Mr. Walter Henry reports
FRONTLINE ACQUIRES FULLY PERMITTED KEBAN AND KAMBERTEPE TAILING PROJECTS
On March 29, 2016, through its tender process agent, AHSA Muh. Mut. ins Mad San Tic Ltd. Sti (AHSA), Frontline Gold Corp. was awarded and purchased both the fully permitted Keban and Kambertepe tailings projects, which are both located in the Elazig province of Turkey in the central-east Anatolia region.
The acquisition includes the following.
1) The Keban tailings project, approximately 45 kilometres from the city of Elazig, is fully permitted and includes the exclusive rights to process a minimum 114,000 tonnes of mineralized milled tailings stored in two areas within the property boundary.
An independent comprehensive report, including a metallurgical assessment of the mineralized tailings, was completed by Dr. Sasmaz, PhD, geologist, Firat University, dated June, 2015. Per the report, 40 assay samples were collected at Keban and assays completed, for 34-element ICP-MS analysis, by Bureau Veritas Mineral Laboratories out of Vancouver, Canada, on behalf of the Firat University and its report. According to the assayed analysis by Bureau Veritas, the assays averaged 1.78 grams per tonne gold, 96 grams per tonne silver, 2.94 per cent per tonne lead and 0.63 per cent per tonne zinc.
2) The Kambertepe tailings project, approximately 100 kilometres from the city of Elazig, includes the exclusive rights to process approximately up to 6,000 tonnes of mineralized tailings, with the following average grades per tonne of tailings noted: 2.1 per cent copper, 21 grams per tonne silver, 1.9 per cent zinc, 0.5 per cent titanium and over 50 per cent iron.
Kambertepe tailings excavating and transport are to begin in the next 15 days and are scheduled to be completed approximately two weeks following the start of operations.
Commentary
Walter Henry, president and chief executive officer of Frontline, commented: "We feel very fortunate to have secured these two opportunities. With both projects being fully permitted, with all the assay work done by both Acme and Agat labs in Canada, it is an excellent opportunity for Frontline to become cash flowing within the next 60 days. Additionally, because of the transportation agreement that we signed (details provided [in this press release]) and the way we have been to able to structure the payment terms of the tailing projects and the processing agreements, we have created an opportunity to become cash flowing in the very near term given the challenging environment for rising exploration funds.
"Cash flow will enable us to: 1) organically advance our other projects in Turkey, Mali and in Red Lake; 2) allow Frontline to capitalize on the other great tailings opportunities that are available in the surrounding region; 3) capitalize on strategic opportunities in the mining sector; and 4) subject to regulatory approval, seek alternatives to restructuring Frontline's capital structure."
Acquisition terms
The terms of the tender agreements require Frontline to pay the following each tailing project:
- Keban -- the payment of 2.55 million Turkish lira, approximately $1.2-million, payable over a 12-month period;
-
Kambertepe -- the payment of 80,000 Turkish lira, approximately $37,000, payable over a 12-month period.
Historical mining conducted at Keban tailings project
The Keban tailings project is the site of an old lead-zinc-silver mine, where, between 1940 and 1983, nearly 800,000 tonnes of ore were mined and lead, zinc and silver recovered by flotation with tailings of possibly 200,000 to 300,000 tonnes being dumped into the Firat (Euphrates) River. Frontline's sole focus will be the processing of only the land-based tailings.
About the Keban property
The Keban property is approximately 50 kilometres from centre of the Elazig city. The Keban tailings have been stored in two different locations (KA and KY) within the Keban property boundary. The total area of tailings is approximately 5,660 square metres. According to drilling of the tailings area completed as per the independent Firat University report on the Keban tailings, the average depth of the KY area calculated from eight drill holes is 6.5 metres and the average depth of the KA area calculated from three drill holes is 1.6 metres.
Keban tailings assays
The attached table is a summary of the assayed results for gold, silver, lead, copper and zinc. Note that, out of the 40 assayed samples, 12 assays show gold of over 2.5 grams per tonne, with the highest gold assay over 3.7 grams per tonne. In addition to the significant gold assays, there were significant silver and lead assays noted.
