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Tethyan Resources entered into an option agreement over the Suva Ruda project in September 2016 (see press release dated 27th September 2016), currently owned by a Serbian private company Deep Reseach d.o.o. According to the option agreement, Tethyan holds the option to purchase 100% of the project at any time during an 8 year period for a EURO 6 million cash payment provided that Tethyan achieves certain exploration and payment milestones (discussed further in the ‘Option Agreement’ tab).

KEY FACTS

Location Southern Serbia, 240km south of Belgrade
Ownership Tethyan holds an exclusive Option for 100% purchase from Deep Research d.o.o. (private Serbian company)
License Area 87km2
Primary Targets Porphyry copper-gold, high-sulphidation gold, lead-zinc-silver veins
2016/2017 Drill Results Including RDD-001 - 567m @ 0.28% Cu and 0.45 g/t Au, AuEq 0.89 g/t
RDD-004 - 356m @ 0.38% Cu and 0.31 g/t Au, 0.90 g/t

REGIONAL SETTING

Situated in in the Vardar Metallogenic Belt, an extension of the renowned Trepca mining district, historically the Suva Ruda area has been mined for lead and zinc, beginning in Roman times as is evidenced by more than 130 pits, shafts and development drives, and more recently during the 20th Century as larger open pit operations. However, little exploration for porphyry copper and gold has occurred. More recently, the Tulare porphyry (Dundee Precious Metals: 523Mt @ 0.24% Cu & 0.23 g/t Au) and Skouries porphyry (Eldorado Gold: 568Mt @ 0.35% Cu & 0.47 g/t Au) deposits have been discovered in the same geological belt.

LOCAL SETTING

The Suva Ruda license occurs within an historical mining district and has excellent infrastructure. The town of Räska located near-by hosts a potential workforce and the area has abundant water and grid electricity. The area is also serviced by a railway with connections to ports located on the Adriatic Coast. In addition, the Serbian Government has declared porphyry copper-gold projects to have a high priority for development and any potential project is likely to receive strong governmental support.

Suva Ruda Regional Setting

SUVA RUDA LICENSE GEOLOGY AND PREVIOUS EXPLORATION

The Suva Ruda exploration license covers Jurassic serpentinite and Cretaceous andesitic volcanics intruded by Tertiary dacite stocks. There are four well-defined targets within the Suva Ruda exploration license:

  • A well-defined porphyry dacite stock with significant copper and gold mineralisation, named the ‘Rudnitza’ porphyry.
  • High-grade lead and zinc veins such as those mined historically and those on the periphery of the Rudnitza porphyry in the area known as ‘Karadak’
  • An early-stage epithermal/porphyry target to the north of the licence named ‘Kremic’ and;
  • ‘Semetes’ a potential lead and zinc target.
Suva Ruda License Geology

RUDNITZA PORPHRY TARGET

Located in the Municipality of Räska, 6km southeast of Räska town, Rudnitza has been defined as a copper-gold diorite porphyry system consisting of four porphyry magmatic intrusives. Three zones of mineralisation along with several overlapping zones of alteration have been identified through recent drilling. A relic potassic assemblage is present, often existing with a propylitic component or overwritten by intense sericitic alteration. Copper and gold grades are seen to be best where the potassic zone is preserved.

A well-developed lithocap with advanced argillic alteration hosts epithermal-style gold mineralisation in its upper portions at Rudnitza. Beneath this, a supergene chalcocite zone with copper grades up to 1.5% has been observed. Hypogene mineralisation below the supergene zone has been drilled to 600m depth and remains open at depth and in all directions. Tethyan is planning a significant drilling programme in 2018 to explore the porphyry system and work towards defining a maiden copper-gold mineral resources estimate.

HISTORIC DRILLING

Phelps Dodge located the Rudnitza porphyry stock in 2004 and drilled 7 widely spaced drill holes over an area of 1.2 kilometres by 0.8 kilometres. The holes were centred on a porphyry stock with outcropping quartz stockwork occurring over an area 500 metres by 450 metres surrounded by more widely spread phyllic and advanced argillic alteration with massive silica and alunite occurring over a broader area. Three of the drill holes were drilled into the quartz stockwork and underlying potassic core, the other 4 holes were drilled on the periphery of the stock into phyllic alteration. Generally, the holes were drilled to depths between 170 and 300 meters and did not test the porphyry at depth. The 3 holes drilled into the potassic core all intersected substantial mineralisation, (See Table 1), including drill hole PDRC 04-03, which intersected 144 metres @ 0.4% copper, 0.4 g/t gold from 100 metres and ended still in mineralisation. It should be noted that the Rudnitza porphyry outcrops as a hill which reaches up to an elevation 200 meters higher than the surrounding plain. Hence drill hole PDRC 04-03 only just intercepted the region defined by surrounding ground level, and hence any strip required in a future mining scenario will be substantially reduced.

