Zhaoyuan Hwatang Trading Co., Ltd. was reviewed by CP, Kevin J. Wright.

• The allowances made for royalties payable, both Government and private.

• In Malaysia the corporate income tax is 24% of net taxable profits. Other taxes are GST (10 %) and a service tax (6%). These have now been replaced since the new government was elected in May 2018 by the Sales Tax and Services Tax (SST) two separate taxes and not new taxes which existed in the 1970s and removed in 2015 with GST. o Sales Tax is a single stage tax applied on importers and manufacturers of certain prescribed goods

at 5.0 % and 10 % collected by manufacturers or importers. There is no credit mechanism for tax paid.

o Service Tax is also a single stage tax and applies at 6.0 % on services that are in-scope. It also does not have a credit mechanism for any tax paid.

• There is no royalty on gold produced in Sarawak, and no export duty or tariff for gold concentrate. • Pioneer Status is a concession under which companies can apply for 70 % of project net income to be

tax free for the first five years and can be extended for a second five years under certain circumstances.




Pioneer status must be applied for prior to project commencement. • Import duties are 10-30 % for most goods; however, drilling and mining equipment pay no import tariffs

for certain items. • Investment Tax Allowance (ITA) is a ‘once only’ exemption of income at the standard rate of 60% of

qualifying capital expenditure for the period in which the capital expenditure is incurred. Eligibility lasts for five years from the date of approval. The allowance is used to exempt statutory income, with a limit of 70% restriction applied, the balance of 30% becomes liable to tax.

• Exploration and prospecting costs are eligible for special tax allowances.

Revenue factors

• The derivation of, or assumptions made regarding revenue factors including head grade, metal or commodity price(s) exchange rates, transportation and treatment charges, penalties, net smelter returns, etc.

• The ore production with head grade derived from the optimised ore release schedule went into the cost model that analysed the preferred business and production scenarios based on key assumptions and factors. Section 21 Capital – Operating Costs of the Pre-feasibility Study 2013 has the Extract from Cost Model Scenario Options List that shows the options table parameters.

• Derivation for Mining and Process option. Tonnage, head grade and strip ratio assumptions as follows:

Ultimate Pit Description (Base Case) Tonnage

(t) Grade (g/t)

Pit Shell Number

Strip Ratio

Jugan Owner-Operator 8000 TPD Flotation 12,916,270 1.439 Pit 68 3.324

Jugan Contract-Mining 8000 TPD Flotation 10,114,130 1.552 Pit 65 1.587

BYG-Krian Owner-Operator 8000 TPD Flotation 1,060,190 3.065 Pit 65 4.535

BYG-Krian Contract-Mining 8000 TPD Flotation 1,026,890 3.109 Pit 63 4.140

• Assumptions used in the cost models for the base case options are:

o Gold price fixed at $US1,300, though sensitivities have been investigated and are shown in Section 22-Economic Analysis of the Pre-feasibility Study 2013.

o The exchange rate used was 3.21 Malaysian Ringgit to the $US for the latter part of 2013. o A Revised Guoda Gold Proposal (Zhaoyuan Hwatang Trading Co., Ltd. Chinese Au refiner): specifying

90% Contained Gold payable; $400/t Process Fee; $20/oz Refining Fee (from table - $US1,300 Au Price) but it is unclear if it was used in the NPV, IRR of the two base case options identified in Pre-feasibility Study 2013, Section 22-Economic Analyses.

o Production levels are fixed for each production option, except build up and wind down; o Initial high grading with increased mine production, stockpiling low grade Vs lower production was

investigated, with processing maintained at constant throughput. o NPV discounted at a fixed at 8%; o Production schedules had Jugan phase into BYG-Krian as opposed to two pits operating




concurrently, though this option is possible; o Early stage mining occurs in all options six-months ahead of plant processing start up; o Processing is offset by one quarter to allow for commissioning, build up and throughput lag; o Phased capital was applied at the appropriate time ahead of requirements.

