COMPETENT PERSONS REPORT

A REVIEW OF THE MINERALISATION AND PROPOSED EXPLORATION PROGRAMME FOR THE

GOBI MINERALS GOLDCOPPER PROJECT, MANDAKH SOUM,

DORNOGOVI PROVINCE, MONGOLIA

GOBI MINERAL LEASE - Altan Tobchi

Dr. Earl W. Abbott

January 2016

TABLE OF CONTENTS Page

1.0   SUMMARY 1  

2.0   INTRODUCTION AND TERMS OF REFERENCE 3  

3.0   DISCLAIMER 4  

4.0   PROPERTY DESCRIPTION AND LOCATION 6  4.1   TITLE TO PROPERTY 7  4.2   INFORMATION NOTE ON MAPPING CO-ORDINATES 10  4.3   ENVIRONMENTAL LIABILITIES 14  

5.0   PHYSIOGRAPHY, ACCESSIBILITY, INFRASTRUCTURE, LOCAL RESOURCES AND CLIMATE 16  

5.1   PHYSIOGRAPHY 16  5.2   ACCESSIBILITY 17  5.3   INFRASTRUCTURE AND LOCAL RESOURCES 17  5.4   CLIMATE 18  

6.0   HISTORY 20  6.1   EXPLORATION HISTORY 20  

7.0   GEOLOGICAL SETTING AND MINERALISATION 22  7.1   DEPOSIT MODEL 22  7.2   GEOLOGICAL SETTING 22  

7.21   Porphyry-copper systems ........................................................................................... 25  7.22   High-sulphidation Copper-Gold Deposits .................................................................. 32  

7.3   REGIONAL GEOLOGY 34  7.4   LOCAL GEOLOGY 42  

8.0   DEPOSIT TYPES 45  8.1   MAANIT OVOO DEPOSIT 45  8.2   ULAAN DEL OVOO DEPOSIT 47  

9.0   EXPLORATION 49  9.1   RUSSIAN AND MONGOLIAN EXPLORATION 49  9.2   IVANHOE MINES MONGOLIA INC. (IMMI) EXPLORATION 49  

10.0   DRILLING 59  

11.0   SAMPLE PREPARATION, ANALYSES AND SECURITY 64  11.1   Analytical Laboratories .............................................................................................. 64  11.2   Sample Preparation .................................................................................................... 64  11.3   Quality Assurance & Quality Controls Methods ....................................................... 64  

12.0   DATA VERIFICATION 66  

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13.0   ADJACENT PROPERTIES 67  13.1   SIGNIFICANT ADJACENT PROPERTIES 67  13.2   SIGNIFICANT REGIONAL PROPERTIES 67  

14.0   MINERAL PROCESSING AND METALLURGICAL TESTING 70  

15.0   MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES 70  

16.0   OTHER RELEVANT DATA AND INFORMATION 70  

17.0   INTERPRETATION AND CONCLUSIONS 71

18.0   PROPOSED DE-RISKING EXPLORATION PROGRAMME 71 18.1   PROPOSED EXPLORATION PROGRAMME 71  

18.1.1   Structural Study ....................................................................................................... 71  18.1.2   Topographic Mapping Project ................................................................................. 72  18.1.3   Hydrological ............................................................................................................ 72  18.1.4   Geotechnical-Sterilisation ....................................................................................... 72  18.1.5   Remote Sensing ....................................................................................................... 72  18.1.6   Reference Standard Sample Preparation ................................................................. 72  18.1.7   Chip Sampling ......................................................................................................... 73  

18.2   BUDGET 73  

19.0   CONCLUSION 75  

20.0   RECOMMENDATIONS 76   List of Figures and Tables

Page Figure 4.0   Regional Location Map Altan Tobchi Lease ....................................................................... 6  Table 4.0   Tenement Details ................................................................................................................... 7  Figure 4.1   Gobi Gold Copper Project Exploration Lease Map ............................................................. 8  Table 4.1   Gobi Mineral Lease Altan Tobchi Property Boundaries ....................................................... 9  Figure 4.2   Mongolian Province Map Showing the Gobi Minerals Lease Ulann Tsokhio .................. 11  Figure 4.3   Map Showing the Central Asian Fold Belt ........................................................................ 12  Figure 4.4   Map Showing Regional Geology Deposits Altan Tobchi (Gobi Mineral Lease)

Aeromagnetic Data Medium to High Priority Targets ................................................................... 13  Figure 4.5   Map of Southern Gobi Showing Key Environments Zones vs. Exploration Permits ....... 15  Figure 5.0   General View of Gobi Mineral Lease Area Altan Tobchi Outcrops ................................. 16  Figure 5.1   General View of Gobi Mineral Lease Area Altan Tobchi Rolling knolls of Outcrop ...... 16  Figure 5.2   Gobi Mineral Lease Area Altan Tobchi Site Accessibility Map ....................................... 17  Figure 5.3   Local Nomadic Population During Peak Winter ............................................................... 18  Figure 5.4   Climate Graph .................................................................................................................... 19  Figure 6.0   Trench Sampling on Gobi Mineral Lease Altan Tobchi .................................................... 21  Figure 6.1   Chip Sampling on Gobi Mineral Lease Altan Tobchi, Maanit Ovoo Target Dondog

Garamjav Sr. (right) whom discovered Oyu Tolgoi ....................................................................... 21  Figure 7.0   Regional Geology and Tectonic Setting ............................................................................ 22  Figure 7.1   Tectonic Map of Southern Mongolia ................................................................................. 23  Figure 7.2   Simplified Lithostratigraphic Columns for Specific Tectonic Zones South Mongolia .... 24  Figure 7.3   Porphyry Copper System Section ...................................................................................... 26  Table 7.0   Features of Principal Hydrothermal Breccia Types in Porphyry Copper Systems ............. 27  

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Figure 7.4   Porphyry Copper System Typical Alteration Assemblages ............................................... 29  Table 7.1   Characteristics of Principal Alteration-mineralisation Types in Porphyry Copper

Systems ........................................................................................................................................... 30  Figure 7.5   Rock Sample – Quartz-hematite-malachite vein ............................................................... 32  Figure 7.6   Conceptual model for styles of magmatic arc epithermal Au-Ag and porphyry Au-Cu

mineralisation ................................................................................................................................. 33  Figure 7.7   Regional Setting Gurvansayhan Terrane ........................................................................... 34  Figure 7.8   Regional Tectonic Setting & Distribution of Major Porphyry Copper Deposits ............... 36  Figure 7.9   Map showing the distribution of permissive tracts for porphyry copper deposits in the

Central Asia Orogenic Belt and eastern Tethysides and adjacent study areas. .............................. 37  Table 7.2   Permissive tracts for porphyry copper deposits in the Central Asian Orogenic Belt ......... 38  Table 7.3   Chart showing the distribution of the permissive tracts for porphyry copper deposits in

the Central Asia Orogenic Belt and eastern Tethysides regions in terms of geologic time span and orogenic events. . ............................................................................................................. 39  

Figure 7.10   Regional Geology Showing Mineral Occurrences & Medium to High Priority Targets 40  Figure 7.11   Regional Geology Aeromagnetic Data Medium to High Priority Targets ...................... 41  Table 7.12   District Scale Geological Map of the Altan Tobchi Lease Area ....................................... 43  Table 7.13   Geological Map of deposit Maanit Ovoo .......................................................................... 44  Figure 8.0   Rock Samples - Maanit Ovoo Deposit ............................................................................... 46  Figure 8.1   View of scattered gold-copper bearing quartz-hematite-malachite veins hosted in

granosyentite within undulating topography .................................................................................. 47  Figure 8.2   Rock Sample – Ulaan Del Ovoo Deposit .......................................................................... 48  Table 9.0   Exploration Summery ......................................................................................................... 50  Table 9.1   Sampling Ivanhoe Mines Mongolia 2007 .......................................................................... 50  Table 9.2   Sampling Ivanhoe Mines Mongolia 2007 ........................................................................... 51  Figure 9.0   Early exploration map detailing target area for future exploration. . ................................ 52  Figure 9.1   Ivanhoe Mines Mongolia Inc. Ground Magnetic Survey .................................................. 53  Figure 9.2   Ivanhoe Mines Mongolia Inc. Ground IP Magnetic Survey Chargeability ...................... 54  Figure 9.3   Ivanhoe Mines Mongolia Inc. Ground Magnetic Survey Resistivity ................................ 55  Figure 9.4   Ivanhoe Mines Mongolia Inc. Dipole-Dipole Survey ........................................................ 56  Figure 9.5   Ivanhoe Mines Mongolia Inc. Dipole-Dipole Survey ........................................................ 57  Figure 9.6   Ivanhoe Mines Mongolia Inc. 3D Inversion Model Generated from Dipole-Dipole

Survey ........................................................................................................................................... 58  Table 10.0   Deposit Drill Hole Mineralised Intercepts ....................................................................... 59  Figure 10.0   Deposit Drill Hole Mineralised Intercepts ...................................................................... 60  Figure 10.1   GTS0001 Resistivity Section vs. Dill Hole (depth 1000m .............................................. 61  Figure 10.2   GTS0002 Resistivity Section vs. Dill Hole (depth 2,000m ............................................. 61  Figure 10.3   GTS0003 Resistivity Section vs. Dill Hole (depth 1400m .............................................. 61  Figure 10.4   GTS0004 Resistivity Section vs. Dill Hole (depth 1200m .............................................. 62  Figure 10.5   GTS0005 Resistivity Section vs. Dill Hole (depth 1400m) Result retained by Ivanhoe

Mines Mongolia ............................................................................................................................. 62  Figure 10.6   Oyu Tolgoi Chargeability Section of Major Despsit Discovery vs. Drill Holes ............. 63  Table 18.1 Proposed Gobi Gold Copper Project Exploration Programme Budget .............................. 74   Appendix A Gobi Mineral Lease Exploration Lease Documentation

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1.0 SUMMARY The Gobi Minerals Group Limited is the owner of the Gobi Gold Copper Project, which consists of a single exploration lease known as the Gobi Minerals Lease - Altan Tobchi (“Gobi Minerals Lease”). The Altan Tobchi Lease was 100% acquired by the Mongolian company, Gobi Minerals Group Limited (“Gobi Minerals) in November 2015. The CIC Gold Group Limited (CIC Gold) acquired an 80% interest in Gobi Minerals in November 2015. The 47,877ha Gobi Leases is located in the territory of Mandakh soum, Dornogovi aimag in the southern Gobi region of Mongolia located. The site is 560 km from Ulaanbaatar city and approximately 150km northeast from the world leading gold copper mine Oyu Tolgoi. Historic exploration has shown this lease contains a number of potentially economic gold, copper and rare earth prospects. The Gobi Mineral Lease falls within the highly prospective Gold, Copper and Molybdenum porphyry system found in the southern Mongolian magmatic belt which stretches through the South Gobi region of Mongolia. This terrane hosts other similar South Gobi porphyry deposits, including Oyu Tolgoi and Tsagaan Suvarga. Tsagaan Suvarga The Gobi Minerals Lease is located within a sequence of Devonian rocks in the geological Gurvansayhan Terrane which is part of a large arc system that extends from western China through north-eastern Mongolia (a detailed geological description can be found in section 7). The porphyry system found on the Gobi Minerals Lease is emplaced in a mature volcanic arc environment and features of not only porphyry type mineralisation but also of related high-sulphidation copper-gold mineralising systems similar to Oyu Tolgoi. Extensive historical exploration on the Gobi Minerals Lease area has been conducted since the 1960s, which includes; 1960 - 1982 Soviet geological teams explored and evaluated all areas of mineralisation within the Tsagaan Suvarga Massif and concluded that the area demonstrated high economic potential for gold and copper. 1998 helicopter reconnaissance and mapping 1998 - 2010 extensive exploration and sampling programme of the Tsagaan Suvarga Massif 2002 – 2010 exploration focussed on defining and identifying outcropping porphyry and gold

mineralisation conducted by Ivanhoe Mines including:

Detailed geological mapping, extensive rock chip sampling, stream sediment sampling, 71sq km of ground magnetics, 16sq, km, of Dip Hole IP, 423sq. km of gradient array IPand targeted diamond drilling (5 holes) to test structural geological interpretation potential.