The surface expression of the Rudnitza porphyry and initial drilling indicates that the exposed surface represents the upper portions of the mineralised system, as evidenced by an overlying, possibly high sulphidation, gold system in which drill hole PDRC 04-03 intercepted 100 meters of massive silica containing 0.4 g/t gold from surface. Thus potential exists for a heap-leach operation mining this oxide gold zone from above the main copper-gold porphyry below.

Drill Hole End Depth (m) From (m) To (m) Interval (m) Copper (%) Gold (g/t)
PDRC 04-01 171 5 170 165 0.2 0.2
PDRC 04-03 244 0 100 100 0.4
  100 244 144 0.4 0.4
PDRC 04-07 345 244 332 88 0.3 0.4

Table 1. Selected drill hole results from the Rudnitza porphyry, note that drill holes PDRC 04-01 and PDRC 04-03 drilled through a low grade gold mineralised silica cap from approximately 0 to 100 meters.

In addition to the porphyry type mineralisation identified, drill hole PDRC 04-04 which was drilled to the west of the porphyry intercepted significant lead-zinc mineralisation as shown in Table 2 below.

Drill Hole End Depth (m) From (m) To (m) Interval (m) Lead (%) Zinc (%) Silver (g/t)
PDRC 04-04 550 161 165 4 1.6 2.7 16
285 293 8 7.1 3.4 108
326 330 4 2.5 0.8 43
370 374 4 9.2 11.2 229
430 432 2 7.8 1.0 204
504 508 4 11.0 0.2 154

Table 2. Drill hole PDRC 04-04 results showing significant lead-zinc mineralisation existing at the periphery of the Rudnitza porphyry.

2016 / 2017 DRILL RESULTS

Results from Tethyan’s 2016 and 2017 drilling programmes at Rudnitza are shown in the table below:

Drill Hole ID Easting Northing Elevation (m) Dip Azimuth Total Depth (m) From (m) To (m) Length (m) Copper Grade (%) Gold Grade (g/t)
RDD-001 473,927 4,787,653 604 -85 136 584.6 0 567 567 0.28 0.45
including 122 158 36 1.22 0.38
RDD-002 474,022 4,787,637 622 -76 165 461.8 6 74 68 0.11 0.23
including 98 320 222 0.24 0.27
354 440 86 0.16 0.30
RDD-003 473,873 4,787,734 581 -60 140 710 42 327 285 0.31 0.33
including 102 118.7 16.7 1.55 0.20
657 695 38 0.14 0.27
RDD-004 474,005 4,787,752 592 -60 210 558.6 48 404 356 0.38 0.31
including 102 132 30 1.45 0.39
476 502 26 0.12 0.19
RDD-005 473,890 4,787,657 596 -65 30 535.7 6 266 260 0.22 0.20
including 116 128 12 0.78 0.13
  366 535.7 169.7 0.15
RDD-006 474,020 4,787,640 622 -80 325 500.6 0 460 460 0.21 0.20
including 92 112 20 1.04 0.20
RDD-007 473,816 4,787,670 577 -60 140 611.6 0 572 572 0.11 0.16
including 106 186 80 0.30 0.16
RDD-008 474,039 4,787,804 579 -60 210 479.7 138 479.7 341.7 0.17 0.24

The results of these drill holes have expanded the known extent of the Rudnitza porphyry system, and have returned long intervals of porphyry-style stockwork copper mineralisation hosted in multi-phase porphyritic dacite/diorite intrusions. The true widths of the drill intersections cannot be determined with the information available as mineralisation is disseminated throughout the large system.

GEOPHYSICS

A TITAN 24 geophysical survey was carried out by the Canadian company ‘Quantec Geoscience’ over the Rudnitza copper-gold porphyry target within the Suva Ruda licence during the summer of 2017. At the Suva Ruda project, the survey consisted of ten survey lines, each 2.4 kilometres long and 200 metres apart, covering the entire Rudnitza porphyry system where Tethyan have completed eight diamond drill holes to date.

The results are highly encouraging, showing a significant anomaly of coincident high chargeability and low resistivity, a common signature of porphyry systems, from a depth of approximately 300 metres below surface and extending more than 1,200 metres to the depth limit of the survey at 1,500 metres below surface.

