JSC “SiGMA” - an example of successful development of the gold project "Ozernovskoye" (Kamchatka, Russia) Dmitry S. Prjibelski, CFO, Managing Partner
Disclaimer D ISCLAIMER The purpose of this Memorandum is to inform and help the recipient decide whether to investigate and evaluate further the activities of the OJSC SiGMA and its affiliates (hereinafter referred to as “the Company” or “the Group”) and should not serve as the basis for taking any investment decisions or the decision to acquire stake in the Company’s equity capital without further analysis (due diligence). The fact that this Memorandum is prepared and disseminated should not be regarded as a guarantee of a subsequent sale of a stake in the equity capital of the Company. Information in the form of facts and/or estimates submitted by the Company and contained in this Memorandum was not subject to independent verification by Z1 INVESTMENT GROUP. Such information shall not be regarded as comprehensive and exhaustive. OJSC SiGMA and Z1 INVESTMENT GROUP cannot guarantee and shall not be held liable for the completeness and reliability of the Memorandum, or for any information transferred subsequently in verbal or written form to the Recipient of the Memorandum or its consultant. Specifically, OJSC SiGMA and Z1 INVESTMENT GROUP cannot guarantee and shall not be held liable for the fulfillment or attainment of any forecasts relating to the future indicators of the Company’s activities, nor for the reliability of any admissions and assumptions which were directly or indirectly used in compiling forecasts for future indicators of the Company’s performance. Certain statements, beliefs and opinions in this document, are forward-looking, which reflect the Company’s or, as appropriate, the Company’s management’s current expectations and projections about future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements contained in this document regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. OJSC SiGMA and Z1 INVESTMENT GROUP does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or other wise. You should not place undue reliance on forward-looking statements, which speak only as of the date of this document. The recipient of this Memorandum should, if appropriate, conduct due diligence and evaluate the information provided on the activities of OJSC SiGMA independently. OJSC SiGMA reserves the right, in its sole discretion, to modify any of the information provided herein, or without prior notice and for reasonable cause therefore, to decide not to proceed with any transaction. Neither OJSC SiGMA nor any of their agents, representatives, advisors or consultants will be liable or responsible to any person for any cost or expense incurred in responding to the Investment or in any investigation or transaction, whether or not consummated, which may follow. This document does not constitute an offer to sell or solicitation of an offer to buy any security or shares, nor does it constitute an offer to sell or a solicitation of an offer to buy any security or share in any jurisdiction in which such an offer, solicitation or sale is not authorized, or to any person to whom it is unlawful to make such an offer, sale or solicitation. This document and its contents are confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose. By attending the presentation to which this document relates or by accepting this document you will be taken to have represented, warranted and undertaken that you have read and agree to comply with the contents of this notice; you will use the information in this document solely for evaluating your possible interest in the Investment Opportunity and for no other purpose. 2