The results of which identified two high priority prospects, Ultaan Del Ovoo and Maanit Ovoo. Drilling on Maanit Ovoo identified a 24m zone returning grades of 3.73g/t gold, 0.173% molybdenum and 0.97% copper.

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High priority target areas within Gobi Minerals Lease are characterised by mineralised sheeted quartz- sulphide veins, breccia’s and to a lesser extent fine dissemination in the chlorite-epidote-k-feldspar-sericite altered volcanics and intrusives. Based on the assessment and interpretation of the historical exploration data and two prospective, high priority targets that have been identified in the Gobi Minerals lease, it is the opinion of the independent expert and competent person, Dr. Earl W. Abbott’s that these two high priority prospects warrant further detailed exploration work. Dr. Earl W. 1998 - 2010 extensive exploration and sampling programme s in the Tsagaan Suvarga MassifAbbott also believes, given the highly prospective nature of the district including the presence of the nearby world leading producing gold copper producer Oyu Tolgoi (Turquoiseh ill Resources) and the adjacent producing property Tsagaan Survarga (Mongolian Alt Corporation) and the continuity of the mineralisation over the large land tenure of the Gobi Minerals Lease that the potential for finding additional economic mineralisation is significant and should be explored further. Based on these results and exert opinion, CIC Gold has concluded that an exploration programme consisting initially largely of technical de-risk works on identified highly prospective targets and further exploration on the Gobi Minerals Lease is justified for the Gobi Mineral Gold Copper Project. CIC Gold anticipates that a multi-year effort will be required to fully evaluate the Gobi Minerals Lease. Dr. Earl W. Abbott has reviewed the proposed exploration Programme for Gobi Mineral Gold Copper Project and it is Dr. Earl W. Abbott’s opinion that CIC Gold’s proposed exploration plan is properly conceived and justified.

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2.0 INTRODUCTION AND TERMS OF REFERENCE The CIC Gold Group Limited (CIC Gold) is a public listed company on the main board of the London Stock Exchange. In November 2015 CIC Gold acquired 80% of the Mongolian company Gobi Minerals Group Limited. Gobi Minerals Group Limited owns 100% of a 47,876ha gold - copper exploration lease located approximately 150km northeast of the world leading gold copper mine Oyu Tolgoi in the southern Gobi region of Mongolia. This lease forms the basis of the Gobi Minerals Gold Copper Project. CIC Gold retained the services of Dr. Earl W. Abbott to undertake a Competent Persons Report and to conduct a due diligence review of the Gobi Minerals Gold Copper Project in Mongolia and to opine on the proposed exploration programme and strategy. Dr. Earl W. Abbott has over 40 years of experience in the mining industry and is a Certified Professional Geologist, Certificate Number 7611, with the American Institute of Professional Geologists. Dr. Abbott is a member of the Society of Economic Geologists, the Geological Society of America, the Geological Society of Nevada, the Northwest Mining Association, the Prospectors and Developers of Canada, the Nevada Petroleum Society, and the society of Mining Engineers of the American Institute of Mining, Metallurgical, and Petroleum Engineers. Dr. Abbott was supported in his investigations by the Gobi Minerals Limited’s consulting geologist Dr.Dondog Garamjav Sr. Dr.Garamjav Sr. was credited with the discovery of the world leading Copper Gold deposit at Oyu Tolgoi and who has conducted extensive exploration work on the Gobi Mineral Lease over many years. Dr. Dondog Garamjav Sr. graduated from the National University of Mongolia as a mapping engineer and geologist. Dr. Dondog Garamjav Sr. has spent more than 35 years in the mineral exploration industry advising BHP, Ivanhoe Mines, Rio Tinto and Turquoise Hill Resources. In 2004 Dr. Dondog Garamjav Sr. was the one of the recipients of the PDAC inaugural Thayer Lindsley medal awarded for the most significant international mineral discovery in 2004.

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3.0 DISCLAIMER CICG has sourced data from historic exploration conducted by Russian and Mongolian geologist, plus exploration and geological data undertaken by Ivanhoe Minerals Mongolia Limited. The data sourced and included in the CICG geological database pertains to regional and Gobi Minerals Lease specific areas. This data, along with support and assistance from Dr. Dondog Garamjav Sr. Consulting Senior Geologist to BHP, Ivanhoe Mines, Rio Tinto and Turquoise Hill Resources was made available to Dr. Earl W. Abbott. It is noted that Dr. Earl W. Abbott has not carried out any independent onsite exploration work. While exercising all reasonable diligence in checking, confirming and testing the provided data, Dr. Earl W. Abbott has relied upon the data presented by these parties in formulating his opinions and recommendations for the Gobi Minerals Lease. The geological, mineralisation and exploration descriptions used in this report are taken from reports prepared by CIC Gold Group Limited or their contracted consultants, or from publicly available scientific literature. The name Tsagaan Survarga (White Stupa), as used in this report, refers to the name given by local people to an impressively eroded cliff on a property adjacent to the Gobi Minerals Lease. Over millions of years various changes in the environment have produced its famous coloured layers. The formation is over 50 meters at its highest point and it is a sheer slope, which from a distance seems to be the ruins of an ancient city. The Tsagaan Survarga operations and project referred to in this document relates to the Mongolian Alt. Corporation Copper – Molybdenum operation in this vicinity, which is also adjacent to the Gobi Minerlas Lease. The Gobi Minerals Lease is 100% owned by Gobi Minerals Group Limited (a Mongolian company) which in turn is 80% owned by CIC Gold Group Limited, a publically listed company. The various agreements under which CICG may hold title to the mineral lease for this project by-way of its majority ownership of Gobi Mineral Group Limited have not been investigated or confirmed by Dr. Earl W. Abbott. While he has seen copies of the supporting documentation for the exploration and mining leases, Dr. Earl W. Abbott offers no opinion as to the validity of the issued mineral lease or ownership structure. A description of the property and ownership thereof is provided in this document for general information purposes only, as required by Canadian National Instrument 43-101 (NI 43-101). Dr. Earl W. Abbott has relied upon information provided by CIC Gold Group Limited. All currency amounts are stated in either UK pounds (£) or US dollars (US$) as specified. Quantities are generally stated in SI units, the UK and international practice, including metric tons (tonnes, t), kilograms (kg) and grams (g) for weight, kilometres (km) or metres (m) for distance, hectares (ha) or square kilometres (km2) for area, and grams per metric tonne (g/t) for gold grades (g/t Au). Precious metal grades may be expressed in parts per billion (ppb) or parts per million (ppm) and their quantities may also be reported in troy ounces (ounces, oz), a common practice in the western mining industry. Dr. Earl W. Abbott is pleased to acknowledge the helpful cooperation of the CIC Gold Group Limited management and field staff, all of whom made any and all data requested available and responded openly and helpfully to all questions, queries and requests for material and to Project

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Advisor Stuart J. Bromley for his invaluable technical expertise on porphyry copper gold systems.

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4.0 PROPERTY DESCRIPTION AND LOCATION The Gobi Mineral lease consists of one (1) granted Exploration License named Altan Tobchi (the “Gobi Minerals Lease”). The Gobi Minerals Lease covers an area of approximately 47,877ha and is found at 108º 30’ E and 43º 50’ N (using the WGS84 datum) (See Figure 4.0) in the central Asian fold belt. The Asian fold is one of the largest orogenic belts in the world, extending for over 5000 km from northern China to the Urals in Russia (see Figure 4.1). Within the Asian fold belt, the Gobi Minerals Lease is in the South Gobi region of Mongolia in the territory of Mandakh soum, Dornogovi aimag. The Gobi Minerals Lease is located near Tsagaan Survarga and the property is 560 km from Ulaanbaatar city and approximately 150km north-east from the world leading gold copper mine, Oyu Tolgoi (See Figure 4.2). The lease boundaries are defined geographically using UTM coordinates. Figure 4.3 and Table 4.0 define the lease boundaries as per the official exploration license documentation.

Figure 4.0 Regional Location Map Altan Tobchi Lease

Altan Tobchi

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4.1 Title to Property The Gobi Mineral Lease is an exploration license. This gives the right to explore but not to the right to mine minerals on the property. It entitles the holder to conduct all geological investigations and sampling as required to support resource definition, technical and commercial studies and all statutory requirements required to submit for a mining permit. Receipt of a mining permit requires the demonstration of a three-dimensional ore body by drilling and drifting and the completion of an economically valid feasibility study.

Table 4.0 Tenement Details

Exploration License

License Name Size (Ha) License

Date Grant Expiry

6/8543 Altan Tobchi 47,876.57 Oct 2015 Oct 2030

See Figure 4.3 and Table 4.0 for lease boundaries The Mongolian government agency Department of Mineral Resources has oversight to all mineral leases in Mongolia. To keep the leases current the lease holder must pay an amount per hectare per year. For exploration licenses the annual fee is fixed at US$0.1 per hectare for the first year, US$0.2 for the second year and US$0.3 per hectare for the third year. Exploration licenses can be renewed for two (2) more three (3) year period, thus giving a total exploration period of nine (9) years. (Ref: The Minerals Laws of Mongolia, Official Translation 30/10/2006)

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Figure 4.1 Gobi Gold Copper Project Exploration Lease Map

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Table 4.1 Gobi Mineral Lease Altan Tobchi Property Boundaries

Point Longitude Latitude

Grad Min Sec Grad Min Sec 1 108 28 56.6 43 57 39.14 2 108 28 56.62 43 52 1.48 3 108 29 58.3 43 52 1.49 4 108 30 33.35 43 51 37.62 5 108 31 4.43 43 52 1.5 6 108 33 19.92 43 52 1.51 7 108 33 19.92 43 51 38.97 8 108 34 1.67 43 51 38.97 9 108 34 1.67 43 48 22.49

10 108 33 41.51 43 48 22.49 11 108 33 41.51 43 48 8.31 12 108 34 1.67 43 48 8.31 13 108 34 1.66 43 46 55.86 14 108 33 23.08 43 46 55.86 15 108 33 23.08 43 46 32.85 16 108 34 1.66 43 46 32.85 17 108 34 1.66 43 43 36.76 18 108 31 6.8 43 43 36.76 19 108 31 6.8 43 43 17.4 20 108 34 1.66 43 43 17.4 21 108 34 1.65 43 37 31.49 22 108 31 45.56 43 37 31.49 23 108 31 45.56 43 39 12.38 24 108 31 23.33 43 39 12.38 25 108 31 23.33 43 37 31.49 26 108 27 34.46 43 37 31.49 27 108 27 34.46 43 38 43.62 28 108 24 35.09 43 38 43.62 29 108 24 35.09 43 39 57.53 30 108 21 16.41 43 39 57.53 31 108 21 16.41 43 42 34.87 32 108 19 26.63 43 42 34.87 33 108 19 26.63 43 44 1.87 34 108 23 30.15 43 44 1.87 35 108 23 30.15 43 44 22.92 36 108 18 15.72 43 44 22.92 37 108 18 15.72 43 44 56.64 38 108 16 15.51 43 44 56.64 39 108 16 15.51 43 47 41.48 40 108 26 26.74 43 47 41.48 41 108 26 26.74 43 46 58.33 42 108 28 46.07 43 46 58.33 43 108 28 46.07 43 48 25.64 44 108 25 31.61 43 48 25.64 45 108 25 31.62 43 50 32.79 46 108 25 43.84 43 50 42.21 47 108 25 31.62 43 50 50.52 48 108 25 31.63 44 0 0 49 108 28 56.59 44 0 0 50 108 28 56.59 43 58 41.67 51 108 28 15.43 43 58 12.91

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4.2 Information Note on Mapping Co-ordinates Exploration projects contain data of which over 80% is geo-spatially referenced to a coordinate reference system (CRS). In order that all geo-spatially data, within a project, fits together harmoniously it is important to understand the geo-referencing of each individual data set and the relationships between different data sets. Coordinate reference system (CRS) used in this report are (i) WGS 84 Degrees, minutes and Seconds, (ii) WGS 84 / UTM zone 49N and (iii) Decimal Degrees. The following should be noted: (a) "Geographic" are generally called an easting (Longitude) and a northing (Latitude).

(b) Spatial Reference System or Coordinate Reference System (CRS) encompasses both geographic and projected coordinate systems. If a CRS is geographic, it may be called a GCS, if projected a PCS.