Suva Ruda Geophysics

At approximately 400 metres below surface, the geophysical anomaly indicates the possibility of two porphyry centres, described as a ‘double-headed porphyry’, an interpretation which is supported by the two distinct copper-gold-molybdenum soil anomalies Tethyan has previously defined. From 600 metres below surface the geophysical anomaly combines into one large anomaly extending approximately 1,500 metres north to south, and 400 metres east to west, representing an exploration target of significant scale.

Diagrams representing these results, and showing the position of drilling relative to the anomalies, can be found on the following link at https://www.tethyan-resources.com/2017-11_geophysics/.

A high chargeability anomaly is typically interpreted to represent an elevated concentration of conductive sulphide minerals, which in the case of a porphyry target may be pyrite yet also copper-bearing minerals such as chalcopyrite and bornite. At the Rudnitza porphyry, Tethyan’s geologists have identified from drilling so far that copper and gold mineralisation is best developed where pyrite is the dominant sulphide mineral which in turn is closely associated with copper-bearing chalcopyrite and lesser bornite. In this survey, the chargeability level of the main anomaly is unusually high, often exceeding 70 milliradians and up to 120 milliradians, whereas the chargeability recorded in the area of Tethyan’s drilling to date is in the range of 30 to 60 milliradian

Suva Ruda Geophysics 2

ACHIEVED IN 2017

  • Completion of 8 diamond drill holes for a total of 4445.6 metres at the Rudnitza Copper-Gold porphyry target.
  • Mapping and soil sampling programmes completed at additional exploration targets within the Suva Ruda licence.
  • Completion of a TITAN 24 geophysical survey at the Rudnitza Copper-Gold porphyry target with encouraging results.
  • Early-stage exploration in potential new licences across Serbia.

TARGETED IN 2018

  • 5,000m drilling programme at Rudnitza commencing in March.
  • Advancement of the lead-zinc prospects and Kremic copper-gold prospect to scout drilling stage.
  • Initial metallurgical studies at Rudnitza.
  • Pending positive results, a second 10,000m drilling programme at Rudnitza commencing in Autumn.

Figures

Option Agreement

Under the terms of the Agreement Tethyan is entitled to purchase 100% of the License or Deep Research (at Tethyan’s discretion) for a cash payment of €6 million, plus a percentage of the eventual capital cost of building the mine (details set out below), at any time during the total duration of the License and any future extensions of the License (a minimum of 7 years from the date of the Agreement).

The decision whether or not to exercise the Option during this period is at the sole discretion of the Company. The percentage of the capital costs payable by Tethyan in relation to the building of the mine (the “CAPEX”), which will only become clear once a bankable feasibility study has been conducted over the License, will only become payable if Tethyan exercises the Option, secures the necessary financing and proceeds with the building of the mine. The percentage of these costs due to the shareholders of Deep Research will be calculated as follows:

  • 4% of CAPEX up to €200m;
  • 2% of CAPEX between €200 – 500m;
  • 1% of CAPEX in excess of €500m.

Pursuant to the terms of the Agreement, and in order to retain the Option, the Company will arrange to complete, at its sole discretion, the following work program on the License:

  • a minimum of 2,000m drilling before 28 December 2016;
  • a minimum of 5,000m additional drilling before 28 December 2018;
  • complete a preliminary economic assessment before the sixth anniversary of the date of the Agreement;
  • complete an economic feasibility study before the seventh anniversary of the Agreement.

The Company estimate that the full cost of the drilling programme to be completed by 28 December 2018 will be less than £500,000. The drilling programme can be stopped at any stage at the Company’s sole discretion. The purpose of the drilling programme is to assess the prospectivity of the License so that Tethyan can make an informed decision with regards to the exercise of the Option.

In order to satisfy the first requirement under the work programme Tethyan intends to start work immediately with respect to drilling 2,000 meters by 28 December 2016. Discussions have commenced with local drill contractors who have drill rigs standing-by to commence work. Land access is currently being assessed in order to allow for drilling during the next 3 years,

The Company will also make certain milestone payments, at its sole discretion, in order to retain the Option:

  • €100,000 by 1 March 2017;
  • €100,000 on each anniversary of the signing the Agreement up until the third year.

Tethyan Resources has executed an option agreement with Rockstone Group LLC (“RGS”) pursuant to which Tethyan can earn up to an 80% interest in the Gokcanica project licenses in Southern Serbia (“the Gokcanica Permits”).