• The derivation of assumptions made of metal or commodity price(s), for the principal metals, minerals and co-products.

• At the time that the Cost Models were being developed towards the end of 2013, similar projects were using published six months rolling average for gold selling price which at that time was $US 1,300.

• The derivation of the assumption to use the commodity price, in this case the Au metal price was to assign the “current” market prices which as of late December 2013, similar to other price assignments being used by other resource/reserve reports in the industry at that time was in the range of $US1,250/oz to $US1,300/oz.

Market assessment

• The demand, supply and stock situation for the particular commodity, consumption trends and factors likely to affect supply and demand into the future.

• Supply and demand are not considered material to the Ore Reserve calculations. • However, the market for gold is well established and liquid and the price has varied in recent times from

a high of around US$1,800/oz in 2011-2012 to a low of around US$1,070 in December 2015. The spot price of gold has been around $US1,200/oz to $US1,350/oz in from mid-2017 to mid-2018.

• Marketing of the Au concentrate has been investigated by NBG/Besra and preliminary offers by Chinese processing facilities. Apparently, these were not disclosed in the commercial reasons in the Pre-feasibility Study 2013.

• A customer and competitor analysis along with the identification of likely market windows for the product.

• No formal market assessment or forecast for the gold has been undertaken by Besra Gold Inc.

• Price and volume forecasts and the basis for these forecasts.

• Long term metals prices were developed from published forecasts from multiple sources. Ore Reserve estimates use long term metal price assumptions.

• For industrial minerals the customer specification, testing and acceptance requirements prior to a supply contract.

• The Bau Project did not anticipate the commercial opportunities for industrial minerals in the Pre-feasibility Study 2013, although the potential market for the limestone and shale waste could be investigated going forward.

Economic • The inputs to the economic analysis to produce the net present value (NPV) in the study, the source and confidence of these economic inputs including estimated inflation, discount rate, etc.

• All operating and capital costs as well as revenue streams were included in the financial model. • Sensitivity was conducted on capital costs, operating costs, gold grade, gold recovery, gold prices and

foreign exchange. Inflation rate and price increases have not been considered. • Based on the Cashflow Model-Option 484 (8,000 tpd Contractor-Mining) and Option 452 (8,000 tpd

Owner-Operator) in the Pre-feasibility Study 2013, Section 21 presents the project cost model (before tax) for both base case options.

• The Pre-feasibility Study 2013, Section 22-Economic Analyses does not specify the smelter terms used. In fact Cost Model Cashflow Worksheets B-1, Option 484 and B2-Option 452 have left the




Freight/Transportation and Refining cost cells blank, resulting in no costs in those cashflow models assigned and overstating the NPV and IRR, likely account for the following:

Option 484 Option 452

Key Summary Results from Cashflow Model - Option 484 (8,000tpd Contractor-Mining) Key Summary Results from Cashflow Model - Option 452 (8,000tpd Owner-Operator)

• However, from file documentation retained by NBG/Besra referencing a Revised Guoda Gold Proposal

(Chinese Au refiner) by applying their terms: Payment of 90% Contained Gold; $400/t Process Fee; $20/oz Refining Fee (from table-$1300 Au Price) the following Cashflow Model- Option 484 (8,000tpd Contractor-Mining) is derived:

Mined Ore Tonnes 10,928,000 Waste Tonnes 18,569,000 Gold Price 1,300.00$ Strip Ratio 1.70 Total Recovered Ounces 463,700 Average Ounces/Annum 116,000 Recovery Percentage 0.77 Total Capital 134,878,000$

Initial Capital 92,119,690$ Stage 3 Capital -$ Ongoing Capital 42,758,310$

Operating Cost/ Ore Tonne 31.39$ Cost per Ounce 1,030.61$ Cost per Ounce (incl. Resale) 973.14$ Mine Life (Years) 4.00 Mine Life (Quarters) 16.00 Pre-Mine Period (Years) 1.00 Yearly NPV @ 8% 91,407,216$ Yearly IRR 38.0%