(c) WGS 84 / UTM zone 49N is a projected CRS and is suitable for use in between 108°E and

114°E, northern hemisphere between equator and 84°N, onshore and offshore. Many Asian geographical maps use WGS 84 / UTM zone 49N including Mongolia. WGS 84 / UTM zone 49N uses the WGS 84 geographic 2D CRS as its base CRS and the UTM zone 49N (Transverse Mercator) as its projection. WGS 84 / UTM zone 49N is a CRS for large and medium scale topographic mapping and engineering survey.

Maps used in this report and in exploration mapping use WGS 84 / UTM zone 49N.

To convert between easting (Longitude) and a northing (Latitude) to WGS 84 / UTM zone 49N use online converter: http://georepository.com/crs_32649/WGS-84-UTM-zone-49N.html

(d) Converting from Degrees, minutes and Seconds to Decimal Degrees: (dd+mm/60+ss/3600) to Decimal degrees (dd.ff)

dd = whole degrees, mm = minutes, ss = seconds

dd.ff = dd+mm/60+ss/3600

Example:

30 degrees 15 minutes 22 seconds = 30+15/60+22/3600 = 30.2561

On line converter:

http://www.rapidtables.com/convert/number/degrees-minutes-seconds-to-degrees.htm

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Figure 4.2 Mongolian Province Map Showing the Gobi Minerals Lease Altan Tobchi

Altan Tobchi

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Figure 4.3 Map Showing the Central Asian Fold Belt

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Figure 4.4 Map Showing Regional Geology Deposits Altan Tobchi (Gobi Mineral Lease) Aeromagnetic Data Medium to High Priority Targets

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4.3 Environmental Liabilities CICG and Gobi Minerals Limited are committed to the responsible development of the Gobi Minerals Lease. Environmental sustainability and management is a key priority of the board of CICG. Under section 38 of the Minerals Laws of Mongolia clear requirements for environmental protection for exploration license holders have been established. Key aspects are;

1. an environmental protection plan must be approved by the local Governor and the environmental protection agency prior to work start.

2. a deposit of 50% of the annual environmental management budget must be deposited in a special bank account established by the local Governor and held as a guarantee against any environmental damage

3. any instances of adverse environmental impact resulting from exploration activity must be record, rectified and reported in the annual environmental report.

Mongolia’s Southern Gobi Region is vast, richly endowed with mineral wealth, served by few transport links, habitat of a number of rare or endangered plant and animal species, and one of the most sparsely populated areas on earth. It supports a small human population which has grown slowly but is poised to accelerate rapidly. Many of the existing inhabitants are livestock herders who make their livelihood following traditional practices that have existed for centuries or longer. There is a trend to more commercialised animal husbandry in the SGR since Mongolia began the transition to a privatised market economy, but this is not the reason for the population growth Most new arrivals are directly associated with or attracted by the mining industry, which is expanding rapidly in the region as a matter of government policy as well as, of course, economic opportunity. Ecotourism is also growing in the region, but the impact on development thus far has been small. It is the establishment of mines, together with their associated infrastructure needs and human population movements that could cause significant and varied impacts on the environment in the region.

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Figure 4.5 Map of Southern Gobi Showing Key Environments Zones vs. Exploration Permits (Source Mongolian Government Environment Department)

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5.0 PHYSIOGRAPHY, ACCESSIBILITY, INFRASTRUCTURE, LOCAL RESOURCES AND CLIMATE

5.1 Physiography The Gobi Mineral Lease is located in the south Gobi region in the Dornogovi Province in the south east of Mongolia. This is a harsh environment with high temperature swings between summer and winter and withfrequent sand and snow storms amplify the hard weather conditions of the area. Local wells and mining operations indicate that the Dornogovi has ample reserves of groundwater. There are no significant natural surface water storage facilities likelakes or rivers, however ephemeral streams occur locally and flow for short periods immediately after rainfall. Local inhabitants source their water from wells which remain in service all year round. The area is covered by sparse semi-desert vegetation and is used by nomadic herders who tend camels, goats and sheep. The area is characterised by gently rolling plains and scattered knolls and outcrops. .

Figure 5.0 General View of Gobi Mineral Lease Area Altan Tobchi Outcrops

Figure 5.1 General View of Gobi Mineral Lease Area Altan Tobchi Rolling knolls of Outcrop

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5.2 Accessibility The Gobi Mineral lease can be safely accessed by two main routes. Route 1 is to fly to Ulaanbaatar, the capital of Mongolia and then by road from Ulaanbaatar to the lease via Sainshand and route 2 is to fly to Beijing, China and take the Trans Mongolian Rail to Sainshand and to drive to the lease. From Sainshand one would drive to Mandakh and from Mandakh to the lease area by 4wheel drive vehicle. Approximate Distances Ulaanbaatar to site 750 km Ulaanbaatar to Sainshand 453 km Sainshand to Mandakh 220 km Mandakh to lease area 77 km Beijing to site 1,242 km Beijing to Sainshand 945 km Sainshand to Mandakh 220 km Mandakh to lease area 77 km

Figure 5.2 Gobi Mineral Lease Area Altan Tobchi Site Accessibility Map

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5.3 Local Infrastructure and Resources The nearest population center in Mandakh some 77 Km from the lease area. It has very limited services and has a population of under 20,000 persons. Sainshand (capital city of Dornogovi Province) with a population of over 30,000 is located on the Trans Mongolian Rail network. It is an important industrial and transportation center and has significant support resources and logistics. Mongolian Alt Corporation (MAK) operations are located adjacent to Gobi Mineral lease (Tsagaan Suvarga). MAK and are in full production with extensive on site mine and mine personal facilities. Significant road, power and water infrastructure is also well progressed to service the mine operations of Tsagaan Suvarga and will benefit Gobi Minerals greatly in their development of the lease. Located on the lease boundaries are natural ground water systems. 5.4 Climate General The area which has a continental, semi-desert climate with cool springs and autumns, hot summers (as high as 60 °C), and cold winters (as low as -40 °C). Refer to Figure 5.0 for climate graph Ground Temperature During winter months the ground is frozen and temperatures of -220 C in gravely soil up to depths of 2.5 meters have been recorded. In peak summer the ground temperature can reach up to 400 C. Wind Very high winds are accompanied by sand or snowstorms that often severely reduce visibility for several hours at a time. Generally in the Gobi Mineral lease area the average wind speed in April is 5.5 m/sec, windstorms with gusts of up to 40 m/sec occur for short periods. Winter snowstorms and blizzards with winds up to 40 m/sec occur in the Gobi desert region between 5 and 8 days a year. Spring dust storms are far more frequent and these can continue through June and July.

Figure 5.3 Local Nomadic Population During Peak Winter (Source: S J. Bromley Trust Art Foundation Inc.)

Relative Humidity

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The Gobi desert region average relative humidity ranges from 18.7% in May to 53.3% in January. Daily relative humidity is dependent on current temperature and varies considerably. The average relative air humidity varies from 32% to 66%, according to the weather station at Sainshand. The relative humidity is dependent on the temperature which can vary considerably. Precipitation The average annual precipitation in the Gobi Minerals lease area is 57mm/a, 90% of which falls as rain and the rest as snow. Snowfall accumulations rarely exceed 50 mm. Maximum rainfall events of up to 43 mm/hr are considered a 1-in-10 year occurrence. In an average year, rainfalls occur on approximately 19 days, while snowfalls occur on 10 to 15 days of the year.

Figure 5.4 Climate Graph

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6.0 HISTORY The Gobi Minerals lease area has been subject to many regional and specific exploration programme between 1975 and 1997. The programmes consisted principally of geological and geochemical surveys which were conducted across the region by Russian and Mongolian government geologists. From 1998 onwards more detailed geological surveys and rock chip sampling, plus limited reconnaissance drilling were conducted by Ivanhoe Mines Mongolia Inc.. In November, 2015 Gobi Minerals Limited was awarded the exploration license over the lease known as Altan Tobchi. This forms the basis of the Gobi Minerals Gold Copper Project. CIC Gold Group Limited signed an agreement to acquire an 80% ownership interest in the Gobi Minerals Group Limited in November 2015. 6.1 Exploration History Regional aeromagnetic surveys covering most of the country were carried out between 1950 and 1990 by Russian and Mongolian workers. They were flown at a 2 km drape height. The dataset was later compiled and processed by Geophysical Exploration Technology and the Mongolian Geological and Geophysical Exploration Company to generate total magnetic intensity maps. Between 1964 and 1982 the Tsagaan Suvarga area, which included the Gobi Minerals Lease, Au-Cu targets were specifically explored by joint Russian-Mongolian geological expeditions Joint Russian-Mongolian geological expedition between 1970 and 1982 collected rock-chip samples, excavated several long trenches. Russian and Mongolian geologists conducted geological and geochemical surveys across the region between 1975 and 1997. Ground magnetic, induced polarisation (chargeability and resistivity), seismic and vertical electric sound surveys were also conducted in selected areas. The results of these exploration programmes have provided some of the existing geological database for the project. In 2003 lithological and structural interpretation of Landsat TM imagery and target identification were conducted over the area. First pass reconnaissance work commenced in 2003 comprising field visits to prospective mineral occurrences, Landsat targets and other anomalies identified during the reconnaissance work. The work included limited geological mapping and rock grab sampling for geochemical analyses. In 1998 Ivanhoe Mines Mongolia Inc. ("IMMI") conducted Helicopter reconnaissance on the Gobi Minerals lease area as part of a broader aerial reconnaissance programme me. Between 2004 and 2007 IMMI conducted chip sampling and other exploration, during which assay results of up to 7.32 g/t Au and 0.68 % Cu were achieved. Regional stream sediment and grid-base soil sampling, and a ground magnetic survey covering 21.7 km2 was completed in 2006. The soil and ground magnetic lines are oriented east-west with line spacing of 100 m and 25 m respectively. On 10 Auguts, 2007 IMMI announced, via a regulated press release, the Gobi Mineral Lease reconnaissance exploration results on the deposit Maanit Ovoo. During 2009 to 2011 IMMI successfully completed 42,370ha of IP chargeability surveys. In 2010 IMMI completed over 7,000 meters of diamond drilling on selected prospective targets that had been identified during the previous year's surveys and geological assessments. The results of the IMMI geological investigations, combined with the historic exploration data has resulted in the identification of two potentially significant prospects, namely Ulaan Del Ovoo

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and Maanit Ovoo. In additon a number of other highly prospective anomalies and targets have been identified, which all bear further investigation.

Figure 6.0 Trench Sampling on Gobi Mineral Lease Altan Tobchi

Figure 6.1 Chip Sampling on Gobi Mineral Lease Altan Tobchi, Maanit Ovoo Target Dondog Garamjav Sr. (right) whom discovered Oyu Tolgoi

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7.0 GEOLOGICAL SETTING AND MINERALISATION 7.1 Gobi Minerals Lease Primary Prospects

Ulaan Del Ovoo

Ulaan Del Ovoo propsects displays features of copper porphyry type mineralisation which is typical of potential copper resources. This style of mineralisation is similar to that found at the adjacent operation of Tsabaan Suvarga, which has been operated as a copper – molybdenum project by Mongolia Alt Corporation since 2012 and has been ranked as the 11th most strategic asset in Mongolia. The Maanit Ovoo porphyry prospect shows high characteristics of high sulphide mineralisation, which is common to gold operations. The mineralisation at Maanit Ovoo is similar to that found at the world class gold – copper operations at Oyu Tolgoi.

7.2 Geological Setting The South Gobi Zone consists of a Precambrian basement covered by Ordovician and Silurian siliciclastic sediments, Devonian volcano-sedimentary rocks, and Carboniferous volcanic rocks (Figure 7.1). The Ordovician to Silurian rocks are typical continental-margin sediments [Zonenshain, 1973; Johnson et al., 2008; Lehmann et al., 2010], whereas Upper Devonian to Carboniferous strata consist of thick volcanic sequences topped by Permian continental sedimentary deposits.