Assay ID Au Ag Pb Zn
(g/t) (g/t) (%/t) (%/t)
KY-1 1.834 73 1.70% 0.31%
KY-2 1.411 48 1.17% 1.78%
KY-3 1.795 180 5.26% 0.12%
KY-4 3.221 152 3.64% 0.50%
KY-5 2.659 300 7.04% 0.24%
KY-6 3.244 101 2.49% 0.43%
KY-7 3.754 300 8.79% 0.16%
KY-8 0.924 71 1.64% 0.37%
KY-9 1.974 93 2.01% 0.77%
KY-10 0.456 55 1.46% 0.88%
KY-11 0.631 42 0.92% 0.45%
KY-12 0.676 55 1.41% 5.38%
KY-13 1.158 108 2.79% 0.00%
KY-14 0.193 10 0.26% 1.49%
KY-15 1.595 94 2.29% 0.55%
KY-16 1.341 300 10.00% 0.53%
KY-17 0.444 28 0.65% 0.18%
KY-18 3.206 107 2.46% 0.19%
KY-19 1.295 216 4.94% 4.39%
KY-20 2.659 251 6.95% 0.81%
KY-21 1.071 154 4.68% 1.29%
KA-1 1.121 62 1.40% 0.93%
KA-2 1.955 81 1.54% 0.15%
KA-3 1.504 67 1.33% 0.39%
KA-4 1.742 47 1.16% 0.14%
KA-5 2.658 171 5.25% 0.59%
KA-6 2.477 139 3.46% 0.08%
KA-7 2.704 169 3.81% 0.04%
KA-8 3.474 153 3.32% 0.05%
KA-9 0.458 22 0.49% 0.07%
KA-10 1.952 102 2.27% 0.25%
KA-11 2.041 110 2.41% 0.22%
KA-12 2.717 110 2.15% 0.08%
KA-13 1.29 56 1.36% 0.43%
KA-14 2.556 110 2.50% 0.25%
KA-15 2.59 88 1.61% 0.14%
KA-16 0.297 14 0.30% 0.13%
KA-17 1.117 46 0.97% 0.14%
KA-18 0.815 67 1.71% 0.25%
KA-19 2.011 100 2.14% 0.14%In support of its due diligence, Frontline had Agat Labs, based out of Mississauga, Ont., assay 12 samples the corporation had independently taken. The results are shown in the attached table.
Au Ag Pb Zn
(g/t) (g/t) (%/t) (%/t)
16-0106 AFS 2016-01 No. 1 2.83 129.0 2.52% 0.39%
16-0107 AFS 2016-01 No. 2 1.90 78.5 2.00% 0.38%
16-0107 AFS 2016-01 No. 3 2.97 142.0 4.06% 0.27%
16-0107 AFS 2016-01 No. 4 2.90 110.0 2.43% 0.26%
16-0107 AFS 2016-01 No. 5 3.24 150.0 3.53% 0.37%
16-0107 AFS 2016-01 No. 6 1.54 55.5 1.31% 0.27%
16-0107 AFS 2016-01 No. 7 2.10 64.0 1.37% 0.16%
16-0107 AFS 2016-01 No. 8 1.87 77.4 2.64% 1.24%
16-0107 AFS 2016-01 No. 9 2.59 97.7 2.61% 0.42%
16-0107 AFS 2016-01 No. 10 2.49 90.1 2.28% 0.35%
16-0107 AFS 2016-01 No. 11 0.57 41.0 0.94% 0.67%
16-0107 AFS 2016-01 No. 12 0.84 59.5 1.44% 2.93%
Keban tailing processing
Frontline is in final negotiations with a processing company which is proposing toll processing at its existing plant approximately 80 kilometres away, with tank leaching in cyanide so only gold and silver would be recovered and lead would be reported to waste (it is possible this could be recovered by flotation/gravity in another circuit). The processing cost is $10 (U.S.) per tonne.
Keban tailing production timeline
The tailings production schedule is approximately 18 months, with average daily tailings excavation ranging from 250 tonnes to 400 tonnes per day. The excavating and transportation costs per tonne are approximately $17.75 (U.S.) per tonne.
Frontline has entered into an excavating and transportation agreement with AHSA, which was the corporation's agent during the tender process.
Frontline has not completed the work required to verify the historical estimates mining estimates noted above and is not treating these historical estimates as being compliant with current standards under National Instrument 43-101, and, as such, these historical estimate should not be relied upon. Caution should be used when evaluating these resources as they were calculated prior to NI 43-101 existing and a qualified person has not done work to classify the historical estimate as a current mineral resource.
Frontline is actively searching for investors or partners in order to expedite to full tailings recovery at both the Keban and Kambertepe tailings projects. In addition, there is an opportunity to acquire additional tailing projects in the Elazig region. To contact Frontline, please call Mr. Henry at 416-414-5825 or visit the company's website.
The technical information herein was reviewed by Greg Isenor, PGeo, who acts as Frontline's qualified person, as defined by NI 43-101.
We seek Safe Harbor.
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