Key Summary ResultsMined Ore Tonnes 11,210,000 Waste Tonnes 20,927,000 Gold Price 1,300.00$ Strip Ratio 1.87 Total Recovered Ounces 472,300 Average Ounces/Annum 111,200 Recovery Percentage 0.77 Total Capital 156,167,000$

Initial Capital 112,314,696$ Stage 3 Capital -$ Ongoing Capital 43,852,304$

Operating Cost/ Ore Tonne 28.64$ Cost per Ounce 1,010.50$ Cost per Ounce (incl. Resale) 945.52$ Mine Life (Years) 4.25 Mine Life (Quarters) 17.00 Pre-Mine Period (Years) 1.00 Yearly NPV @ 8% 97,289,637$ Yearly IRR 34.3%

Key Summary Results




• The confidence level of the technical and cost estimate input is moderate and reasonable for the Pre-feasibility category study.

• NPV ranges and sensitivity to variations in the significant assumptions and inputs.

• In summary, the project is relatively insensitive to capital cost due to the long life of mine, more sensitive to operating costs and foreign exchange; sensitive to gold price and foreign exchange rates and more sensitive to gold grade, gold recovery, gold price.

• Some key effects identified in the Sensitivity Analyses in Section 22-Economic Analyses of the Bau Project Pre-feasibility Study are: o Mining and process cost variations moving in the upward direction show drops in IRR/NPV, but

these do not go negative within the variations tested, showing a little less sensitivity. o The capital cost variation shows similar trend although a +20% takes the project negative. o Other than Au price, the grade and recovery analysis show much more sensitivity to the factors. o Although the sensitivities show the negative impact on higher costs and lower grade, recovery and

Au price it also shows a large upside for small positive increments. o These sensitivities have been reviewed individually. Combined they have a compounded impact. o Overall the negative impacts are of lower value than the equivalent positive impacts.

• This process has demonstrated that the Ore Reserves can be processed yielding a positive net present value (NPV) on a number of options. The sensitivity analysis is shown in Section 22 Economic Analysis




of the Bau Project Pre-feasibility Study.

Social • The status of agreements with key stakeholders and matters leading to social licence to operate.

• The Bau District has had long association with the gold mining legacy. Evidences of both past and current mining activities can be found throughout the district and interaction between the industry and the surrounding residence.

• The Study for Ecology and Social Components by Chemsain Konsultant Sdn Bhd completed in March 2014 found that the Stakeholders identified and engaged are aware of and understand; o The Bau Project will take into consideration the interests and expectations of the respective

stakeholders; o The likely environmental, social and economic impacts of mine closure; o NBG will ensure closure occurs in an orderly, cost-effective and timely manner and establish a set

of indicators which will demonstrate the successful completion of the closure process; o NBG will establish completion criteria to the satisfaction of the responsible authority; and ensure

support for closure decisions; and enhance public image and reputation. • NBG/Besra’s environmental officer and community relations officer, the latter an ethnic native of Bau

have made inroads with dialog among locals, including landowners where NBG/Besra have mining licenses who will be impacted by open pit mining operations and all its implications.

• Stakeholder involvement and engagement process was initiated and continue during the relevant Pre-feasibility Study activities and will be integral to the EIA and throughout mining operations.

• NBG has a full-time community relations liaison on staff to maintain informed open communications with the local inhabitants. There are no formal agreements with stakeholders and most verbally agree to NBG personnel accessing their properties for exploration.

Other • To the extent relevant, the impact of the following on the project and/or on the estimation and classification of the Ore Reserves:

• Any identified material naturally occurring risks.

• No material naturally occurring risks that would impact the estimation and classification of the Ore Reserves.

