Southern Gobi Belt

Exploration Strategy

The Kincora technical team is credited with multiple discoveries of Tier 1 copper deposits and is undertaking the first modern district-scale exploration program in the world-class Southern Gobi belt. The Company is now executing a proven exploration strategy and systematically advancing a wholly owned pipeline of targets up the value curve.

Southern Gobi Belt Exploration Strategy 1

BRONZE FOX TARGET

West Kasulu bulk tonnage sulphide prospect

To assist provide improved parameters for future exploration, post the 2017 capital raisings Mining Associates was mandated to review the West Kasulu prospect and provide estimated grade and tonnage curves based on previous drilling.

This review was the first major advancement at Bronze Fox since resolution of the previous dispute that between 2013-2015 restricted access to the full Bronze Fox Intrusive Complex (BFIC) and, within it, the West Kasulu prospect.

Figure 1: Bronze Fox (western license) project timeline

Figure 2: Bronze Fox story - High grade system / targets significantly advanced

The review generated an independent block model (noting specific gravity samples were previously not taken, which would be required for a NI 43-101 compliant resource) and was announced in the January 25th, 2018 press release.

The review supported a larger tonnage exploration target than internally expected at 416 Mt to 428 Mt grading 0.26% to 0.30% copper for up to 2,437Mlb of copper and 0.84Moz gold, ranking as one of the largest potential in-situ copper-gold systems in Mongolia and with only modest drilling.

The potential quantity and grade ranges are conceptual in nature and based on nearest neighbour and ordinary krige estimates, and there has been insufficient exploration to define a mineral resource. It is uncertain if further exploration will result in the target being delineated as a mineral resource.

Kincora has undertaken only one drilling season (2012) across the full BFIC and West Kasulu prospect, noting this was prior to the “Search” Induced Polarization (IP) program (2013) and SJ IP program (2018) which achieved better resolution and deeper penetration than prior survey’s.

Results from this 2012 drill season were some of the most prospective in the wider Southern Gobi belt, attracting 14 NDAs with industry groups and a period of exclusivity. Full 2012 results and interpretation were impact by the aforementioned dispute, with only 24,139 metres in total (for 76 holes) having been drilled in total across the 1.3km strike at West Kasulu (by Ivanhoe Mines, Temujin and Kincora).

The Mining Associates review identified the “Tov” fault that bisects the West Kasulu prospect and that a North-West monzonite zone had more encouraging grades in holes F57, F85 and F62 (the latter including 37 meters at over 1% copper equivalent), indicating a more potentially favourable preservation level in the porphyry setting.

This NW zone has had limited exploration, with only 4 holes for 2,170 metres by Kincora in 2012 and 24 holes for 3,841 metres by previous tenement holders (noting previous drilling by Temujin Mining impacted by only 100 metres of RC rods being available).

Figure 3: Bronze Fox story - Higher grade across western fault in monzodiorite section of system (West West Kasulu)

Drilling efforts by previous holders focused on soil and rock chip anomalies, often with zones of high-grade mineralization down hole, noting a largely untested IP chargeability anomaly at relatively shallow depths.

Post the Mining Associates review, Kincora has been analysing the previously relogged 11,991 metres of core (from 24,139 metres drilled at West Kasulu) and other work programs undertaken during the period of exclusivity in 2014 with a copper major (during the period of dispute for the western license and during the early stages of the copper price correction), and following up a number of the recommendations made by Mining Associates.

Kincora tasked specialist geophysical consultant, Barry de Wet, with a review of all geophysical undertaking a new interpretation, benefiting from a number of new geophysical, and geological, datasets.

Figure 4: Bronze Fox geophysics - Compelling large zones associated with high-grades largely untested

Figure 5: Bronze Fox geology - Eastern granodiorite outcrops & eroded, western monzodiorite preserved (West West Kasulu)

The Mining Associates review and subsequent activities have assisted by proving an improved geological and geophysical understanding of the West Kasulu target, its bulk tonnage copper porphyry system and zonation within it.

Encouragement is provided by the spacing between previous limited drilling in this NW zone, including up and down dip potential from previous higher grade intersections, previous drilling on the western license having been generally limited to approximately 100m depth grid drilling and supportive geophysics remaining largely untested (particularly in the western license).

During the 2018 field season all West Kasulu core was relogged with further surface geology and extension of IP coverage to the west via the SJ survey.

These work programs have extracted as much as possible from the existing geology and geophysics , supporting our interpretation that the most prospective parts of the very large mineralised system at Bronze Fox sit to the western of the Tov fault in a preserved porphyry setting, which is largely untested. No future exploration is proposed at the interpreted eroded granodiorite zone to the east of the Tov fault, which has been the focus of previous drilling activities and is a very large, lower grade system with limited areas of higher grade zonation.

The relogging of core has provided further geological data that is required to upgrade the Mining Associates exploration target and block model to a NI 43-101 compliant resource.

Initial steps have also been taken to support potentially converting the existing exploration license to a mining license.

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EAST TSAGAAN SUVARGA (EAST TS)

The East TS project was secured via the 2016 IBEX merger. Kincora’s first full field season activities in 2017 confirmed our interpretation that the East TS porphyry target sits in a brownfield environment on the interpreted eastern margin of the Devonian age Tsagaan Suvarga (“TS”) intrusion, which hosts Mongolyn Alt LLC’s (MAK) Serven Sukhait open pit development project and southern exploration targets on the western margin.