The Gokcanica Permits consist of two adjoining permits with a combined area of 110km² located in southern Serbia, 5 km to the north of the town Josaniska Banja. The area is located within the 500 km² Rashka ore field. A Jurassic ophiolite sequence intruded and overlain by Tertiary andesitic volcanics and intermediate stocks covers the area. The board of Tethyan believes that good potential for porphyry and epithermal style mineralisation as well as deeper-level replacement base metal and gold deposits exists throughout the license.

Mining in the Gokcanica licence area dates back beyond contemporary records and is evidenced by many pits and shafts. Exploration from the 1970s focused on lead-zinc-silver veins. Euromax Resources Limited (“Euromax”) conducted exploration in the area from 2006 to 2008. Following this work a major copper company explored the area for porphyry copper mineralisation in 2014-2015.

Euromax completed a detailed mapping and soil geochemistry program over a 6 km long zone of phyllic to argillic altered andesite volcanics and intrusives with abundant ancient mine workings. Drilling at the northern end of this trend by Euromax intersected multiple gossan and massive sulphide intervals, one of which reported 12.4 metres at 1.5% copper, 1.4% lead, 0.8% zinc, 62 g/t silver and 1.6 g/t gold. This program also defined a 3 km by 2 km magmatic complex at the southern end of the trend which remains undrilled.

A major copper company followed-up this work on the large zone of phyllic to argillic alteration, which measures 6 km by 3 km wide, indicating the potential for a porphyry copper gold deposit. They identified a coincident Cu-Mo soil anomaly within this alteration. However after drilling 6 holes the major copper company did not locate the source of this Cu-Mo anomalism. In addition the phyllic alteration occurs within altered andesites immediately above an unconformity contact with the ophiolite basement. This is a classic contact zone for porphyry copper deposits to form, for example the Resk Project (700 million ton @ 0.7 % Cu, 0.3 g/t Au) in Hungary forms at an unconformity contact between basement and overlying altered volcanics.

More recent prospecting work has located a number of arsenopyrite and pyrite rich veins which outcrop over a 200 meter strike length, can be up to 20 meters wide, and with individual assays up to 67 g/t gold. Detailed channel sampling has not been completed on this zone and it has not been drilled. Tethyan plans to focus initial exploration on these zones for a potential high grade gold target. Exploration will consist of geological mapping, rock chip sampling, trenching and drilling.

With large areas of alteration and many undrilled gossan zones rich in precious metals we feel confident in moving the project forward to the drill stage and with the aim of discovering a significant gold deposit. Much of the previous work has been targeted at base metal veins and porphyry copper deposits and may therefore have overlooked the potential for significant gold mineralisation. The district as a whole is very under explored and previous exploration has mainly focussed on base metals and the Tethyan Resources management therefore feels that we can bring our gold exploration expertise to bear.

Currently Tethyan Resources is developing a regional deposit targeting framework to focus exploration on highly prospective and under explored areas of the Balkans region of Eastern Europe

The Balkans region is under explored as it has seen relatively little serious exploration since the 1980s when the former Soviet Union ceased geological exploration. Since this time technology has improved in both exploration and mining techniques which allows for exploration under cover and development of lower grade deposits previously considered uneconomic and of little interest.

The region is highly mineralised and proven to host world class deposits, importantly opportunity still exists to acquire exploration tenements over and around known mineralisation, a setting proven to be favourable for new discoveries year on year. Currently Tethyan Resources is developing a regional deposit targeting framework to focus exploration on the most prospective and under explored areas of the Balkans and is actively reviewing project opportunities in Serbia and Macedonia.

Conducting exploration in the Balkans where there is such a rich history of mining is an exciting task.

Southern and Central Europe has one of the oldest mining industry in the world. There is evidence of copper mining by the Cretians since the 5th millennium BC in Serbia, Romania and Bulgaria. From the 2d century AD, the Romans obtained gold from the Balkans, in particular in the Carpathian. Two of the oldest copper mines in Europe come from the Balkans.

The main one in Serbia is the Rudna Glava belonging to the Vinča culture. The discovery of these mines have changed the thinking of the Neolithic and the Chalcolithic periods of European history by pushing back European usage of copper by a thousand years or more.

Modern, industrialised mining was started by the Austrians and by the 20th Century the copper mines of Bor in Serbia and the Trepca lead complex in what is now Kosovo were among the largest operations of their kind in Europe. However this proud tradition of mining was dramatically interrupted by the breakup of Yugoslavia, the ensuing civil war and international economic sanctions. Today there is a momentum to carry exploration in this promising region.