Figure 7.0 Regional Geology and Tectonic Setting (Source: AMC 2012 modified CIC Group)

Altan Tochi

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Figure 7.1 Tectonic Map of Southern Mongolia

(Source Geophysical and geochemical nature of relaminated arc-derived lower crust underneath oceanic domain in southern Mongolia)

Altan Tobchi

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Figure 7.2 Simplified Lithostratigraphic Columns for Specific Tectonic Zones South Mongolia

(Source Geophysical and geochemical nature of relaminated arc-derived lower crust underneath oceanic domain in southern Mongolia)

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7.21 Porphyry-copper systems The following description of the typical nature of porphyry-copper deposits is sourced from Dr. Richard H. Sillito15 April 2009 (Society of Economic Geologists, Inc. Economic Geology, v. 105, pp. 3–41), Singer and others (2008), Cox (1986a, b, c), and John and others (2010). Cox (1986a, b, c) subdivides porphyry copper deposits into three subtypes on the basis of copper, gold, and molybdenumgrades (1) porphyry Cu, (2) porphyry Cu-Au, and (3) porphyry Cu-Mo. The recent review of salient features of porphyry copper deposits by Sillitoe (2010) is also pertinent. Porphyry copper deposits typically form in subduction related, compressional tectonic settings, during active subduction of oceanic or continental crust (Sillitoe, 2010; John and others, 2010). These deposits are commonly associated with shallowly emplaced calc-alkaline plutons. The Andes range of South America is the classic province for continental-arc magmatism (Kay and others, 1999). Magma associated with porphyry copper deposits typically is hydrous, oxidised, and rich in sulfur and has likely undergone complex processes of differentiation and evolution at the crust-mantle boundary (Richards, 2003; John and archetypes of island-arc magmatism (Garwin and others, 2005). Magma associated with island-arc porphyry copper deposits is similar to that associated with continental arcs, but diorite, quartz abundant (Kesler and others, 1975). In recent years, evidence has accumulated for the existence of a family of porphyry copper deposits that formed transtensional, or transpressional regimes that have evolved within relatively cratonised regions after active subduction had ceased. are referred to as “postconvergent” or “postcollisional” (Richards, 2009; Ludington and others, 2013). Their geology and mineralisation style are broadly similar to subduction-related porphyry copper deposits; however, the magmas that are associated with them originated from as yet only partially understood mantle-involvedprocesses (Richards, 2009; Richards and Kerrich, 2007; Hou and others, 2011). Porphyry-copper systems commonly define linear belts, some many hundreds of kilometres long, and some occurring less commonly in apparent isolation. The systems are closely related to underlying composite plutons, at paleo-depths of 5–15 km’s, which represent the supply chambers for the magmas and fluids that formed the vertically elongate (>3 km) stocks or dyke swarms and associated mineralisation. Commonly, several discrete stocks are emplaced in and above the pluton roof zones, resulting in either clusters or structurally controlled alignments of porphyry-copper systems. The rheology and composition of the host rocks may strongly influence the size, grade, and type of mineralisation generated in porphyry-copper systems. Individual systems have life spans of circa 100,000 years to several million years, whereas deposit clusters or alignments, as well as entire belts, may remain active for 10 million years or longer.Deposits are typically semicircular to elliptical in plan view. In cross-section, ore-grade material in a deposit typically has the shape of an inverted cone with the altered, but low grade, interior of the cone referred to as the ‘barren’ core. In some systems, the barren core may be a late-stage intrusion. The alteration and mineralisation in porphyry-copper systems are zoned outward from the stocks or dyke swarms, which typically comprise several generations of intermediate to felsic porphyry intrusions. Porphyry copper–gold–molybdenum deposits are centred on the intrusions, whereas carbonate wall rocks commonly host proximal copper–gold skarns and less commonly, distal

26

base metal and gold skarn deposits. Beyond the skarn front, carbonate replacement copper and/or base metal gold deposits, and/or sediment-hosted (distaldisseminated) gold deposits can form. Peripheral mineralisation is less conspicuous in noncarbonated wall rocks, but may include base metal or gold-bearing veins and mantos. Data compiled by Singer et al. (2008) indicate that the median size of the longest axis of alteration surrounding a porphyry copper deposit is 4–5 km, while the median size area of alteration is 7–8 km2. High-sulfidation epithermal deposits may occur in lithocaps above porphyry-copper deposits, where massive sulfide lodes tend to develop in their deeper feeder structures, and preciousmetal-rich, disseminated deposits form within the uppermost 500 m. Figure 7.4 shows a schematic section of a porphyry-copper deposit, illustrating the relationships of the lithocap to the porphyry body and associated mineralisation styles.

Figure 7.3 Porphyry Copper System Section (Source Dr. Richard H. Sillito15 April 2009 (Society of Economic Geologists, Inc.

Economic Geology, v. 105, pp. 3–41)

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Table 7.0 Features of Principal Hydrothermal Breccia Types in Porphyry Copper Systems

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7.211 Copper Porphyry Mineralisation

A permissive tract for porphyry copper deposits is delineated as a geographic area that includes intrusive and that are part of a magmatic arc or belt. These arcs have been traditionally related to convergent plate margins, but some magmatic belts have uncertain origins or formed after subduction ceased. A tract generally is bounded by the outline of the magmatic arc, as depicted at the scale of the maps available for tract delineation, and may include areas covered by younger or structurally overlying materials that are less than 1 km thick. For tracts in the study area, many of the igneous rocks most closely associated with porphyry copper formation are not depicted on available digital geologic maps. Porphyry-copper mineralisation occurs in a distinctive sequence of quartz-bearing veinlets as well as in disseminated forms in the altered rock between them. Magmatic-hydrothermal breccias may form during porphyry intrusion, with some breccias containing high-grade mineralisation because of their intrinsic permeability. In contrast, most phreatomagmatic breccias, constituting maar–diatreme systems, are poorly mineralised at both the porphyry copper and lithocap levels, mainly because many such phreatomagmatic breccias formed late in the evolution of systems, and the explosive nature of their emplacement fails to trap mineralising solutions. Copper mineral assemblages are a function of the chemical composition of the fluid phase and the pressure and temperature conditions affecting the fluid. In primary, unoxidised or non-supergene-enriched ores, the most common sulfide assemblage is chalcopyrite ± bornite, with pyrite and minor amounts of molybdenite. In supergene-enriched ores, a typical assemblage can comprise chalcocite + covellite ± bornite, whereas in oxide ores a typical assemblage could include malachite + azurite + cuprite + chrysocolla, with minor amounts of minerals such as carbonates, sulfates, phosphates, and silicates. Typically, the principal copper sulfides consist of millimetre scale grains, but may be as large as 1–2 cm in diameter and, rarely, pegmatitic (larger than 2 cm). 7.212 Alteration

Alteration zones in porphyry-copper deposits are typically classified on the basis of mineral assemblages. In silicate-rich rocks, the most common alteration minerals are K-feldspar, biotite, muscovite (sericite), albite, anhydrite, chlorite, calcite, epidote, and kaolinite. In silicate-rich rocks that have been altered to advanced argillic assemblages, the most common minerals are quartz, alunite, pyrophyllite, dickite, diaspore, and zunyite. In carbonate rocks, the most common minerals are garnet, pyroxene, epidote, quartz, actinolite, chlorite, biotite, calcite, dolomite, K-feldspar, and wollastonite. Other alteration minerals commonly found in porphyry-copper deposits are tourmaline, andalusite, and actinolite. Figure 7.5 shows the typical alteration assemblage of a porphyry-copper system. Porphyry-copper systems are initiated by injection of oxidised magma saturated with sulfurand metal-rich, aqueous fluids from cupolas on the tops of the subjacent parental plutons. The sequence of alteration and mineralisation events is principally a consequence of progressive rock and fluid cooling, from >700 C to <250°C, caused by solidification of the underlying parental plutons and downward propagation of the lithostatic–hydrostatic transition. Once the plutonic magmas stagnate, the high temperature, generally two phase hyper-saline liquid and vapour responsible for the potassic alteration and contained mineralisation at depth and early overlying advanced argillic alteration, respectively, gives way, at <350°C, to a single-phase, low to-

29

moderate-salinity liquid that causes the sericite - chlorite and sericitic alteration and associated mineralisation. This same liquid also is a source for mineralisation of the peripheral parts of systems, including the overlying lithocaps. The progressive thermal decline of the systems combined with syn-mineral paleo-surface degradation results in the characteristic overprinting (telescoping) and partial to total reconstitution of older by younger alteration and mineralisation types. Meteoric water is not required for formation of this alteration and mineralisation sequence, although its late ingress is commonplace.

Figure 7.4 Porphyry Copper System Typical Alteration Assemblages (Source Dr. Richard H. Sillito15 April 2009

Society of Economic Geologists, Inc. Economic Geology, v. 105, pp. 3–41)

30

Table 7.1 Characteristics of Principal Alteration-mineralisation Types in Porphyry Copper Systems

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7.213 Applicability of The Sillito Model to the Gobi Minerals Lease

The Gobi Minerals Lease displays features which identify it as having the potential to host porphyry-copper-type deposits. These features include: • Mineralisation is in or adjoining porphyritic intrusions of quartz-monzodiorite composition. • Multiple emplacements of successive intrusive phases and a variety of breccias are present. • Mineralisation is spatially, temporally, and genetically associated with hydrothermal • alteration of the intrusive bodies and host rocks. • Large zones of veining and stockwork mineralisation, together with minor disseminated and

replacement mineralisation, occur throughout large areas of hydrothermally altered rock, commonly coincident wholly or in part with hydrothermal or intrusion breccias.

• Hydrothermal alteration is extensive and zoned, which is common to porphyry-copper deposits. Major alteration minerals in the biotite–chlorite, intermediate argillic, sericite, and K-feldspar alteration zones include quartz, chlorite, sericite, epidote, albite, biotite, hematite–magnetite, pyrophyllite, illite, and carbonate. Advanced argillic alteration zones can contain minerals such as kaolinite, zunyite, pyrophyllite, muscovite, illite, topaz, diaspore, andalusite, alunite, montmorillonite, dickite, tourmaline, and fluorite. In the leached cap, smectite and kaosmectite can also occur. The alteration assemblages are consistent with the physio-chemical conditions of a porphyry environment.

• Pyrite is the dominant sulfide, reflecting the typical high-sulfur content of porphyry copper deposits. The major ore minerals include chalcopyrite, bornite, chalcocite, covellite, and enargite. In some zones, minerals such as tennantite, tenorite, cubanite, and molybdenite have been identified. Gold typically occurs as inclusions in the sulfide minerals.

• Copper grades are typical of the range of porphyry-copper grades (0.2% to >1.0% Cu). The Gobi Minerals Lease porphyry-copper deposits displays a range of mineralisation styles, alteration characteristics, and deposit morphologies that are likely to reflect differences in structural controls, host rock lithology, and depth of formation. For the most part, structural influences account for the differences in shape and distribution of mineralisation within the prospects. High-sulfidation mineralisation and associated advanced argillic alteration are most common within the wall rocks (basaltic tuffs and fragmental rocks) to the quartz-monzodiorite, where it intrudes to levels high in the stratigraphic succession and in narrow structurally controlled zones. High-sulfidation mineralisation often forms in steam condensate zones and then collapses back into the hypogene zone, causing overprinting and textural destruction. The Gobi Minerals Lease deposits require additional exploration work to define any difference when compared with typical porphyry-copper systems.

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7.22 High-sulphide Copper-Gold Deposits

The following description of the typical nature of Epithermal and Porphyry Gold deposits is sourced from Dr. Greg Corbett World Gold Conference, Brisbane 26-27 September 2013.

Mineralised high-sulphidation epithermal gold deposits predominantly occur in younger poorly eroded magmatic arcs, for example in the Andes of South America, and are hosted in volcanic rocks that are associated with subvolcanic intrusions, particularly flow dome complexes. Deposits are commonly localised by similar major structural corridors to those which host porphyry Cu–Au deposits. Stockworks of quartz veinlets, quartz veins, closely-spaced fractures and breccias containing pyrite and chalcopyrite with lesser molybdenite, bornite and magnetite occur in large zones of economically bulk-mineable mineralisation in, or adjoining, porphyritic intrusions and related breccia bodies. The deposit shapes are commonly irregular, and controlled by combinations of structural setting and host rock permeability. The mineralisation is spatially, temporally and genetically associated with hydrothermal alteration of the host rock intrusions and wall rocks. Zones where fracturing is most intensely developed can give rise to economic grade vein stockworks, notably where there are coincident or intersecting fracture sets. Disseminated sulphide minerals are present, generally in subordinate amounts. Typical minerals include pyrite, chalcopyrite; molybdenite, lesser bornite and rare (primary) chalcocite, with lesser tetrahedrite/tennantite, enargite and minor gold, electrum and arsenopyrite. Late-stage veins can contain galena and sphalerite in a gangue of quartz, calcite and barite. Advanced argillic alteration is the most common alteration type, and can be aerially extensive. Quartz occurs as fine-grained replacements and as vuggy, residual silica in acid-leached rocks. There are wide variations in deposit types, ranging from bulk- mineable, low-grade to selectively mined, high-grade deposits. Although mineralisation of this type is present in portions of the Central and Hugo Dummett Deposits at Oyu Tolgoi (Hodgson, 2004).

