Recently, Pengxin Mining received a reportfrom CAPM African Precious Metals Proprietary Limited (“CAPM”), a subsidiary where it is a controlling share holder. Resources of Orkney Gold Mine, as core assets of CAPM, were verified around No.10 Shaft of Tau Mine,and substantial progress has been made in the verification.

After its acquisition of Orkney Gold Mine,Pengxin Mining specially organized resource verification and research on prospecting potential. It engaged Sinotech Minerals Exploration Co., Ltd. to verify resources of Orkney Gold Mine. The expert panel of China Mining Association conducted review and acceptance. Shanghai Pengyan Geological TechnologyCo., Ltd. was entrusted to explore metal logenic regularity of the whole Orkney Gold Mine and prospecting of its deep-seated orebodies.             

In June 2021, Wang Jinding, as newly appointed Chairman of Pengxin Mining, led the management to the site againstthe harsh epidemic in South Africa. They visited local technical teams and consultating companies. All of them thought that Orkney Gold Mine had tremendous potential. After multipleparties’ on-site survey and demonstration as well as field investigation of roadways, it has been found that there are three major areas under inadequateengineering control at No.6 Shaft around No.10 Shaft of Tau Mine. These three areas approximately cover a total area of 5.60km². Calculations(prospecting, control and deduction) suggest that these areas have 9,470,000 tores and 57.6t metals, while the average grade is 6.08g/t. In fact, only 3.15km²was taken into account in the calculations. Other areas were neglected in the calculations, because they are not under engineering control. The results have indicated that there is favorable prospecting space in these areas.

Chairman WangJinding led a team to investigate Orkney Gold Mine’s resources

A pre-shiftmeeting at Middle Section of Project 1050, No.10 Shaft of Tau Mine

The existing project at No.10 Shaft of Tau Mine has been adjacent to the west of No.6 Shaft. It is a shaft with complete production equipment, mining system and skilled industrial workers. It is capable of enhancing its mining capacity by 2,000,000t/year. In consideration of these, Pengxin Mining immediately adjusted its ideas for resuming production of Orkney Gold Mine. In February 2022, it acquired assets of Tau Mine. It sped up orebody developmentin the west of No.6 Shaft with existing production system of No.6 Shaft, to effectively facilitate Orkney Gold Mine’s production resumption, shorten construction period and rapidly develop mining capacity while increasing production capacity.

Distribution of oreblocks at No.6 Shaft around No.10 Shaft

At Middle Section of Project 1050 of No. IArea, the orebody is only 80m to 120m away from the existing project of No.10Shaft. The Projects 1050&900 of No.10 Shaft were commenced from March 2022. The development under shaft was started from Middle Sectionof Project 1050 to the west of No.6 Shaft. In May 2022, the orebodies were first put under control by transverse drift of No.17 Line. They were 0.86m thick on average (thickness range: 0.55m~1.3m) and approximately inclined at 316°. Their grade was upto 20.7g/t on average (grade range: 5.78g/t~46.01g/t). In June, the orebodies were further controlled through transverse drift of No.18 Line. Their thicknesswas 1.50m on average (thickness range: 1.48m~1.52m) and their average grade was 9.02g/t (grade range: 2.04g/t~33.73g/t). For development of mining capacity in late 2022, Pengxin Mining has organized promotion of related exact mining projects such as uphillmining along mountain ranges according to prospecting situation. As of July 18,2022, uphill mining along veins had been performed for 31m and 27m on No.17Line and No.18 Line respectively. In the uphill mining project of No.18 Line,the orebody thickness was 1.41mon average (thickness range: 1.25m~1.58m) and the average grade was 7.10g/t(grade range: 2.61g/t~10.64g/t). In the development projects of No.17 Line andNo.18 Line, high-grade orebodies were prospected as scheduled in succession.All of their geological features and occurrence status demonstrate the forecastthat there would be stable VCR orebodies within the west area of No.6 Shaft. Inaddition, it has been found in the preliminary project that orebody and oregrade is high in this area (the grade has been generally calculated as 6.21g/tin No.I Area).

Layout of Project 1050 of No.10 Shaft (left) andprospecting position (right)

VCR veins of No.18Line at Middle Section of Project 1050

VCR veins of No.18Line at Middle Section of Project 1050

The orebodies at No.II Area and west mineboundary are separated from the existing project of No.10 Shaft only by a“wall”. This is a water-retaining wall which is made of unmined ores and about60m thick, to prevent roadway water of corresponding projects at east No.6Shaft from flooding into the roadway system of No.10 Shaft. According to thematerials obtained at the time of handover after asset acquisition from TauMine in February 2022, the average geological grade of the ores making up thewall is 8.12g/t and higher than that of No.II Area, which is inferred to be6.12g/t. It has been slightly recovered based on existing roadways. Pumping andexact mining projects are implemented in respect of the 1,050N water-retainingwall. Exact mining can be performed on a large-scale basis after pumpingroadway water out of No.II Area of No.6 Shaft. It is expected that miningcapacity would be developed fast. 

VCR orebody underthe control of No.17 Line at Middle Section of Project 1050

Representative oreof orebodies prospected at No.17 Line of Middle Section of Project 1050

VCR orebody underthe control of No.18 Line at Middle Section of Project 1050

Representative ore of orebodies prospected at No.18 Lineof Middle Section of Project 1050

Preliminary resource demonstration ofProjects 1050&900 and1,050N water-retaining wall project suggest that resource grade in the west ofNo.6 shaft planned for development is higher than that inferred earlier, andexisting system of No.10 Shaft works well with immediate effects. This willfurther accelerate resumption of Orkney Gold Mine’s large-scale production.