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7/29/2019 KGC Newsletter

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Kalimantan Gold News 2013 www.kalimantan.com

We have initiated these

newsletters because of the manyrequests we get from you for moredetailed information about whatwe are doing on site. In futurenewsletters we will take a deep diveinto our onsite operations, focusingon details of particular activities.

As the New Year getsunderway, we would like to giveyou an update on our KSK CoWprogress and activities in 2012. Wehad an excellent year and we are

confident 2013 will be even better.While we were waiting for

our Forestry Permit, the beginningof 2012 was spent building oursupply base and core sheds nearPalangka Raya at KM 37. Wereviewed and updated all ourdigital data and plotted all GISdata. We recovered our old corefrom the field, re-boxed it andcompleted Magsus and pulp datacollection for the old core. We

rebuilt and tested our two smallrigs to be used for definition drillingin preparation for mobilization. Wealso completed and won all our oldtax cases originating from 2007.

We received our phase oneBorrowand-Use Forestry permit(Pinjam Pakai) in mid March foran area totalling 7,422 hectaresof the KSK CoW. The remaining53,581 ha of the CoW was put in

to suspension pending the release

of the remaining forestry permits.In April and May mobilization

commenced in earnest withthe building of our base campat Marinyoi. This required theconstruction of a jetty at TumbangManggu, a river crossing about70 km south of the Marinyoi basecamp. The AS350 B3 Squirrel Eurocopter helicopter wasmobilized and flown from Papuavia Manado to our site arriving on21 April. The B3 can lift 900 kg

giving us the ability to move allrigs by helicopter. The deep rigsare broken down into packagesfor moving, the largest of which isthe engine and control panel thatweighs 700 kg.

We negotiated access to ourbase camp through a forestryconcession owned by a loggingcompany PT Dwima. We also

Kalimantan Gold

HIGHLIGHTS

1. A REVIEW OF KSK CoW 2012

Activity review

2. DRILL PROGRAM Completed 12,895 M 2 x LF 130 Long Year rigs

capable of 1800 M 2 x Delineation rigs

3. FIELD GEOLOGY PROGRAM 7 target prospects mapped 8 more prospects

scheduled 17 field geologist assigned

4. CORPORATE SOCIALRESPONSIBILTY

YTS working in 21 Dayakvillages.

Mercury capture program

A REVIEW OF 2012Dear Investor

Hangar at Marinyoi or Helicopter


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had to negotiate the use of theland for the base camp ownedby indigenous landholders. TheMarinyoi base camp area iscompletely uninhabited and very

remote. From Marinyoi to BeruangDrill camps is a distance of 30km, which is only accessible byhelicopter.

Rather than cutting down anytrees in this area we purchasedlegal timber from governmentcertified timber suppliers 200kmsouth of us and trucked the timberto site.

We also started recruitinglabour from the surrounding

villages further south. They areprovided with a medical check-upbefore starting. All new hires aregiven rigorous safety inductionsand medical checks. About 25%of the staff that have the medicalcheck-up are found to be unfitlargely due to Hepatitis or TBC.

About 60% of our field crewshave never worked for a companybefore ~ some have difficulty

getting used to the safety bootsand gear mandatory on site havingspent their life moving freelythrough the forests barefooted.

We started training for some of

the skilled roles such as HelicopterLoad Supervisors and Fire Crews.

We established our EmergencyMedical facilities working withSOS Medika, our medical supportspecialists. All our staff are coveredby Medical and Life insurancewhich provides more coverthan the state based Jamsosteksubscriptions. We carried outcustomary Dayak religious

ceremonies at the base camp for

our safety and success.

After very long prayers and

anointings we asked the priest

and priestess what they prayed

INVESTOR NEWSLETTER ISSUE N1 JANUARY 2013

Marinyoi Base Camp

ypical access road river crossing.

First Medical Centre

Map


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for Higher wages! they repliedgrinning.