SUVA RUDA PROJECT

Tethyan Resources entered into an option agreement over the Suva Ruda project in September 2016 (see press release dated 27th September 2016), currently owned by a Serbian private company Deep Reseach d.o.o. According to the option agreement, Tethyan holds the option to purchase 100% of the project at any time during an 8 year period for a EURO 6 million cash payment provided that Tethyan achieves certain exploration and payment milestones (discussed further in the ‘Option Agreement’ tab).

KEY FACTS

Location Southern Serbia, 240km south of Belgrade
Ownership Tethyan holds an exclusive Option for 100% purchase from Deep Research d.o.o. (private Serbian company)
License Area 87km2
Primary Targets Porphyry copper-gold, high-sulphidation gold, lead-zinc-silver veins
2016/2017 Drill Results Including RDD-001 - 567m @ 0.28% Cu and 0.45 g/t Au, AuEq 0.89 g/t
RDD-004 - 356m @ 0.38% Cu and 0.31 g/t Au, 0.90 g/t

REGIONAL SETTING

Situated in in the Vardar Metallogenic Belt, an extension of the renowned Trepca mining district, historically the Suva Ruda area has been mined for lead and zinc, beginning in Roman times as is evidenced by more than 130 pits, shafts and development drives, and more recently during the 20th Century as larger open pit operations. However, little exploration for porphyry copper and gold has occurred. More recently, the Tulare porphyry (Dundee Precious Metals: 523Mt @ 0.24% Cu & 0.23 g/t Au) and Skouries porphyry (Eldorado Gold: 568Mt @ 0.35% Cu & 0.47 g/t Au) deposits have been discovered in the same geological belt.

LOCAL SETTING

The Suva Ruda license occurs within an historical mining district and has excellent infrastructure. The town of Räska located near-by hosts a potential workforce and the area has abundant water and grid electricity. The area is also serviced by a railway with connections to ports located on the Adriatic Coast. In addition, the Serbian Government has declared porphyry copper-gold projects to have a high priority for development and any potential project is likely to receive strong governmental support.

Suva Ruda Regional Setting

SUVA RUDA LICENSE GEOLOGY AND PREVIOUS EXPLORATION

The Suva Ruda exploration license covers Jurassic serpentinite and Cretaceous andesitic volcanics intruded by Tertiary dacite stocks. There are four well-defined targets within the Suva Ruda exploration license:

  • A well-defined porphyry dacite stock with significant copper and gold mineralisation, named the ‘Rudnitza’ porphyry.
  • High-grade lead and zinc veins such as those mined historically and those on the periphery of the Rudnitza porphyry in the area known as ‘Karadak’
  • An early-stage epithermal/porphyry target to the north of the licence named ‘Kremic’ and;
  • ‘Semetes’ a potential lead and zinc target.
Suva Ruda License Geology

RUDNITZA PORPHRY TARGET

Located in the Municipality of Räska, 6km southeast of Räska town, Rudnitza has been defined as a copper-gold diorite porphyry system consisting of four porphyry magmatic intrusives. Three zones of mineralisation along with several overlapping zones of alteration have been identified through recent drilling. A relic potassic assemblage is present, often existing with a propylitic component or overwritten by intense sericitic alteration. Copper and gold grades are seen to be best where the potassic zone is preserved.

A well-developed lithocap with advanced argillic alteration hosts epithermal-style gold mineralisation in its upper portions at Rudnitza. Beneath this, a supergene chalcocite zone with copper grades up to 1.5% has been observed. Hypogene mineralisation below the supergene zone has been drilled to 600m depth and remains open at depth and in all directions. Tethyan is planning a significant drilling programme in 2018 to explore the porphyry system and work towards defining a maiden copper-gold mineral resources estimate.

HISTORIC DRILLING

Phelps Dodge located the Rudnitza porphyry stock in 2004 and drilled 7 widely spaced drill holes over an area of 1.2 kilometres by 0.8 kilometres. The holes were centred on a porphyry stock with outcropping quartz stockwork occurring over an area 500 metres by 450 metres surrounded by more widely spread phyllic and advanced argillic alteration with massive silica and alunite occurring over a broader area. Three of the drill holes were drilled into the quartz stockwork and underlying potassic core, the other 4 holes were drilled on the periphery of the stock into phyllic alteration. Generally, the holes were drilled to depths between 170 and 300 meters and did not test the porphyry at depth. The 3 holes drilled into the potassic core all intersected substantial mineralisation, (See Table 1), including drill hole PDRC 04-03, which intersected 144 metres @ 0.4% copper, 0.4 g/t gold from 100 metres and ended still in mineralisation. It should be noted that the Rudnitza porphyry outcrops as a hill which reaches up to an elevation 200 meters higher than the surrounding plain. Hence drill hole PDRC 04-03 only just intercepted the region defined by surrounding ground level, and hence any strip required in a future mining scenario will be substantially reduced.

