The Chaarat licence area hosts two types of mineralisation; the Chaarat refractory mineralisation hosted in the Main and Contact Zones (the Kiziltash Project, in which the gold is associated with arseno-pyrite, and the partially oxidized Tulkubash zone in which the gold is associated with pyrite. The partially oxidised nature of the mineralisation means that a proportion of the gold is free milling (i.e. does not require oxidation) and the balance can be collected to a clean easy to sell flotation concentrate.
The Chaarat project which will process both types of mineralisation, hence calls for a large investment in an oxidation unit which includes an oxygen plant and a power line to supply the relative large quantity of power needed from the national grid.
As a first step towards production management decided that based on the characteristics of the Tulkubash ore it makes sense to commence production from the Tulkubash zone albeit at a relatively small scale. The commencement of production will lay the foundations for the larger project whilst "de-risking" elements like permitting and road construction. Management believes that raising funds for the larger operation will be easier when an existing operation is in place and infrastructure issues are resolved.
With that in mind it has been decided to ring fence the Tulkubash project and fast forward it to production.
It was decided not to prepare a Western style Definitive Feasibility Study separately for the Tulkubash project, as it seems to be more of a pilot project for the larger Chaarat project, and will assist the preparation of a more accurate feasibility study for the larger project. Most of the cost of the Tulkubash project is invested in such way so as to ensure it can be used for the larger project without any duplication of costs. As a result the company expects that the implementation of the larger Chaarat project will be quicker and easier. It is expected that the Tulkubash project will not only generate cash flow for the company but more importantly de-risk the whole Chaarat project hopefully resulting in a higher share price. This should allow funds to be raised for the rest of the project with minimum dilution by demonstrating the implied value of the tremendous Chaarat resource already verging on 5 Million ounces.
The preliminary assumption is that 700-1,000 tonnes per day of ore can be processed from the Tulkubash project and based on that, a production rate of 30,000-35,000 ounces of gold per year may be possible.
Power for the Tulkubash project will be provided from generators located in the Chatkal valley. The high voltage line from Chatkal to the project is part of the line which will eventually provide power from the grid to the larger Chaarat Project.