Figure 7.5 Rock Sample – Quartz-hematite-malachite vein

0.38 g/t Au, 2.1% Cu, 0.960% Zn, 0.094 % Mo (Sample MR131819)

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Figure 7.6 Conceptual model for styles of magmatic arc epithermal Au-Ag and porphyry Au-Cu Mineralisation

(Source Corbett World Gold Conference, Brisbane 26-27 September 2013)

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7.3 Regional Geology

Gobi Mineral Lease is located within the Central Asian fold belt, one of the largest orogenic belts in the world, extending for over 5000 km from northern China to the Urals in Russia. Contained within this orogenic belt is the southern Mongolian fold system (Ruzhentsev and Pospelov, 1992), which comprises a zone of arc-continent collision that was active during several episodes from the Silurian to Early Carboniferous along the southern margin of the Siberian Craton. Currently the tectonics of Mongolia is interpreted as a series of fault-bounded accreted terranes (Badarch et al. 2002). Like Oyu Tolgoi, it was formed within the Southern Mongolian Magmatic Belt segment of the late Palaeozoic Kazakh-Mongol magmatic arc, and it has been dated at approximately 365 Ma in the late Devonian (Lamb and Cox, 1998). The Gobi Minerals Lease is located within the Gurvansaikhan arc terrane (Figure 7.9) which comprises an arcuate belt, 600 km long and up to 200 km wide through southern Mongolia. It comprises Middle to Late Palaeozoic volcanic and sedimentary rocks, intruded by Late Devonian and Carboniferous granitoids (Lamb and Badarch, 1997: Badarch et al., 2002), part of the Central Asian Orogenic Belt, rocks of which now comprise the South Gobi region of Mongolia (Figure 7.9 and Figure 9.10).

Figure 7.7 Regional Setting Gurvansayhan Terrane

(Source James H.S. Blight a, Dickson Cunningham a, Michael G. Petterson Depart of Geology, University of Leicester, UK)

35

Development of the Central Asian Orogenic Belt consisted of Palaeozoic age accretionary episodes that assembled a number of island and continental margin magmatic arcs, rifted basins, accretionary wedges, and continental margins. Arc development ceased by about the Permian. During the Late Jurassic to Cretaceous, north-south extension occurred, accompanied by the intrusion of granitoid bodies, unroofing of metamorphic core complexes, and formation of extensional and transpressional sedimentary basins. North-east-south-west shortening is superimposed on the earlier units and is associated with major strikeslip faulting and folding within the Mesozoic sedimentary basins. The Gurvansaikhan Terrane is interpreted to be a juvenile island arc assemblage that consists of highly deformed accretionary complexes and volcanic arc assemblages dominated by imbricate thrust sheets, dismembered blocks, mélanges, and high-strain zones. Lithologies identified to date in the Gurvansaikhan Terrane include Silurian to Carboniferous terrigenous sediments, volcanic-rich sediments, carbonates, and intermediate to felsic volcanic rocks. Sedimentary and volcanic units have been intruded by Devonian granitoids and Permo-Carboniferous diorite, monzodiorite, granite, granodiorite, and syenite bodies, which can range size from dykes to batholiths. Major structures to the west of the Gurvansaikhan Terrane include the Gobi-Tien Shan sinistral strike-slip fault system that splits eastward into a number of splays and The Gobi Altai Fault system, which forms a complex zone of sedimentary basins over-thrust by basement blocks to the north and north-west of Oyu Tolgoi. To the east of the Gurvansaikhan Terrane, regional structures are dominated by the north-east striking East Mongolian Fault Zone, which forms the south-east boundary of the terrane. This regional fault may have formed as a major suture during Late Palaeozoic terrane assembly, with Mesozoic reactivation leading to the formation of north-east elongate sedimentary basins along the fault trace. The major ore minerals are chalcopyrite, bornite, molybdenite and pyrite, which are concentrated in the sericitic bands. A supergene chalcocite blanket has been developed over the deposit (Lamb and Cox, 1998; Watanabe and Stein, 2000). The current geometry and distribution of volcanic belts in southern Mongolia is attributed to post-accretion disruption and dislocation by extensional and/or dextral strike-slip faulting related to the Himalayan collision, which dominate the present-day regional structure of southern Mongolia. The Gurvansaikan terrane hosts most of the known porphyry and intrusion-related mineralisation in the South Gobi, including the Oyu Tolgoi copper-gold porphyry (Perello et al., 2001; Crane and Kavalieris, 2013), the Kharmagtai copper-gold porphyry (Kirwin et al., 2004) deposits, and the Tsagaan Suvarga copper-molybdenum porphyry (Watanabe and Stein, 2000) an adjacent property.

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Figure 7.8 Regional Tectonic Setting & Distribution of Major Porphyry Copper Deposits

(Source T M. Porter 25 June 2015)

Altan Tobchi

37

Figure 7.9 Map showing the distribution of permissive tracts for porphyry copper deposits in the Central Asia Orogenic Belt and eastern Tethysides and adjacent study areas.

(Source USGS Porphyry Copper Assessment of the Central Asian Orogenic Belt 2010)

Altan Tobchi

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Table 7.2 Permissive tracts for porphyry copper deposits in the Central Asian Orogenic Belt (Source USGS Porphyry Copper Assessment of the Central Asian Orogenic Belt 2010)

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Table 7.3 Chart showing the distribution of the permissive tracts for porphyry copper deposits in the Central Asia Orogenic Belt and eastern Tethysides regions in terms of geologic time span and orogenic events. Note that tract 142pCu8508 (Erdenet), consisting of two sub-tracts (“a” and “b”), is represented as a single time-interval bar on the chart. Ma, mega-annum/millions of years before present.

(Source USGS Porphyry Copper Assessment of the Central Asian Orogenic Belt 2010)

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Figure 7.10 Regional Geology Showing Mineral Occurrences & Medium to High Priority Targets

Altan Tobchi

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Figure 7.11 Regional Geology Aeromagnetic Data Medium to High Priority Targets

Altan Tobchio

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7.4 Local Geology

The Gobi Mineral Lease copper–gold porphyry systems are situated in a poorly exposed inlier of Devonian mafic to intermediate volcanic, volcaniclastic, and sedimentary rocks that have been intruded by Devonian to Permian felsic plutons. These rocks are unconformably overlain by poorly consolidated Cretaceous sedimentary rocks and younger unconsolidated sedimentary deposits. Local geological areas (refer to Figure 7.14): • Lithologies occurred in the east portion comprise a thick succession of northeast trending

exposures of Late Carboniferous to Permian volcanics, Volcanclastics, sedimentary rocks and granitoid intrusives.

• These lithologies are similar to the adjacent property Tsagaan Suvarga host of the gold

and base-metals mineralisation. • A series of sub-parallel east to northeast trending faults crosscut by northeast to

northwest transverse faults transect the lease. These cross cutting faults are situated within the northeast trending fault corridor hosting the Tsagaan Suvarga copper, gold and molybdenum (Cu-Au-Mo) deposit. A major east-west trending fault transects those faults above in the north portion of the licence.

• Anomalous copper, gold, Arsenic, lead, zinc and molybdenum Cu-Au-As-Pb-Zn-Mo

mineralisation at deposit Ulaan Del Ovoo is associated with quartz-hematite veins and zones of strong to intense silicification centred on several breccia bodies. The multiphase breccias are texturally diverse, and show gradational variations between monomictic, clast-supported facies through to polymictic, poorly sorted matrix-supported facies.

• In deposit Maanit Ovoo gold and base metal mineralisation is associated with

mesothermal-style sheeted quartz-sulphide veins hosted in the hornfels, oxidized andesite and rare gossans. The veins are associated with intense pervasive chlorite-epidote-biotite-scricitc-actinolite alteration halos.

Main rocks in deposit are aplite, diorite porphyry, explosive breccia, feldspar porphyry, gabbro porphyry, granite porphyry, quartz syenite porphyry, syenite porphyry, syenodiorite porphyry.

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Table 7.12 District Scale Geological Map of the Altan Tobchi Lease Area

Mongolia Alt Corporation open pit mine Tsagaan Suvarga Ulaan Del Ovoo

Deposit

Maanit Ovoo Deposit

44

Table 7.13 Geological Map of deposit Maanit Ovoo

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8.0 HIGH PRIORITY DEPOSIT TYPES The South Gobi region hosts a wide range of gold, copper-gold and copper-molybdenum deposits. The deposit types or model that exists on Gobi Mineral Lease can be interpreted to fall into one of two sub-types of Porphyry Deposits: • Copper-Gold Porphyry Deposits (Oyu Tolgoi); and • Copper-Molybdenum Porphyry Deposits (Tsagaan Suvarga - adjacent property to Gobi

Minerals Lease) The porphyry mineralisation systems identified on the Gobi Minerals Lease are believed to display features of not only porphyry type mineralisation but also of related high-sulphidation copper-gold mineralising systems. In addition to two high priority prospects identified by the work provided by IMMI, namely Ulaan Del Ovoo and Maanit Ovoo, there exist several other noteworthy targets that will require further exploration. 8.1 Maanit Ovoo Prospect Gold and base metal mineralisation at Maanit Ovoo is associated with sheeted quartz-hematite veins and hematite goethite malachite infilled fractures. The Maanit Ovoo prospect is located to the east-southeast of Tsagaan Survarga porphyry copper-molybdenum deposit and is hosted in the same volcano-plutonic complex. The mineralization is associated with mesothermal-style sheeted quartz-sulphide veins hosted in hornfels, oxidised and site and rare gossans. The veins are associated with intense pervasive-chlorite-ephlorite-biotite-sericite-actinolite alteration. Hematite and secondary copper minerals (mostly malachite) are moderately developed on fractures and also occur as pseudomorphs of sulphides in the oxidised parts of the viens. The quartz veins are sparsley distributed over a 50 by 200 metre area. Narrow zone (3 by 5 metre area) of hematite-malachite chalcopyrite and rare molybdenite mineralisation occur sporadically near the contact of monzonite and andersite dykes. Minor carbonate-quartz-limonite veins are hosted in the polymictic conglomerate and medium-grained monzonite. This area of felsic volcanogenic rocks were exposed to alteration of strong silicification and hornblende due to metasomatosis activities at the granosyenite intrusive. These volcanogenic rocks are intersected by small to medium porphyry dikes and stockwork. Maanit Ovoo prospect occurrence may be hosting a vein type mineralisation with polymetals of porphyry type deposit.

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Figure 8.0 Rock Samples - Maanit Ovoo Prospect

47

8.2 Ulaan Del Ovoo Prospect The Ulaan Del Ovoo prospect is located to the east-northeast of Tsagaan Survarga porphyry copper-molybdenum deposit and is hosted in the same volcano-plutonic complex. IMMI conducted exploration on this prospect and reported that the mineralisation is associated with quartz hematite veins and zone of strong to intense silicification centred on several breccia bodies. The multiphase breccias are texturally diverse and show gradational variations between monomictic, class-supported facies through to polymictic, poorly sorted matrix-supported facies. The breccias and viens are typically strongly silicified and intensely leasched. Geothite and hematite are moderately developed on fractures and pseudomorph primary sulphides. Quartz-hematite malachite vien mineralisation at Maanit Ovoo deposit is sparsely outcropping over a 10-square-km area and is hosted within a medium-grained granosyenites. Light grey, fine to medium grained feldspar and quartz granosyenite is distributed over the southwest and central part of Maanit Ovoo deposit. Fresh medium-grained granosyenite and monzonite are intruded by strongly silicified andesite and moderate hematite-altered volcanic dykes. These dykes are up to 50 metre wide. 200 to 200 metres in length and trending to the northwest. Hematite-magnetite altered monzodiorite outcrop sporadically as small stacks of between 3 and 5 metres.