The surface expression of the Rudnitza porphyry and initial drilling indicates that the exposed surface represents the upper portions of the mineralised system, as evidenced by an overlying, possibly high sulphidation, gold system in which drill hole PDRC 04-03 intercepted 100 meters of massive silica containing 0.4 g/t gold from surface. Thus potential exists for a heap-leach operation mining this oxide gold zone from above the main copper-gold porphyry below.

Drill Hole End Depth (m) From (m) To (m) Interval (m) Copper (%) Gold (g/t)
PDRC 04-01 171 5 170 165 0.2 0.2
PDRC 04-03 244 0 100 100 0.4
  100 244 144 0.4 0.4
PDRC 04-07 345 244 332 88 0.3 0.4

Table 1. Selected drill hole results from the Rudnitza porphyry, note that drill holes PDRC 04-01 and PDRC 04-03 drilled through a low grade gold mineralised silica cap from approximately 0 to 100 meters.

In addition to the porphyry type mineralisation identified, drill hole PDRC 04-04 which was drilled to the west of the porphyry intercepted significant lead-zinc mineralisation as shown in Table 2 below.

Drill Hole End Depth (m) From (m) To (m) Interval (m) Lead (%) Zinc (%) Silver (g/t)
PDRC 04-04 550 161 165 4 1.6 2.7 16
285 293 8 7.1 3.4 108
326 330 4 2.5 0.8 43
370 374 4 9.2 11.2 229
430 432 2 7.8 1.0 204
504 508 4 11.0 0.2 154

Table 2. Drill hole PDRC 04-04 results showing significant lead-zinc mineralisation existing at the periphery of the Rudnitza porphyry.

2016 / 2017 DRILL RESULTS

Results from Tethyan’s 2016 and 2017 drilling programmes at Rudnitza are shown in the table below:

Drill Hole ID Easting Northing Elevation (m) Dip Azimuth Total Depth (m) From (m) To (m) Length (m) Copper Grade (%) Gold Grade (g/t)
RDD-001 473,927 4,787,653 604 -85 136 584.6 0 567 567 0.28 0.45
including 122 158 36 1.22 0.38
RDD-002 474,022 4,787,637 622 -76 165 461.8 6 74 68 0.11 0.23
including 98 320 222 0.24 0.27
354 440 86 0.16 0.30
RDD-003 473,873 4,787,734 581 -60 140 710 42 327 285 0.31 0.33
including 102 118.7 16.7 1.55 0.20
657 695 38 0.14 0.27
RDD-004 474,005 4,787,752 592 -60 210 558.6 48 404 356 0.38 0.31
including 102 132 30 1.45 0.39
476 502 26 0.12 0.19
RDD-005 473,890 4,787,657 596 -65 30 535.7 6 266 260 0.22 0.20
including 116 128 12 0.78 0.13
  366 535.7 169.7 0.15
RDD-006 474,020 4,787,640 622 -80 325 500.6 0 460 460 0.21 0.20
including 92 112 20 1.04 0.20
RDD-007 473,816 4,787,670 577 -60 140 611.6 0 572 572 0.11 0.16
including 106 186 80 0.30 0.16
RDD-008 474,039 4,787,804 579 -60 210 479.7 138 479.7 341.7 0.17 0.24

The results of these drill holes have expanded the known extent of the Rudnitza porphyry system, and have returned long intervals of porphyry-style stockwork copper mineralisation hosted in multi-phase porphyritic dacite/diorite intrusions. The true widths of the drill intersections cannot be determined with the information available as mineralisation is disseminated throughout the large system.

GEOPHYSICS

A TITAN 24 geophysical survey was carried out by the Canadian company ‘Quantec Geoscience’ over the Rudnitza copper-gold porphyry target within the Suva Ruda licence during the summer of 2017. At the Suva Ruda project, the survey consisted of ten survey lines, each 2.4 kilometres long and 200 metres apart, covering the entire Rudnitza porphyry system where Tethyan have completed eight diamond drill holes to date.

The results are highly encouraging, showing a significant anomaly of coincident high chargeability and low resistivity, a common signature of porphyry systems, from a depth of approximately 300 metres below surface and extending more than 1,200 metres to the depth limit of the survey at 1,500 metres below surface.