We immediately started ourbaseline environmental studiesand water sampling from therivers. We were surprised by some

extremely acid results (ph3.5) fromone river in Beruang Kanan causedby naturally occurring very highsulphidation rocks. We opened ourtwo other main drill camps andestablished weather stations in allthree locations.

We completed our first drillpads and drilling commenced May28 ~ a day to be commemorated!

Shortly after this our first fieldgeology program started with soilgrids, soil samples, rock chips andmapping at Low Zone. We builtand set up our core logging facilityat Marinyoi. In the meantime,at our supply base and samplepreparation facilities at KM 37,

we built our core-sheds to receivecore from Marinyoi and set up theSample Preparation Laboratory toprocess the core in preparation

for being assayed in Jakarta by

Geoessay, with checks done by

Intertek. This was completed midJune.

By the end of June all fourrigs were mobilized and drilling.

We had issues with our helicopter

support, as the provider struggledto get the paperwork right and

all the required permits to fly. The

sample preparation lab was in fulloperation by this time.

July brought the Islamic monthof fasting ~ Ramadan ~ which

didnt slow us down at all. Our

offices in Palangka Raya hadbecome too small for the new scale

of operations, so we identified new

offices and began to prepare them.Drilling and field survey were nowin full swing, with the core lab atMarinyoi and prep lab at KM 37 allworking in unison.

The Bupati (Regent) of GunungMas visited our site by helicopterin August to inspect our fieldoperations. He was extremelypleased that we were employingand providing opportunitiesto 300 local villagers. He was

impressed with the health andsafety processes and the very highquality camp facilities and food. Bythis time all the drivers of vehiclesand trucks had received defensivedriver training and weeklysafety meetings for all staff wereunderway. August brought hugeforest fires. It is the time of yearthat Dayaks burn land to clear theforest for planting. We lost severaldays flying because of the densesmoke and reduced visibility.

Also in August we had aworkshop with 14 NGOs toexplain in detail what we weredoing and to see how we could

Stream Sampling at Beruang Kanan

Regent visits Drill Locations

Te Sample Prep Lab

First Core Sheds at KM 37

Chalcopyrite and covelite veins Beruang Drill Camp Alpha.

Porphry related quartz stockwork veining.



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work together with them in Central

Kalimantan. We moved into our

new office by having a small

celebration where we invited a

local orphanage to come and eat

at the office.

We converted our old officeinto a mess for our field staff as

they transit Palangka Raya on their

way to base camp. We also closed

our old mess in September, as the

lease expired. In September on

site, we were building walkways

between our drill pads. These

wooden walkways ensure that

the drill crews are safe and dont

get lost. The wooden steps and

platforms are covered with chickenwire so that they are not slippery inthe wet. We installed hot water andair conditioning at the Marinyoibase camp. We had our drilling

operations audited by a third-partydrilling specialist for safety andperformance. Not many changeswere suggested other than carryingmore spares for the smaller drillrigs. We finished making our safetyand helicopter safety videos fornew recruits.

A SOS medic went missingat Beruang Tengah for 24 hours,after walking away from a drillcamp and deliberately leaving a

walkway. All camps were stooddown and the Emergency Searchand Rescue process activated. Acommand centre was immediately

established in Palangka Raya tocoordinate all activities and logreports at 5-minute intervals.The medic was eventually foundin a river gully. He had becomedisorientated and lost direction.

After walking for a long while,he followed his training, found ariver where he could drink andremained in one location.

By October we had spent US$7million and our partner committedto continue to sole fund the project.Our average monthly expenditurehad now reached US$1.6 millionper month. The Indonesian TaxOffice requested a visit to our sitesto audit activities. The rainy seasonarrived, putting out all fires butcausing flooding in the rivers that

affected our river-crossings furtherdownstream.

Our consulting geologist JohnAllen arrived in November andbegan his review of all core drilledto date. This required many weeksat KM 37, as each piece of corewas reviewed. Many sampleswere taken for thin sections and

petrographic studies. The resultswill be used to build our geological

models at Beruang Kanan andBeruang Tengah. Subsequent initialindications are that Beruang Kananis a Volcanogenic Hosted MassiveSulfide (VHMS) style submarinedeposit, potentially related to adeep porphyry source.