• The status of material legal agreements and marketing arrangements

• Legal agreements have been solid approximately for the decade that Besra and NBG have explored the Bau Project natural resources. Currently there are no marketing arrangements in place other than budgetary and conceptual.

• The status of governmental agreements and approvals critical to the viability of the project, such as mineral tenement status, and government and statutory approvals.

Government Agreements • Relevant Regulation of Mining Industry & Foreign Investment in Malaysia are identified herewith. • The two main legal instruments that govern mining activities are the Mineral Development Act 525,

1994 and the State Mineral Enactment for Sarawak, and where the Bau Gold Project is located, is




There must be reasonable grounds to expect that all necessary Government approvals will be received within the timeframes anticipated in the Feasibility or Pre-feasibility study. Highlight and discuss the materiality of any unresolved matter that is dependent on a third party on which extraction of the reserve is contingent

entitled the “Minerals Ordinance, 2004”. • The Mineral Development Act defines the powers of the Federal Government for inspection and

regulation of mineral exploration and mining. The State Mineral Enactment provides the States with the powers and rights to issue mineral prospecting and exploration licenses and mining leases. The Governor of the state of Sarawak has statutory rights to forfeit or cancel the mining tenements if there is a breach of, or default in the observance of any of the covenants or conditions attached to the relevant Mining Tenement.

• General Prospecting License or Exclusive Prospecting License are for an initially two years (one renewal period for two years). Mining operations require a Mining Lease or if the boundary survey of the area has not been completed, a Mining Certificate. In either case, the maximum term is 21 years.

• Malaysia is a member of the World Trade Organisation (“WTO”) and made various commitments pursuant to the General Agreement on Trade in Services (“GATS”) including setting out the transactions relating to investment in Malaysia which would require approval. Thus foreign companies under the terms of the WTO membership are expected to be treated on an equal basis as Malaysian Companies.

• No restrictions are imposed on foreign companies investing in Malaysia with regard to repatriation of capital, interest, profits and dividends. No gold royalties are payable to the Federal Government.

• There is a more than a reasonable expectation that all necessary Government approvals will be received within the timeframes anticipated in the Pre-feasibility study.

Mineral Tenement Status • The current exploration and mining tenements that cover the property and comprise the Bau Project

Joint Venture and are contained within Section 04-Property Location of the Pre-feasibility Study 2013 and shows the tenure of the more advanced projects in detail.

• The tenements cover three regions in Sarawak. Blocks A and B relate to the Bau District. The other two regions known as Block C (Serian area) and Gunong Rawan lie east of Bau and near the Sarawak/Kalimantan Border.

• Besra through its joint venture agreement has a combination of about 39 Mining Licensees, Certificates, and Prospecting Licenses covering around 134,000 hectares that require Gladioli to pursue renewal of the Expired Licences with due diligence.

• The Tenements are currently held by the relevant Gladioli entities. • There is no material unresolved matter that are dependent on a third party on which extraction of the

reserve is contingent.

Classification • The basis for the classification of the Ore Reserves into varying confidence categories.

• In compliance with JORC Code definitions, Mineral Resources have been converted to Proven and Probable Ore Reserves. 13,050t of Indicated Resources and 3,405,600t Measured Resources have been converted to 3,418,650t Proven Reserves (Jugan).




• Jugan Proven Ore Reserves were estimated at 3,418,650t taking in 3,405,600t (100%) of the Measured Mineral Resources, The Jugan and BYG-Krian combined totals of 7,243,920t of Probable Ore Reserves were classified from 3,405,600t (100% Jugan) Measured, and 3,838,320t Indicated (53% Jugan) out of a total of 14,505,700t Indicated, Mineral Resources after consideration of the modifying factors that were applied to exploitation of those deposits.

• Whether the result appropriately reflects the Competent Person’s view of the deposit.

• The results of the classification of Ore Reserves from Mineral Resources in the view of the CP, Kevin J. Wright was done appropriately with due diligence and reflects to an acceptable extent, for application in the Pre-feasibility Study 2013 the attributes of the deposits under examination.