Suva Ruda Geophysics

At approximately 400 metres below surface, the geophysical anomaly indicates the possibility of two porphyry centres, described as a ‘double-headed porphyry’, an interpretation which is supported by the two distinct copper-gold-molybdenum soil anomalies Tethyan has previously defined. From 600 metres below surface the geophysical anomaly combines into one large anomaly extending approximately 1,500 metres north to south, and 400 metres east to west, representing an exploration target of significant scale.

Diagrams representing these results, and showing the position of drilling relative to the anomalies, can be found on the following link at https://www.tethyan-resources.com/2017-11_geophysics/.

A high chargeability anomaly is typically interpreted to represent an elevated concentration of conductive sulphide minerals, which in the case of a porphyry target may be pyrite yet also copper-bearing minerals such as chalcopyrite and bornite. At the Rudnitza porphyry, Tethyan’s geologists have identified from drilling so far that copper and gold mineralisation is best developed where pyrite is the dominant sulphide mineral which in turn is closely associated with copper-bearing chalcopyrite and lesser bornite. In this survey, the chargeability level of the main anomaly is unusually high, often exceeding 70 milliradians and up to 120 milliradians, whereas the chargeability recorded in the area of Tethyan’s drilling to date is in the range of 30 to 60 milliradian

Suva Ruda Geophysics 2

ACHIEVED IN 2017

  • Completion of 8 diamond drill holes for a total of 4445.6 metres at the Rudnitza Copper-Gold porphyry target.
  • Mapping and soil sampling programmes completed at additional exploration targets within the Suva Ruda licence.
  • Completion of a TITAN 24 geophysical survey at the Rudnitza Copper-Gold porphyry target with encouraging results.
  • Early-stage exploration in potential new licences across Serbia.

TARGETED IN 2018

  • 5,000m drilling programme at Rudnitza commencing in March.
  • Advancement of the lead-zinc prospects and Kremic copper-gold prospect to scout drilling stage.
  • Initial metallurgical studies at Rudnitza.
  • Pending positive results, a second 10,000m drilling programme at Rudnitza commencing in Autumn.

Figures

Option Agreement

Under the terms of the Agreement Tethyan is entitled to purchase 100% of the License or Deep Research (at Tethyan’s discretion) for a cash payment of €6 million, plus a percentage of the eventual capital cost of building the mine (details set out below), at any time during the total duration of the License and any future extensions of the License (a minimum of 7 years from the date of the Agreement).

The decision whether or not to exercise the Option during this period is at the sole discretion of the Company. The percentage of the capital costs payable by Tethyan in relation to the building of the mine (the “CAPEX”), which will only become clear once a bankable feasibility study has been conducted over the License, will only become payable if Tethyan exercises the Option, secures the necessary financing and proceeds with the building of the mine. The percentage of these costs due to the shareholders of Deep Research will be calculated as follows:

  • 4% of CAPEX up to €200m;
  • 2% of CAPEX between €200 – 500m;
  • 1% of CAPEX in excess of €500m.

Pursuant to the terms of the Agreement, and in order to retain the Option, the Company will arrange to complete, at its sole discretion, the following work program on the License:

  • a minimum of 2,000m drilling before 28 December 2016;
  • a minimum of 5,000m additional drilling before 28 December 2018;
  • complete a preliminary economic assessment before the sixth anniversary of the date of the Agreement;
  • complete an economic feasibility study before the seventh anniversary of the Agreement.

The Company estimate that the full cost of the drilling programme to be completed by 28 December 2018 will be less than £500,000. The drilling programme can be stopped at any stage at the Company’s sole discretion. The purpose of the drilling programme is to assess the prospectivity of the License so that Tethyan can make an informed decision with regards to the exercise of the Option.

In order to satisfy the first requirement under the work programme Tethyan intends to start work immediately with respect to drilling 2,000 meters by 28 December 2016. Discussions have commenced with local drill contractors who have drill rigs standing-by to commence work. Land access is currently being assessed in order to allow for drilling during the next 3 years,

The Company will also make certain milestone payments, at its sole discretion, in order to retain the Option:

  • €100,000 by 1 March 2017;
  • €100,000 on each anniversary of the signing the Agreement up until the third year.
GOKCANICA PROJECT

Tethyan Resources has executed an option agreement with Rockstone Group LLC (“RGS”) pursuant to which Tethyan can earn up to an 80% interest in the Gokcanica project licenses in Southern Serbia (“the Gokcanica Permits”).