We initiated a media campaignin Indonesia to try to help withobtaining our Forestry Permits.


Our new oce

Drill pads

Te drill pads and campsites are immediatelyreplanted & regreened afer use.

Stay on the tracks or get lost!

Orphans open the oce

Core Logging Hall at Marinyoi


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We obtained security clearance for our gravity andhigh-resolution magnetic survey that will use aspecially rebuilt DC3 that flies at very low altitudesof 60 m above ground level. We also had a 3-daytraining workshop to train our eight Community

Relations staff. We also started an in-depth reviewof our Baroi copper gold, base metal prospect data.

By now we were flying on average 110 hoursa month moving about 500 passengers and 200tonnes per month. Our field employees peaked at267 on site.

In November we also completed a highresolutions laser LIDAR topographic survey over25,000 ha to define geological structure in all KSKprimary prospects, including:Beruang Tengah,Beruang Kanan, Tumbang Hoi, Rinjen, Focus 1,Mamuring, Baroi, and Mansur.

A safety inspector from the USA arrived inDecember to carry out a full Health & Safety auditof all operations. The two LF 130 Long Year superrigs that are capable of drilling to 1,800 m or 1mile arrived in Indonesia from Australia.

Drilling Program

Two Duralite drill rigs provided by Pontillhave been utilized on the deep porphyry copperprogram, and two smaller Jackro rigs have been

assigned to the Beruang Kanan near-surfacedelineation drilling program. Nine deep holeshave been completed.


LIDAR Survey Coverage


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Drilling Results

Hole ID Rig TypePlannedDepth

Date Started Date CompletedCurrent

DateRemarks

BTD05-01 Deep 1200 23-05-2012 28-05-2012 97.3 Stopped

BTD05-02 Deep 1200 06-06-2012 13-08-2012 1389 Completed

BKD01-01 Deep 1200 07-06-2012 30-08-2012 1169.5 Completed

BK030-01 Definition 300 03-07-2012 29-07-2012 301 Completed

BK029-01 Definition 300 06-07-2012 01-08-2012 300 Completed

BK032-01 Definition 300 03-08-2012 23-08-2012 300.5 Completed

BK031-01 Definition 300 05-08-2012 23-08-2012 300.2 Completed

BKD02-01 Deep 1000 12-08-2012 27-08-2012 377.8 Stopped

BTD06-01 Deep 1200 30-12-2012 24-09-2012 1281 Completed/ Assay Pending

BK033-01 Definition 300 31-08-2012 21-09-2012 282.1 Stopped

BK034-01 Definition 300 31-08-2012 17-09-2012 300.7 Completed/ Assay Pending

BKD02-02 Deep 1200 05-08-2012 18-10-2012 1200 Completed/ Assay Pending

BK035-01 Definition 300 27-09-2012 14-10-2012 300 Completed/ Assay Pending




BKD03-01 Deep 1200 26-10-2012 13-12-2012 1147.9 Completed/ Assay Pending

BTD07-01 Deep 1200 30-10-2012 12-12-2012 1140.5 Completed/ Assay Pending




BK042-01 Definition 300 05-12-2012 18-12-2012 300 Completed/ Assay Pending

BTD08-01 Deep 1200 19-12-2012 940.50 In Progress



BKD03-02 Deep 600 24-12-2012 752.40 In Progress



14,887.5


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Drilling Locations Of The Two Duralite/Deep Drill Rigs At The Ksk Copper Project

Delineation Drilling

The operation of the twoshallow drill rigs belonging to KSKhas been focused on the centralmineralized zone of BeruangKanan. Eighteen holes have beencompleted.

This drilling continues to

test the strong silica clay pyritealtered volcanic breccia thatcontains chalcopyrite and covellitemineralization in strongly shearedand silica flooded zones withirregular white quartz veining.