• The proportion of Probable Ore Reserves that have been derived from Measured Mineral Resources (if any).

• Probable Ore Reserves total for Jugan and BYG-Krian are 7,243,920t derived from 14,505,700t of Indicated Mineral Resources, or about 47%.

Audits or reviews

• The results of any audits or reviews of Ore Reserve estimates.

• The initial audits and reviews undertaken on the Bau Project focused on Mineral Resource estimates due to their preliminary nature at that time.

• Snowden Mining Industry Consultants in 1997 estimated an Indicated Resource (JORC 1996) of 7.74 million tonnes at 1.68 Au g/t using Indicator Kriging, based on a cut-off of 1.0 Au g/t and the 97.5 percentile mean value for each Au bearing material zone was applied as a top cut averaging 5.29 Au g/t (range of 4.51 to 6.82 Au g/t) for all zones.

• Information Geoscience upgraded (JORC 2004) the Snowden Resource Estimate in 2007 defining an Indicated Resource (JORC 2004) of 4.33 million tonnes at 2.04 Au g/t, using Indicator Kriging at 1.5 Au g/t cut-off.

• Ashby & Associates in 2008 defined an Indicated Resource (JORC 2004) of 9.23 million tonnes at 1.66 Au g/t and an Inferred Resource (JORC 2004) of 2.5 million tonnes at 2.20 Au g/t Au, at 1.0 Au g/t cutoff.

• Terra Mining Consultants/Stevens & Associates (TMCSA) in 2010 defined an Indicated Resource of 10.96 million tonnes at 1.63 Au g/t, at 0.75 Au g/t cutoff.

• In 2012 Besra’s internal update, overseen by TMCSA defined a Measured Resource of 3.43 million tonnes at 1.44 Au g/t, an Indicated Resource of 10.26 million tonnes at 1.52 Au g/t, and an Inferred Resource of 0.507 million tonnes at 1.0 Au g/t, at 0.5 Au g/t cutoff.

• The Pre-feasibility Study December 2013 was reviewed by TMCSA resulting in its current Ore Reserve estimate position.

Discussion of relative accuracy/ confidence

• Where appropriate a statement of the relative accuracy and confidence level in the Ore Reserve estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the

• Mr. Kevin J. Wright, CP undertaking this JORC (2012)Table 1, execution recognises that the Pre-feasibility Report 2013 from which this Table 1 is being completed, was compiled under the supervision of Mr. Graeme Fulton (CP), General Manager at NBG. Mr. Fulton attests that any statements and opinions expressed in The Pre-feasibility Report 2013 document were given in good faith and in the belief that such statements and opinions were not false and misleading at the date of said Report.




application of statistical or geostatistical procedures to quantify the relative accuracy of the reserve within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors which could affect the relative accuracy and confidence of the estimate.

• Mr. Wright accepts that the following people who contributed to said report, are appropriately qualified and knowledgeable enough in their fields of expertise to exercise sound appropriate judgement in the approach and application of geostatistical estimating procedures, as well as Modifying Factors to quantify the relative accuracy of the Ore Reserve estimate to within stated confidence levels .

• Graeme Fulton o Qualifications: BSc. (Hons) Mining & Petroleum Engineering o Affiliations: Fellow of AusIMM o Experience: 29 years o Position: GM, NBG and Consultant with Terra Mining Consultants

• Murray Stevens o Qualifications: BSc. & MSc. (Hons) Geology; Dip. Geol. Sci. o Affiliations: Member of AusIMM o Experience: 35 years o Position: Consulting Geologist with Stevens & Associates

• Erik Devyust o Qualifications: BSc. Mining Engineering, MSc. & PhD in Hydrometallurgy o Affiliations: Member of CIMM o Experience: 40 years o Position: Technical Services Director, (Metallurgy)NBG

• As documented above, the Ore Reserve is based on the Pre-feasibility Study 2013 but excludes subsequent work and an ongoing update to those studies. Most aspects of the Bau Project are at a Pre-feasibility Study level of accuracy and confidence particularly related to the Modifying Factors’ consideration of mining, processing, metallurgical, infrastructure, economic, gold price, legal, environmental, social and governmental factors as documented above.