The Gokcanica Permits consist of two adjoining permits with a combined area of 110km² located in southern Serbia, 5 km to the north of the town Josaniska Banja. The area is located within the 500 km² Rashka ore field. A Jurassic ophiolite sequence intruded and overlain by Tertiary andesitic volcanics and intermediate stocks covers the area. The board of Tethyan believes that good potential for porphyry and epithermal style mineralisation as well as deeper-level replacement base metal and gold deposits exists throughout the license.

Mining in the Gokcanica licence area dates back beyond contemporary records and is evidenced by many pits and shafts. Exploration from the 1970s focused on lead-zinc-silver veins. Euromax Resources Limited (“Euromax”) conducted exploration in the area from 2006 to 2008. Following this work a major copper company explored the area for porphyry copper mineralisation in 2014-2015.

Euromax completed a detailed mapping and soil geochemistry program over a 6 km long zone of phyllic to argillic altered andesite volcanics and intrusives with abundant ancient mine workings. Drilling at the northern end of this trend by Euromax intersected multiple gossan and massive sulphide intervals, one of which reported 12.4 metres at 1.5% copper, 1.4% lead, 0.8% zinc, 62 g/t silver and 1.6 g/t gold. This program also defined a 3 km by 2 km magmatic complex at the southern end of the trend which remains undrilled.

A major copper company followed-up this work on the large zone of phyllic to argillic alteration, which measures 6 km by 3 km wide, indicating the potential for a porphyry copper gold deposit. They identified a coincident Cu-Mo soil anomaly within this alteration. However after drilling 6 holes the major copper company did not locate the source of this Cu-Mo anomalism. In addition the phyllic alteration occurs within altered andesites immediately above an unconformity contact with the ophiolite basement. This is a classic contact zone for porphyry copper deposits to form, for example the Resk Project (700 million ton @ 0.7 % Cu, 0.3 g/t Au) in Hungary forms at an unconformity contact between basement and overlying altered volcanics.

More recent prospecting work has located a number of arsenopyrite and pyrite rich veins which outcrop over a 200 meter strike length, can be up to 20 meters wide, and with individual assays up to 67 g/t gold. Detailed channel sampling has not been completed on this zone and it has not been drilled. Tethyan plans to focus initial exploration on these zones for a potential high grade gold target. Exploration will consist of geological mapping, rock chip sampling, trenching and drilling.

With large areas of alteration and many undrilled gossan zones rich in precious metals we feel confident in moving the project forward to the drill stage and with the aim of discovering a significant gold deposit. Much of the previous work has been targeted at base metal veins and porphyry copper deposits and may therefore have overlooked the potential for significant gold mineralisation. The district as a whole is very under explored and previous exploration has mainly focussed on base metals and the Tethyan Resources management therefore feels that we can bring our gold exploration expertise to bear.

REGIONAL EXPLORATION

Currently Tethyan Resources is developing a regional deposit targeting framework to focus exploration on highly prospective and under explored areas of the Balkans region of Eastern Europe

The Balkans region is under explored as it has seen relatively little serious exploration since the 1980s when the former Soviet Union ceased geological exploration. Since this time technology has improved in both exploration and mining techniques which allows for exploration under cover and development of lower grade deposits previously considered uneconomic and of little interest.

The region is highly mineralised and proven to host world class deposits, importantly opportunity still exists to acquire exploration tenements over and around known mineralisation, a setting proven to be favourable for new discoveries year on year. Currently Tethyan Resources is developing a regional deposit targeting framework to focus exploration on the most prospective and under explored areas of the Balkans and is actively reviewing project opportunities in Serbia and Macedonia.

Conducting exploration in the Balkans where there is such a rich history of mining is an exciting task.

Southern and Central Europe has one of the oldest mining industry in the world. There is evidence of copper mining by the Cretians since the 5th millennium BC in Serbia, Romania and Bulgaria. From the 2d century AD, the Romans obtained gold from the Balkans, in particular in the Carpathian. Two of the oldest copper mines in Europe come from the Balkans.

The main one in Serbia is the Rudna Glava belonging to the Vinča culture. The discovery of these mines have changed the thinking of the Neolithic and the Chalcolithic periods of European history by pushing back European usage of copper by a thousand years or more.

Modern, industrialised mining was started by the Austrians and by the 20th Century the copper mines of Bor in Serbia and the Trepca lead complex in what is now Kosovo were among the largest operations of their kind in Europe. However this proud tradition of mining was dramatically interrupted by the breakup of Yugoslavia, the ensuing civil war and international economic sanctions. Today there is a momentum to carry exploration in this promising region.