Summary I NVESTMENT S UMMARY 3.35 M oz Au / 104.1 t contained at average grade of 2 g/t (M,I&I), according to Substantial Independent NI43-101 compliant Report - Technical Due Diligence & Resource Estimate Resources Over 8 M oz / 250 t total upside potential expected Significant Upside Upside in run-of-mine grades and reserves because of bonanza dissemination (grades > Potential 100 g/t) Intensive geological exploration, infrastructure development Intensive A number of finished steps: metallurgical tests and extraction technology, road construction Development project, geological audit and NI 43-101 report, FS preparation by Q2 2013 Open pit mining with relatively low strip ratio Technology Carbon-in-leach recovery method (recovery ~ 90%) Management with up to 25 years experience in gold sector Management & Main shareholder with access to substantial funds, connections and business experience Shareholder Start of production in 2015 with 60 K oz per year, expansion to 130 K oz per year in 2017 Production Targets and to ~300 K oz per year by 2018-19. Building up a company with total reserves exceeding 9 M oz, annual production of about Target 300 K oz and market cap of more than USD 2 bn . 3
COMPANY OVERVIEW
General Overview C OMPANY O VERVIEW In March 2010 was acquired by current shareholders. Head-office located in Saint-Petersburg, main branch in Petropavlovsk-Kamchatsky. In that time no official reserves according to At present, exploration works are in full swing, front-end international or Russian classification engineering and design works are being carried out, operating New shareholders provided financing and resumed procedures are being clarified, infrastructure facilities are being RUSSIAN FEDERATION exploration works in 2010, which had been shipped in and set up temporarily suspended by previous owners. Equipment, trenching tools and drilling facilities have been Main and the only project – Ozernovskoe. License delivered to the field. awarded on state public auction in 2005. Since March 2010 current shareholders invested more than $55 million in JSC Sigma, mostly in exploration and project design Head Office: Ozernovskoe Saint-Petersburg Minefield Main Branch: Petropavlovsk-Kamchatsky RUSSIAN FEDERATION 5
Ozernovskoe Ore field Timeline P ROJECT T IMELINE Current Ownership Structure* Exploration Prospecting and carried out by evaluation carried previous 1.2M oz Au JORC 3.35 M oz Au out by CKEE GGP owners of OJSC Exploration resources NI43-101 “Kamchatgeologia” SiGMA carried out by confirmed resources (UFG Private CJSC Palamos confirmed Equity) Over $55 mm invested exploration and development) March September 4Q 2013- 1987 1992 1997 1998 2005 2006 2008 2011 2010 2012 2012 2014 OJSC SiGMA Sigma acquired Further exploration (2012- acquired the by current 2014) license to shareholders Ozernovskoe field Zero official Factory construction (2013- From the state resources 2014) and start of auction production (2015) 6
PROJECT OVERVIEW - OZERNOVSKOE
Resources of the most explored zones R ESOURCE B ASE Due Diligence and NI 43-101 estimation of 2010 Total Resources (M,I & I), oz resources was done jointly by Micromine 3.3 m + 0.3m + Consulting Services (Australia) and TOMS 3.0 m Engineering (Russian leading consulting firm). + 1.8m + 1.2 m 2011 resource update and 2012 NI 43-101 were Dec 2010 Dec 2011 Sept 2012 performed by international consulting Resources, Measured & Indicated, oz company CSA Global Pty Ltd (CSA, Australia). 2.3 m + + 1.0m During operational exploration, concurrent with 1.3 m open pit mining, it is expected to spot many rich + 0.8m + 0.5 m and bonanza ore spots , lenses and shoots, which are common for this type of deposit. As a result, Dec 2010 Dec 2011 Sept 2012 run-of-mine grades are expected increase. GEOLOGICAL AUDIT 1st HALF OF 2012 г. COG Au_cut, Au, Au_cut, Au, g/t g/t Koz Koz Measured 2,50 3,14 459,00 576,94 Total NI43-101 resources as of the 1st half of 2012 Indicated 1,70 2,02 1 860,00 2 216,82 0,6 are confirmed at the level 3.35 M oz / 104.1 t Inferred 1,53 1,67 1 028,00 1 119,97 Total: 1,72 2,01 3 347,00 3 913,74 gold with average grade 2 g/t (reduction of Measured 3,26 4,19 415,00 532,74 nugget grades) Indicated 2,49 3,10 1 465,00 1 821,82 1,0 Inferred 2,23 2,50 776,00 868,58 0.46 M oz/14.3 t - measured Total: 2,50 3,03 2 656,00 3 223,14 Measured 4,94 6,70 330,00 447,47 1.86 M oz / 41.5 t – indicated Indicated 4,39 6,03 947,00 1 300,14 2,0 Inferred 4,71 5,77 411,00 504,06 1.03 M oz / 52.7 t – inferred Total: 4,57 6,09 1 688,00 2 251,68 Measured 6,45 9,25 268,00 384,39 Indicated 6,54 9,88 676,00 1 021,01 3,0 Inferred 8,32 10,96 289,00 380,18 Total: 6,86 9,94 1 233,00 1 785,59 8
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