Figure 8.1 View of scattered gold-copper bearing quartz-hematite-malachite veins hosted in

granosyentite within undulating topography

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Figure 8.2 Rock Sample – Ulaan Del Ovoo Deposit

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9.0 EXPLORATION

9.1 Russian and Mongolian Exploration The joint Russian and Mongolian geologists are reported to have discovered this area as a result of a regional stream sediment and soil sample geochemical programme conducted from 1950 to 1997. The area around the Tsagaan Suvarga area (adjacent property) including Gobi Minerals Lease Altan Tobchi was specifically explored by joint Russian-Mongolian geological expeditions from 1964 to 1982. The results that period of exploration activity have provided some of the existing geological database for the project. Joint Russian-Mongolian geological expedition between 1970 and 1982 collected rock-chip samples, excavated several long trenches and conducted assay works through this area.. After 1986 the resultant geochemical anomalies were subject to fieldwork, which continued until 2002 with the objective of outlining specific target areas on what is now the Gobi Minerals Lease (refer to Figure 9.1) 9.2 Ivanhoe Mines Mongolia Inc. (IMMI) Exploration In 2003 IMMI conducted remote sensing on the Gobi Minerals Lease area. This work using Landsat TM imagery and target identification identified two principal prospects. Ulaan Del Ovoo and Maanit Ovoo. Between 2004 and 2007 IMMI conducted surface sampling, regional stream sediment and grid-base soil sampling. In 2007 IMMI focused principally on Maanit Ovoo deposit and conducted an IP survey over 25 square km (refer to Figure 9.3 and 9.4). There survey consisted of 3 lines containing 15.4 line km of dipole-dipole array and a 16 square km Vector IP (VIP) array survey. The object of the surveys was to identify, map sulphide and alteration zones associated with porphyry style copper mineralisation. Survey data was modeled with 2D and 3D inversion software to produce a 3D model for Maanit Ovoo deposit (refer to Figure 9.6). Following the IP surveys IMMI drilled a total of 5 holds to test mineralisation at Maanit Ovoo deposit. resulting in 7,032 m of core, from which 304 samples were collected for analysis. A fifth hole GST0005 which was drilled to over 1,300m was also conducted but the data was kept confidential by Ivanhoe Mines Mongolia Inc. In Q2 2007 Ivanhoe Mines Mongolia Inc. announced via a regulated press release on 10 Aug 2007 the Gobi Mineral Lease reconnaissance exploration on deposit Maanit Ovoo. During 2009 to 20011 IMMI conducted an IP chargeability survey covering an additional 423.70 square km of the Gobi Mineral lease area (refer to Figure 9.2). The results of the survey showed the area named Ulaan Del Ovoo as a high resistivity anomaly. Analysis and investigations showed this is related to a sulphide body shell associated with a deep

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intrusive body. The geological setting and location suggest that this is an extension of adjacent property Tsagaan Survarge deposit, which is currently an operating copper molybdenum operation. There were three principal types of resource development sampling conducted on the property, trenching, sampling and diamond core drilling. This sampling constitutes the vast majority of the exploration work conducted at the Gobi Minerals Lease.

Table 9.0 Exploration Summery

Exploration Activity

Detailed geological mapping & extensive rock-chip grab sampling

Rock chip sampling 931 rock chip samples & assays

Stream sediment sampling 41 stream sediment samples and assays

Detail mapping 25 square Km geological mapping Maanit Ovoo area

Ground Magnetics 71 square Km (100 metre line spacing) Maanit Ovoo area

Dip-Dipole IP 16 square Km detailed 3D IP survey

Gradient Array IP 423.7 square Km (100 metre line spacing)

Diamond drilling 5 deep diamond drill holes 7,032 meters

Table 9.1 Sampling Ivanhoe Mines Mongolia 2007

Sample No Lithology Lithology Modifier Description Au

ppm Cu %

Ag ppm

Pb ppm

Zn ppm

As ppm

Mo ppm

MR121554 Quartz Quartz vein material with rare malachite, hosted in basalt 0.37 8.36 4 48 136 1070 388 MR121555 Basalt Dark grey, rare malachite on surfase fracture 0.01 1.46 < 3 36 < < MR121556 Quartz Vein 40 m by 0.6 m, grey, rare hematite and malachite stained,

hosted in quartz syenite 1.43 1.17 11 747 187 125 <

MR121557 Quartz Vein 1.26 1.21 7 200 350 < 10

MR121558 Quartz Vein White, rare hematite stained 0.03 0.02 1 46 29 < <

MR121559 Quartz-syenite Brown, strongly hematite and silica altered 0.02 0.01 < 28 537 65 9

MR121560 Quartz-syenite Strongly limonite altered, intensely fractured < 0.00 < 8 101 < <

MR121561 Carbonate Strongly limonite-jarosite-silica altered < 0.00 < 6 70 < <

MR121562 Quartz-syenite Pink to yellow, medium-grained, rare limonite-carbonate

altered < 0.01 < 6 95 < <

MR121563 Basalt Dark grey, rare malachite on surfase fracture 0.39 0.14 < 18 175 < 6

MR121564 ?Andesite 2 m by 3m, dark, strongly hematite altered < 0.02 < 6 34 < <

MR121565 ?Andesite White grey, stromgly clay altered < 0.00 < 3 8 < <

MR121566 ?Andesite White grey, strong clay, moderate silica-hematite altered < 0.00 < 8 9 < <

MR121567 ?Andesite White grey, strong clay, moderate silica-hematite altered 0.03 0.00 < 5 9 < <

MR121568 Andesite Breccia Strong silicified, limonite stained 0.03 0.00 < 6 14 < 15

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Table 9.2 Sampling Ivanhoe Mines Mongolia 2007

Sample No Lithology Lithology

Modifier Description Au ppm

Cu %

Ag ppm

Pb ppm

Zn ppm

As ppm

Mo ppm

MR121501 Basalt Breccia Limonite altered, amygdaloidal. < 0.00 < 5 78 < < MR121502 Breccia Yellow grey, explosive, strongly limonite altered < 0.01 < 11 74 155 6 MR121503 Breccia Strong weathered and limonitic alteration < 0.00 < 9 34 190 < MR121504 Breccia Strong weathered and limonitic alteration < 0.00 < 14 86 185 < MR121505 Breccia Strong weathered and limonitic alteration < 0.00 < 8 67 75 < MR121506 Basalt Limonite altered, amygdaloidal chlorite 0.01 0.00 < 13 70 < < MR121507 Basalt Yellow to grey strongly limonite, rare chlorite altered, with amygdaloidal

chlorite < 0.00 < 12 51 < <

MR121508 Basalt 0.05 0.00 < 7 57 < < MR121509 Breccia Brown, strong iron oxidised, fragment supported 0.02 0.01 < 10 81 65 < MR121510 Breccia Brown, strong iron oxidised, fragment supported 0.01 0.01 < 10 74 65 < MR121511 Breccia Brown, strong iron oxidised, fragment supported < 0.00 < 13 48 225 11 MR121512 Breccia Strong limonitic alteration, fragment supported < 0.00 < 12 40 215 < MR121513 Breccia Strong limonitic alteration, fragment supported 0.02 0.00 < 13 35 395 6 MR121514 Breccia Strong limonited. The brecciated zone is 15m by 5m. 0.01 0.00 1 16 50 430 9 MR121515 Breccia Strong limonited. The brecciated zone is 15m by 5m. < 0.00 < 11 71 165 < MR121516 Andesite Yellow-grey, limonitic alteration < 0.00 < 11 74 55 < MR121517 Andesite Strong limonited. The brecciated zone is 15m by 5m. 0.02 0.00 < 18 45 190 6 MR121518 Andesite Strong limonited. The brecciated zone is 15m by 5m. < 0.00 < 7 49 105 8 MR121519 Andesite Breccia Strongly limonite+chlorite altered 0.01 0.01 < 12 102 180 < MR121520 Andesite Breccia Strongly limonite+chlorite alteration 0.04 2.07 5 12 45 < <

MR121521 Basalt Grey, rare epidote altered, with disseminated pyrite+ chalcopyrite and malachite 0.61 1.82 6 8 108 < <

MR121522 Basalt Moderate disseminated malachite, rare arseno pyrite and molybdenet 0.39 0.81 3 16 84 < < MR121523 Basalt Moderate disseminated malachite, rare arsenopyrite 0.37 1.74 3 21 91 < < MR121524 Basalt Moderate disseminated malachite, rare arsenopyrite 0.29 0.32 1 13 84 < < MR121525 Basalt Moderate disseminated malachite, rare arsenopyrite 0.08 0.97 1 10 73 < < MR121526 Basalt Moderate disseminated malachite, rare arsenopyrite 0.23 0.32 < 19 90 < < MR121527 Basalt Moderate disseminated malachite, rare arsenopyrite 0.21 0.38 < 11 53 < < MR121528 Basalt Moderate disseminated malachite, rare arsenopyrite 0.13 0.34 < 5 103 < 15 MR121529 Basalt Moderate disseminated malachite, rare arsenopyrite 0.04 1.23 < 3 100 < < MR121530 Basalt Moderate disseminated malachite, rare arsenopyrite 0.38 0.69 1 10 109 < < MR121531 Quartz Vein chalcedonic, strongly limonite altered, hosted in basalt < 0.02 < 9 29 70 15 MR121532 Quartz Vein chalcedonic, strongly limonite altered, hosted in basalt < 0.02 < 8 31 85 17 MR121533 Quartz Vein chalcedonic, strongly limonite altered, hosted in basalt < 0.00 < 9 23 75 17 MR121534 Quartz Vein chalcedonic, strongly limonite altered, hosted in basalt 0.39 0.97 1 23 109 < < MR121535 Quartz Vein 5 m by 0,2 m, limonitic alteration, hosted in limestone 0.01 0.00 < 5 13 < 7 MR121536 Quartz Vein 15 m by 0.2 m strong limonite alteration < 0.00 < 3 9 < < MR121537 Basalt Grey, with rare disseminated pyrite, chalcopyrite and malachite < 0.01 < 13 18 < < MR121538 Basalt Grey, with rare disseminated pyrite, chalcopyrite and malachite 0.33 0.92 2 18 661 < < MR121539 Basalt Grey, with rare disseminated pyrite, chalcopyrite and malachite 0.27 0.18 < 6 61 < < MR121540 Basalt Grey, with rare disseminated pyrite, chalcopyrite and malachite 0.02 0.05 < 54 40 < < MR121541 Basalt Grey, with rare disseminated pyrite, chalcopyrite and malachite 0.20 0.61 2 13 60 < < MR121542 Basalt Grey, with rare disseminated pyrite, chalcopyrite and malachite 0.07 0.19 < 9 107 < < MR121543 Basalt Grey, with rare disseminated pyrite, chalcopyrite and malachite 0.05 1.23 3 19 66 < < MR121544 Basalt Dark grey, with rare malachite 0.05 0.31 < 5 63 55 < MR121545 Basalt Dark grey, with rare malachite 0.24 1.26 < 7 55 50 < MR121546 Basalt Dark grey, with rare malachite 0.08 0.97 2 7 30 < < MR121547 Basalt Dark grey, with rare malachite 0.02 1.70 6 8 126 < < MR121548 Basalt Dark grey, with rare malachite 0.31 1.55 3 12 84 < < MR121549 Basalt Dark grey, rare malachite on surface fracture 0.06 0.61 < 4 123 < < MR121550 Basalt Dark grey, rare malachite on surface fracture 0.12 0.85 3 4 73 < < MR121551 Basalt Dark grey, with rare malachite 0.07 1.14 1 23 73 50 < MR121552 Basalt Dark grey, with rare malachite 0.06 0.66 2 < 63 < < MR121553 Basalt Dark grey, with rare malachite 0.09 0.77 < 4 57 < <

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Figure 9.0 Early exploration map detailing target area for future exploration. Target 1490 on adjacent property lease has since been proven to be 11th strategic mineral deposit in Mongolia owned by Mongolian Alt Corporation now in production. Target 1501 is know as Ulaan Del Ovoo deposit and Target 1505 is know as Maanit Ovoo, the focus on Ivanhoe Mongolia Mine Inc exploration.