Field Geology Programs

As part of a campaign toinvestigate all areas of interest ina systematic manner, field geology

programs have been initiated.Seven target prospects have beenmapped and sampled and anothereight are scheduled. The programsinclude follow-up sampling, gridsoil sampling, and geologicalmapping. The field geology hasgenerated data to support definingadditional drill hole targeting in theprospects.

These programs have

produced a total of 1,243 soil, 50

stream sediments, and 1,292 rock

chip samples.

Lab Facility for Preparation of Samples

The core sampling facility

and sample prep lab commenced

operation in early July. To date, a

total of 8,818 samples have beensent to Tangkiling preparation

laboratory and 9,279 pulps have

been sent to Geoassay analytical

laboratory in Cikarang, Jakarta,

Intertek Jakarta and Sucofindo

Kuala Kencana, Timika.

Assays are carried out in

Jakarta by PT. Geoassay, with

sample checks by PT Intertek (ISOcertified). Both labs include routineCanadian Certified Reference

Materials (CCRM), in-housestandards, and blank samplesare inserted with each samplesubmission. Low level analysis ofgold in rocks and soils was carriedout by 50 g fire assay fusion with

AAS finish, and base metals weredetermined by triple acid digestionand ICP-OES finish.

Corporate Social Responsibility (CSR)Program

Yayasan Tambuhak Sinta (YTS)is working in 21 Dayak villages,located along the Kahayan River,just outside of the KSK concessionarea. YTSs program is focused onstrengthening governance in thearea, and is helping communitiestake greater responsibility for theirown development agenda throughparticipatory planning, institutionstrengthening and economicdevelopment.

This initiative enablescommunities to engage moreeffectively with local government inorder to access improved servicesand programs in education,health, infrastructure and economiclivelihoods.

YTS provides training andtechnical assistance to improve


Pig husbandry training

wo meter silica and silica-clay alteration zonewith pyrite veins.


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INVESTOR NEWSLETTERInvestor Newsletter is a

monthly newsletter of

PT. Kalimantan Surya Kencana,

a mineral exploration company

affiliated with Kalimantan Gold

Corporation.

PUBLISHED BYPT. Kalimantan Surya KencanaJl. Rajawali VII, Srikandi III,No. 100, Bukit Tunggal,Palangka Raya 73112Kalimantan TengahIndonesia

[email protected]

www.borneomercury.comwww.tambuhaksinta.com


the capabilities of villagers ingrowing crops, raising animals,and managing local resources. In2012, this support concentrated onvegetables, fish, pigs and rubber.

In collaboration with thelocal credit union, YTS providedtraining on savings, credit, andsmall business development. Byjoining the credit union, people

establish savings accounts and canaccess credit for their household orbusiness.

At district level, YTS has atwo-year program to improvethe capacity of district staff toimprove their annual planningand budgeting mechanism. Thiswill result in delivering bettersupport programs and services tocommunities.

The YTS CommunityDevelopment Program accountedfor 4% of expenditure and includes: Village Development Planning Village Development Fund &

Technical Support for EconomicLivelihoods

Village InstitutionalDevelopment

Kalimantan Kids Club -- ascholarship program

Information & CommunicationMedia and Events

The YTS CSR budget for the KSKCoW has been increased to a totalof $521,000 for 2013.

YTS Mercury Capture Program

The benefits of distributingrecycling equipment to small scalegold mining communities areimmediate and wide-reaching:providing economic, health, andenvironmental benefits for themercury users themselves, as wellas the surrounding communities.Each piece of equipment weprovide can improve the well-

being of hundreds of people.In addition to providing

retorts and condensers, YTS isalso demonstrating mercury-freeprocessing techniques to miners,and spreading awareness aboutthe dangers of mercury pollutionthrough a widespread health-awareness campaign.

In 2012, interventions wereperformed in six major towns,fifteen villages, and eight remote

field sites. Over the course of theyear, YTS distributed one hundredand twelve retorts and installedeighty-seven condenser systems.Our equipment is now recyclingmore than one thousand kilogramsof mercury each month.

Mercury use in small-scale gold mining

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