MAK secured the TS project, undertook confirmationary resource drilling and studies, ahead of investing US$377 million of a reported US$1,089 million total capital cost into the development of the Serven Sukhait open pit. The project is now connected to grid power, has aquifer water supply and the pre-strip completed, forecast to annually produce up to 316,000t of copper and 4,400t of molybdenum concentrate.

TS is a long standing known geological prospect, with its outcrop interpreted to be an eroded porphyry setting. No regional drilling has taken place within its Devonian complex testing for a preserved and more favourable grade setting.

Figure 1: Where is the “Hugo” of the TS complex?

Mapping, infill soil sampling and first phase “to basement” drilling (maximum vertical depth drilled 320 metres) confirmed the targeted fertile and Devonian age quartz monzonite and monzonite intrusion at East TS.

Half of the 14 holes from the maiden 2017 drilling program, for 3,452 metres, intersected the TS intrusion (two of which were underlying carboniferous cover).

Age dating, green rock, petrographic, lithogeochemical and geochronological analysis have been positive, with infill ground magnetics and maiden ground gravity survey’s completed post the first phase drilling program.

A review of the 2017 geophysics identified three interpreted intrusive bodies with four targets for follow up, which may represent multiple intrusive centers with favourable geological and geophysical, and the correct structural setting for a fertile porphyry system.

Figure 2: East TS - At the point of target testing drilling

Figure 3: East TS - Multiple Tier 1 scale targets

Benefitting from previous exploration by Kincora, SJ Geophysics Ltd, a Canadian specialist geophysical group was selected following a detailed review and in late 2018 undertook a DC resistivity and induced polarization (IP), and magnetotelluric (“MT”) geophysical survey.

Results from the SJ survey are very positive, with broad chargeability highs coincident at three of the four conceptual intrusive bodies and are supportive of sulfides associated with demagnetised zones that may represent magnetite-destructive mineralized phyllic or argillic alteration from shallow to moderate depths.

The background copper with molybdenum returned in a number of the first phase holes and detailed magnetic susceptibility readings has provided further encouragement for the interpreted porphyry clusters and, complementing now understood geophysics, indicated a number of holes from Phase 1 might have stopped short of geophysical anomalies identified (eg in particular holes 3 and 5) or on the margin (eg hole 12 and 14).

Further encouragement is provided from both surface mapping and drilling that has intersected interpreted lower carboniferous cover above the Devonian TSIC, which coupled with improved interpretations of key structural and fault features, supports the concept of a potential preserved Devonian complex. The later is an analogue for East TS hosting an equivalent preserved high grade Hugo or Heruga orebody as at Oyu Tolgoi.

Target at East TS is an equivalent preserved high grade Hugo or Heruga orebody (or series of orebodies) as at Oyu Tolgoi within the Tsagaan Suvarga intrusion.

Activities to date support the East TS target being in the right geological and structural setting to the Serven Sukhait open pit (307Mt @ 0.54% Cu resource) and southern exploration targets on the western margin of the TSIC but within a preserved porphyry setting.

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TOURMALINE HILLS TARGET

The Tourmaline Hills target sits within a large carboniferous age intrusive complex that outcrops on the western of the two-licenses that form the Bronze Fox project. Previous rock chip samples and soils have identified high grade gold, which has been the focus of ninja activities in 2014 and again over the 2017/18 winter. These ninja activities have been in different zones, with 2014 activities focused on small pits (no underground), and 2017/18 activities going underground.

Drilling by Ivanhoe in 2006 and by Kincora in 2012 (limited to one drill season each – for Kincora impacted by the 106 license dispute, resolved in 2015) intersected zones of structurally controlled higher grade gold, often with copper.

In 2018, a soils and mapping program over the ninja zones and outcrop utilising our XRF was completed, with stream sediment pan sampling program for course gold and magnetic readings to better understand the outcrop and ground magnetic survey results.

In late 2018, the SJ IP survey completed additional IP and resistivity lines across the margin of the complex and extension to the east and the Bronze Fox Intrusive Complex.

Drilling is proposed to test the south western strike potential of the Bronze Fox Intrusive Complex with a geophysical target extending to the south of the Tourmaline Hill’s Complex.

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RED WELL TARGET

The Red Well license is approximately 40km north of the Oyu Tolgoi concentrate plant, along the general NNE arc transverse trend from Oyu Tolgoi, and immediately to the north of Rio Tinto drilling activities in 2017 on a Turquoise Hill Resources license, the later being the first regional drilling by either major group since 2012.

Ground magnetics and gravity completed in 2017 supports shallow cover within the northern section of the license with a historic reported Induced Polarization high anomaly coincident with outcrop. Initial ground truthing has failed to identify or replicate historic copper grade samples on the margin of the license with calcic-sodic alteration identified along eastern margin of the outcropping intrusion with positive fertility indicators returned from analysis undertaken by Kincora.

Kincora’s geophysics indicates deep cover to the southern section of the license, supporting an uplifted (horst) block in the central-northern portion of the Red Well license, relative to the deep drilling program completed by Rio Tinto in 2017 on the adjacent southern license. A soil and mapping program over the outcropping region, with a wider stream sediment sampling is planned at Red Well for the Spring.

Infrastructure to and around the license is very favourable, with a phone tower on the license and located 35km northwest from the Khanbogd soum (the local province center).

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