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Figure 9.1 Ivanhoe Mines Mongolia Inc. Ground Magnetic Survey

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Figure 9.2 Ivanhoe Mines Mongolia Inc. Ground IP Magnetic Survey Chargeability

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Figure 9.3 Ivanhoe Mines Mongolia Inc. Ground Magnetic Survey Resistivity

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Figure 9.4 Ivanhoe Mines Mongolia Inc. Dipole-Dipole Survey

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Figure 9.5 Ivanhoe Mines Mongolia Inc. Dipole-Dipole Survey

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Figure 9.6 Ivanhoe Mines Mongolia Inc. 3D Inversion Model Generated from Dipole-Dipole

Survey

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10.0 DRILLING

In 2010 IMMI drilled a total of 5 diamond holds to test mineralisation at the Maanit Ovoo prospect. Four drill holes GTS001 to GTS004 resulted in 7,032m of core, from which 304 samples were collected for analysis. A fifth hole, GTS0005, was drilled to a depth of over 1300m, but the data was kept confidential by IMMI. The drilling equipment, core handling and sample testing information is being investigated at the time on this report and will be included in a future updated report.

Table 10.0 IMMI Drill Log Summary

Figure 10.3 shows drill hole GTS003, striking high mineralised zone at 859 meters returning an average grade over 24 meters of 0.970 copper, 3.37 g/t gold and 0.173 Molybdenum.

It is noted that the Southern Oly Tolgoi Minerals reserves for the open pit operation, as at 20 September 2014, has average grades of 0.45% Copper, 0.31% Gold and 1.23% Silver.

Hold ID From (m)

To (m)

Interval (m) Au (g/t) Cu % Mo %

GTS0001

162 166 4 - 0.229 0.023 242 246 4 - 0.150 0.022 343 481 138 1.28 0.363 0.039 660 680 20 0.87 0.026 - 724 727 3 0.37 0.015 - 805 847 42 0.57 0.220 -

GST0002 320 986 666 - 0.020 -

GTS0003

36 68 32 1.50 0.421 0.079 73 127 54 1.50 0.229 0.051

263 569 306 1.23 0.300 0.053 634 804 170 1.14 0.180 0.093 859 883 24 3.73 0.970 0.173 958 1114 156 0.60 0.253 0.128

GTS0004

10 28 18 0.19 0.135 - 31 57 26 0.46 0.234 - 61 76 15 0.26 0.164 -

109 130 21 0.37 0.190 -

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Figure 10.0 Deposit Drill Hole Mineralised Intercepts

Figure 10.1 GTS0001 Resistivity Section vs. Dill Hole (depth 1000m

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Figure 10.2 GTS0002 Resistivity Section vs. Dill Hole (depth 2,000m

Figure 10.3 GTS0003 Resistivity Section vs. Dill Hole (depth 1400m

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Figure 10.4 GTS0004 Resistivity Section vs. Dill Hole (depth 1200m

Figure 10.5 GTS0005 Resistivity Section vs. Dill Hole (depth 1400m) Result retained by Ivanhoe Mines Mongolia

.

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Figure 10.6 Oyu Tolgoi Chargeability Section of Major Despsit Discovery vs. Drill Holes

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11.0 SAMPLE PREPARATION, ANALYSES AND SECURITY Pre IMMI exploration sampling has been assessed as part of the overall investigation but was not included in this report as the sample security and techniques could not be validated. The sample analysis and security implemented by IMMI meets the appropriate standards as required by this report and are discussed and described in this section. 11.1 Analytical Laboratories Routine sample preparation and analyses of Ivanhoe Mines Mongolia Inc. (IMMI) samples were carried out by SGS Mongolia LLC (SGS Mongolia) which operates an independent sample preparation facility at the Oyu Tolgoi site and an analytical laboratory in Ulaanbaatar. SGS Mongolia is a part of the global SGS Group. SGS Mongolia and their predecessors have maintained a full service laboratory in Ulaanbaatar since the late 1990s. This laboratory was recognised as having ISO 9001:2000 accreditation and conforms to the requirements of ISO/IEC 17025 for specific registered tests. The laboratory performed all fire assay analyses and associated interpretations for the IMMI samples. 11.2 Sample Preparation All samples were prepared to meet standard quality control procedures as follows:

• Pre-preparation weighing • Crushed to 75% passing 3.35 mm • Split to 1kg • Pulverised to 90% - 95% passing 200 mesh (75 microns) • Split to 150g The IMMI samples were routinely assayed by SGS Mongolia for gold, copper, silver, lead, zinc, arsenic and molybdenum. Gold (Au) was determined using a 30 g fire assay fusion, cupelled to obtain a bead, and digested with Aqua Regia, followed by an atomic absorption spectroscopy (AAS) finish, with a lower detection (LDL) of 0.01 ppm gold, copper, silver, lead, zinc, arsenic and molybdenum were routinely determined using a three-acid-digestion of a 0.3g subsample followed by an AAS finish (AAS21R). Samples were digested to nitric, hydrochloric and perchloric acids to dryness until before leaching with hydrochloric acid to dissolve soluble salts. Analytical samples were made up with 15ml of distilled water. The LDL for copper using this technique was 2ppm. Where copper is over-range (>1% Cu), it is analysed by a second analytical technique (AAS22S), which has a higher upper detection limit (UDL) of 5% copper.

11.3 Quality Assurance & Quality Controls Methods To meet their internal requirements IMMI developed and monitoried all QA/QC requirements for their project. This work included development of procedural guidelines, laboratory audits, and preparation of reference materials. On-site monitoring conducted by designated IMMI supervisors and later OT LLC staff. All sampling and QA/QC work before 2007 was overseen on

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behalf of IMMI by its QA/QC Manager Dale A. Sketchley, M.Sc., P. Geo. IMMI also retained an independent geologist/geochemist Dr. Barry Smee to conduct audits of both the preparation and analytical facilities from March 2002 through 2008.

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12.0 DATA VERIFICATION CICG were unable to suitably validate the historic data that has been accumulated pre IMMI exploration. As such this data has been used on a “for information only” basis. Data verification only focuses on methods and data provided by IMMI’s exploration programmes A number of data reviews have been undertaken by independent third-party consultants as part of preparation of technical reports on the project, including the following: • AMEC and AMEC Minproc, 2002–2007 and 2012 – Review of QA/QC data and databases

in support of Mineral Resource estimates undertaken in 2002, 2003, 2005, 2006, 2007 and 2012, and independent core check sampling. QA/QC reviews showed acceptable analytical precision, low contamination, and a small number of sample mix up errors. The database iterations reviewed were considered sufficiently error-free to support Mineral Resource estimation.

• Independent geologist/geochemist Dr. Barry Smee, 2002–2008 – Review of sample preparation, analytical, and QA/QC data. Inspections and reports were completed in 2002, 2003, 2004, 2005, 2006, and 2008. No significant biases or errors were noted that would affect Mineral Resource estimates.

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13.0 ADJACENT PROPERTIES The Gobi Mineral Lease was formally held by Ivanhoe Mines Mongolia Inc. (IMMI). There are a number of significant regional mineral project either in operation or under development in the southern and eastern regions of Mongolia (see Figure 4.2). The two most notable operations are Oyu Tolgoi owned by Oyu Tolgoi LLC, approximately 150km south of the Gobi Minerals Lease and Tsagaan Suvarga owned by Mongolia Alt Corporation (MAK), adjacent to the Gobi Minerals Lease. Both these operations are having significant beneficial social, economic and infrastructure high impacts on the region. These advancements will benefit the development of the Gobi Mineral Lease. Numerous local industries that support mining and a constant building of a relevant skills base d have and continues to be developed that will benefit all new mineral developments in the region. 13.1 Tsagaan Suvarga Operations

Adjacent to the Gobi Minerals Lease is the operating copper-molybdenum mine Tsagaan Suvarga, which is owned by the Mongolian company Mongolia Alt Corporation. This resource has been ranked as the 11th most strategic mineral asset in Mongolia by the Mongolian Government. On the 6th of October 2011 MAK secured a US$350,000,000 financing facility with the European Bank for Reconstruction & Development (EBRD) to finance the construction of the project. In addition a US$ 100,000,000 stand by facility was also negotitated. The Project is expected to cost US$869 million.

The Tsagaan Suvarga open pit mine and plant construction commenced in 2012. The production capacity of the open pit is 14.6 million tonnes per annum. Once at sustainable full capacity, the mine will employ 300 workers. The processing plant design capacity is 14.6 million tonnes per annum of sulphide ore, which is forecast to produce 316,000 million tonnes per annum of copper concentrates and 4,400 million tonnes per annum of molybdenum concentrates. The plant was commissioned in July 2015. 13.2 Oyu Tolgoi Operation

The Oyu Tolgoi mine (Mongolian: Оюу Толгой, also Oyu Tolgoi, Turquoise Hill) is a combined open pit and underground mining project in Khanbogd sum within the south Gobi Desert, approximately 235 kilometers east of the Ömnögovi Province capital Dalanzadgad and 80 kilometers north of Mongolia's border with the People's Republic of China, where the mined copper is expected to be shipped.1

1 Information sourced from Wikipedia

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The site was discovered in 2001 and is being developed as a joint venture between Turquoise Hill Resources (a majority owned subsidiary of Rio Tinto) with 66% ownership and the Government of Mongolia with 34%.1 The Oyu Tolgoi mining project is the largest financial undertaking in Mongolia's history and is expected upon completion to produce 450,000 tonnes (500,000 short tons) of copper annually. Financing for the project has come in part from the Rio Tinto Group and an investment agreement between Ivanhoe Mines and the government of Mongolia.1 Oyu Tolgoi deposits contains an estimated 2,700,000 tonnes of copper and 1.7 million ounces (48,195,000 grams) of gold. It also contains 1.9 thousand tonnes of silver and 205 thousand tonnes of molybdenum. The mine began construction as of 2010 and shipped its first batch of copper, all 5,800 tons of it, on July 9, 2013. Production is scheduled to reach full capacity in 2021. As of December 2015 the mined had shipped 1.5 million tonnes of concentrate.1 Over the anticipated lifespan of the mine (>50 years), Oyu Tolgoi is scheduled to produce 430,000 tonnes (470,000 short tons) of copper per year, an amount equal to 3% of global production. Oyu Tolgoi is also expected to produce 425,000 ounces of gold annually, with "by-product silver and molybdenum". Rio Tinto intends to employ 3,000-4,000 people from Mongolia.1

In May 2015, Oyu Tolgoi’s shareholders, Rio Tinto, Turquoise Hill Resources, and the Government of Mongolia, agreed a plan to progress the next stage of underground development at Oyu Tolgoi.2 In December 2015 a Project Financing agreement with 20 international banks and financial institutions to fund the development was signed. The US$4.4 billion unlocked by the agreement will allow the construction of more than 200 km of tunnels. Following final Board approvals, construction work is expected to begin during 2016.2 The project is expected to have a material positive impact on the economic development of Mongolia and, at full production, is anticipated to increase national GDP by 30% by 2021. The fiscal benefits for the country will include greater tax revenues, as well as royalties and dividends. The project will adopt best transparency standards through compliance by the project company with the EITI requirements and serve as an example to other private sector investors in the Mongolian mining industry.

In addition, the project has acted as a catalyst for the development of supporting infrastructure in the region, including utility services and transportation, and will continue to the development of the necessary vocational skills in the country through the establishment of two vocational training centres in the South Gobi, and the provision of full financial support for over 3,000 Mongolians to attend technical and vocational education training schools across the country.

2 Information source from the Rio Tinto website: http://www.riotinto.com/copperandcoal/oyu-tolgoi-4025.aspx

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Employment generation, both directly at the project and indirectly through the development of a supply chain providing goods and services to it, is expected to be significant. The project will maintain a greater than 75% Mongolian workforce for direct technical operations and at least 90% of the remainder of the workforce will be Mongolian during the operational phase.