• The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the

• procedures used.

• Besra Gold/North Borneo Gold carried out an Ore Reserve definition and assessment of local estimates for the Bau Project based on the Mineral Resources associated with deposits Jugan and Bekajang (BYG-Krian). These deposits, or parts thereof, (along with parts of the Taiton Sector) have resources at the suitable confidence level for Measured and Indicated Ore Reserves to be defined. At this stage no reserve definition work has been conducted in the Taiton Sector.

• Global Ore Reserve Tonnes Summary by Category (November 2013)




• Local Ore Reserve Summary by Sector/Deposit (November 2013)

• The Jugan estimated Measured and Indicated Resource represents material which can be economically

exploited applying costs and revenue derived for which the necessary design work, mine planning and metallurgical recovery were based. Measured and Indicated resource blocks showed reasonable continuity of mineralization to be categorized as Proven and Probable reserve blocks but not respectively.

• Inferred blocks were considered to be inadequately defined and not included in Ore Reserves, and for the purposes of these Ore Reserves are treated as waste.

Reserve Category Tonnes (t) Grade (Au g/t)

Proven 3,418,650 1.47

Probable 7,243,920 1.81


Sector Reserve Category Tonnes (t) Grade (Au g/t)

Jugan Proven 3,418,650 1.47

Probable 6,368,190 1.61


BYG-Krian Proven 0 0

Probable 875,730 3.31

Proven + Probable 875,730 3.31




• The Ore Reserves are included within the overall Resource figures. Additionally, mineralised blocks containing low Au values below cut-off were reported as waste with no grade.

• Accuracy and confidence discussions should extend to specific discussions of any applied Modifying Factors that may have a material impact on Ore Reserve viability, or for which there are remaining areas of uncertainty at the current study stage.

• Comparing the, 8,000 tpd contract-mining and flotation concentrate process option’s designed total pit Ore Reserves of 9,786,840t ore at 1.56 Au g/t and that generated with the optimisation software 9,930,500t ore at 1.5 Au g/t, the Proven and Probable category Ore Reserves show 1.4 % difference in tonnage and 0.4 % difference in grade; acceptable for ore deposit modelling and design resolution. The accuracy and confidence in the optimised schedules are thus considered reasonable for Ore Reserve estimation.

• Remaining areas of uncertainty at the Pre-feasibility Study stage including as it relates to Modifying Factors: o Concentrate Au g/t grade below economic viability and quality does not meet smelter

specifications resulting in penalties not anticipated. o Impact of high clay in the process feed negatively impacting productivity and Au recovery. o Au processing test work inconclusive resulting in possible inaccurate assumptions used in the

economic models, needs further optimisation. o Incomplete metallurgical characteristics for process design requires further geo-metallurgical test

work to represent the wide mineralogical settings in the deposits, impacts recovery, costs and revenue assumptions.

o Improve understanding of geotechnical properties related to slope stability and pit design in addition to TSF and waste landform slope stability.

o Improve current and/or alternative flotation parameters/ technologies for slimes removal and currently low flotation Au grade and recovery.

• It is recognised that this may not be possible or appropriate in all circumstances. These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

• There is no recent production data available for comparison and historical data, if available could not be substantiated.



APPENDIX 1

BAU PROJECT - asia · Sey Seng, Ropih, Arong Bakit, and Juala West. Each of the 34 deposits or...

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Transcript of BAU PROJECT - asia · Sey Seng, Ropih, Arong Bakit, and Juala West. Each of the 34 deposits or...