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14.0 MINERAL PROCESSING AND METALLURGICAL TESTING CICG that at the time of writing this report no metallurgical or mineral processing testwork had been completed on any samples or material form the Gobi Mineral Lease. As the exploration programmes define and validate targets, metallurgical testwork will be planned and undertaken as required to support resource definition and feasibility studies.

15.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES

CICG has at the time of writing this report not completed or established any mineral resources for the Gobi Minerals Project.

16.0 OTHER RELEVANT DATA AND INFORMATION The relevant data and information related to the Gobi Minerals Lease that CICG has available to it has been presented and discussed in other sections of this document. Ivanhoe Mines Mongolia Inc. and its other joint venter partners have acquired mineral leases to all of Southern Gobi region save approximately four leases that include Gobi Minerals Lease. Please refer to Adjacent Properties Section 13 of this report.

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17.0 INTERPRETATION AND CONCLUSIONS Dr. Earl W. Abbott, with support from Dr. Dondog Garamjav Sr., has reviewed the historic geological data and results from the work performed on Gobi Mineral Lease and surrounding areas by the past Russian/Mongolian Geologists and IMMI. Dr. Earl W. Abbott’s interpretation of the this information is that the Gobi Minerlas Lease is host to gold-copper-molybdenum porphyry mineralisation similar to that found at Oyu Tolgoi and to that of the adjacent property, Tsagaan Survarga. Dr. Earl W. Abbott has sufficient confidence in the information he has reviewed to support further exploration of the high priority prospects identified at Ulaan Del Ovoo and Maanit Ovoo and to continue the exploration of the minerlasitaion across the lease to identify further targets for future exploration. The adjacent operating mine owned by Mongolian Alt Corporation known as Tsagaan Survarga, whose copper-molybdenum resource is hosted in similar mineralisation as found on the Gobi Minerals Lease, has demonstrated that viable projects in this region are able to be funded, are able to economically produce viable product and can become profitable operations. The expenditure for additional work, in Dr. Earl W. Abbott’s opinion, is fully justified by the geological and economic potential of the property. The potential for finding additional mineralisation and viable targets on the Gobi Minerals Lease is considered to be very significant.

18.0 PROPOSED DE-RISKING EXPLORATION PROGRAMME 18.1 Proposed Exploration Programme It is anticipated that due to the size and potential of the Gobi Minerals Lease that a multi-year effort will be required to fully evaluate the potential. In order to ensure cost effective use of company funds an initial 18-month programme has been proposed to further develop, assess and identify current and further prospects. The assessment programme has been developed to fulfill a De-Risking function by assess the following key aspects of the lease area to assist with target definition for the next phase of exploration, which could include drill and assay works;

I. Remote sensing surveys II.

III. Topographical assessment IV. Structural assessment V. Hydrological assessment

VI. Geotechnical assessment VII. Surface and chip sampling 18.1.1 Remote Sensing

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The De-Risking exploration programme has budgeted for the acquisition of additional remote sensing data to supplement the data that currently exists in the CICG database. Data that will be sourced includes Landsat satellite imagery, magnetic surveys and other geophysical data. This data will further enhance and define the current geological understanding of the Gobi Minerals Lease. This data will be a key input into the interpretation of the mineralised zones and may result in the extension of existing resources and-or discovery of new ones. 18.1.2 Topographic Mapping Additional topographic relief and detailed topographic mapping will be undertaken to supplement the existing data I the CICG database. The data collected will be used to produce a robust 4D digital terrain model as well as detailed ortho-photography. 4D data includes the standard 3D data but also include point slope data, which will provide a higher level of definition of gradient, surface areas and accessibility. This data will be essential for the ongoing planning of future exploration programmes, structural analysis and target identification and will form key inputs to future feasibility and mining studies. 18.1.3 Mineralisation Structural Study CICG has a large amount of geological information acquired from the IMMI surveys and programmes. A key aspect to defining high priority targets that will provide the best possibility of creating value for exploration funds spent will be to fully define the structural nuances of the mineralisation across the lease area. The programme planned will combine the results of the remote sensing surveys, topographical mapping and the data in the CICG database to provide a basis for a specialist structural geologist to visit the site, conduct appropriate mapping and sampling and to develop detailed structural maps on a regional, local and prospect / target scale and to provide a structural geology report in which targets are identified, prioritised and planned for more detailed exploration. This work will assist to obtain a more accurate evaluation of the mineral potential of the Gobi Mineral deposit. 18.1.4 Geotechnical-Sterilisation Scoping-prefeasibility studies anticipated for the near future will require geotechnical sampling and future drilling. 18.1.5 Hydrological Preliminary hydrological investigations and assessments will be conducted determine the locations and availability of groundwater which will be required to support future exploration drilling and on site camp and support services. 18.1.6 Reference Standard Sample Preparation

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To ensure that a high level of sample and assay quality is maintained during the planned sampling campaigns, it is anticipated that the manufacture of matrix matched reference assay standards will be required prior to the commencement of sampling. Currently it is recommended that the standard material be prepared from different “ore” types present on the Gobi Minerals Lease. 18.1.7 Chip Sampling A regular grid of chip sampling over the priority target exploration areas has been planned to support the geological mapping and surveys. The outputs of this will be key in assisting to develop drilling programmes to start the detailed resources definition programmes, which are planned as part of the next phase of exploration. 18.2 Budget CICG has prepared an estimated 18-month budget for the programme described above. This budget is summarised in Table 18.1 below.

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Table 18.1 Proposed Gobi Gold Copper Project Exploration Programme Budget

PROJECT JUSTIFICATION PROGRAMME

TYPE COST £

QP Report Compile Qualified Person (QP) technical report Canadian NI 43-101 Technical Report 32,000 Geo Mapping Produce general and geological maps/plans Exploration 40,000 Structural Mapping Project

Advance the understanding of geological controls on mineralisation and refine current structural interpretation. Exploration

70,000 Report Produce a geotechnical report Quality Control 22,000 Reference Standard Sample Preparation

Ensure that assay results obtained are accurate & auditable Quality Control 4,000

Remote Sensing Ensure sampling are accurate and auditable Exploration 12,000

Topographic Mapping Project

Acquire satellite imagery & geophysical data, including magnetics to assist with detailed exploration of the property

Topographic Mapping and Orthophotography 26,000

Sampling Conduct a chip sample programme on target areas Exploration Report Conduct preliminary environmental studies Impact study 22,000

Hydrological Hydrological programme to assess the availability and quantity of process water.

Exploratory Hydrological 14,000

Fixed Costs Staff administration, travel and accommodation, de-risk works support costs. HR

60,000

302,000

The budget stated above takes into account that there will be no on site exploration or activity during the winter months.

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19.0 CONCLUSION The project lease was acquired by Gobi Minerals Group Limited (100%) in November 2015, a Mongolian company. CIC Gold Group Limited (CIC Gold) acquired an 80% interest in Gobi Mineral Group Limited (Gobi Minerals) in November 2015. The Gobi Gold Copper Project area falls within the highly prospective southern Mongolian magmatic belt which stretches through the South Gobi region of Mongolia as part of the Gold, Copper and Molybdenum porphyry system. Gobi Minerals Lease is located within a sequence of Devonian rocks in the geological Gurvansayhan Terrane; part of a large arc system that extends from western China through north-eastern Mongolia. This terrane hosts other similar South Gobi porphyry deposits, including Oyu Tolgoi and Tsagaan Suvarga which is an adjacent property to Gobi Minerals Lease. The porphyry system at Gobi Minerals Lease is emplaced in a mature volcanic arc environment and features of not only porphyry type mineralisation but also of related high-sulphidation copper-gold mineralising systems similar to Oyu Tolgoi. • Lithologies occur in the east portion that comprise a thick succession of northeast trending

exposures of Late Carboniferous to Permian volcanics, Volcanclastics, sedimentary rocks and granitoid intrusives.

• These lithologies are similar to the Tsagaan Suvarga host of the gold and base-metals mineralisation.

 • A series of sub-parallel east to northeast trending faults crosscut by northeast to northwest

transverse faults transect the Gobi Mineral Lease. These cross cutting faults are situated within the northeast trending fault corridor hosting the Tsagaan Suvarga Copper –Gold - Molybdenum deposit. A major east-west trending fault transects those faults above in the north portion of the license.  

 

• Anomalous gold and base metal mineralisation identified at Ulaan Del Ovoo is associated with quartz-hematite veins and zones of strong to intense silicification centred on several breccia bodies. The multiphase breccias are texturally diverse, and show gradational variations between monomictic, clast-supported facies through to polymictic, poorly sorted matrix-supported facies.  

• At the Maanit Ovoo prospect, the mineralisation is associated with mesothermal-style

sheeted quartz-sulphide veins hosted in the hornfels, oxidized andesite and rare gossans. The veins are associated with intense pervasive chlorite-epidote-biotite-scricitc-actinolite alteration halos.

• The Maanit Ovoo prospect is hosted in the same volcano-plutonic complex as the Tsagaan Survarga porphyry copper - molybdenum deposit.  

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It has been concluded that the Gobi Minerala Lease holds an exciting potential and warrants further exploration to define this potential.

20.0 RECOMMENDATIONS Dr. Earl W. Abbott has reviewed the historic geological information produced by the Russian and Mongolian geologist along with the geological information obtained from IMMI and recommends that further exploration programmes be implemented to explore and define the potential of the Gobi Minerals Lease. Furthermore, Dr. Earl W. Abbott supports the de-risking exploration programme approach and associated budget as established by CICG for the next phase of exploration on the Gobi Minerals Lease. The data and technical opinions offered in this report are current as of 22 January 2016. DR. EARL W. ABBOTT

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REFERENCES GEODYNAMICS AND METALLOGENY OF THE CENTRAL EURASIAN PORPHYRY AND RELATED EPITHERMAL MINERAL SYSTEMS: A REVIEW Reimar Seltmann , T. Mike Porter , Franco Pirajno GEOPHYSICAL AND GEOCHEMICAL NATURE OF RELAMINATED ARC-DERIVED LOWER CRUST UNDERNEATH OCEANIC DOMAIN IN SOUTHERN MONGOLIA Alexandra Guy, Karel Schulmann Vojtěch Janoušek, Pavla Štípská, Robin Armstrong, Elena Belousova, Alla Dolgopolova, Reimar Seltmann, Ondrej Lexa, Yingde Jiang, and Pavel Hanž GEOPHYSICAL CONSTRAINTS FOR TERRANE BOUNDARIES IN SOUTHERN MONGOLIA Alexandra Guy1, Karel Schulmann, Marc Munschy, Jean-Marc Miehe, Jean-Bernard Edel, Ondrej Lexa, and Derek Fairhead GROUNDWATER ASSESSMENT OF THE SOUTHERN GOBI REGION THE WORLD BANK April 2010  LATE PALEOZOIC–MESOZOIC TECTONIC EVOLUTION OF THE TRANS-ALTAI AND SOUTH GOBI ZONES IN SOUTHERN MONGOLIA BASED ON STRUCTURAL AND GEOCHRONOLOGICAL DATA. Alexandra Guy, Karel Schulmann, Norbert Clauer, Pavlina Hasalová, Reimar Seltmann , Robin Armstrong, Ondrej Lexa, Antonio Benedicto LATE TRIASSIC SINISTRAL SHEAR IN THE EAST GOBI FAULT ZONE, MONGOLIA Laura E. Webb, Cari L. Johnson , Chuluun Minjin PACIFIC RIM EPITHERMAL Au-Ag Greg Corbett SEDIMENTARY RECORD AND TECTONIC IMPLICATIONS OF MESOZOIC RIFTING IN SOUTHEAST MONGOLIA S.A. Graham SOUTHERN GOBI REGIONAL ENVIRONMENTAL ASSESSMENT THE WORLD BANK March 2009 TECTONIC OVERVIEW OF MONGOLIA G. Badarch, Institute of Geology and Mineral Resources, Mongolian Academy of Science THE DYNAMIC EVOLUTION OF THE PALAEOZOIC GEOGRAPHY OF EASTERN ASIA L. Robin M. Cocks , Trond H. Torsvik THE GEOLOGY, STRUCTURE AND MINERALISATION OF THE OYU TOLGOI PORPHYRY COPPER-GOLD-MOLYBDENUM DEPOSITS, MONGOLIA: A REVIEW T.M. (Mike) Porter

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EXPLORATION LEASE DOCUMENTATION