Catak, Turkey

(Chesser Letter of Intent to earn upto 100%)

Catak – Location

Figure 1 - Map of Turkey – showing location of Catak property in NE Turkey

The Catak property is in the Eastern Pontides and located 70km south of the Black Sea coastal town of Fatsa and 70km WNW of the Sisorta Property (Figure 1).

Catak – Geology

Catak is a well-preserved epithermal vein system in Andesites, with good indications of high-grade potential and mineable widths of veins. A generalized description of the geology is set out in Figure 2. The vein textures suggest that bonanza targets lie at depth.

Figure 2. Geological map of Catak licenses showing veins, drillholes and alteration.

Catak – Previous Exploration

Previous work on the property includes geological mapping, soils and rock sampling, and eight shallow percussion holes for a total of 158 metres of drilling (Figure 3). Epithermal veins with rock chip values of up to 42.6 g/t gold occur on the property, with widths from 2 to 7 metres and a total strike exposure of 2.2 kilometres . Of the eight shallow percussion holes completed, the best result was 10 metres at 1.53 g/t gold in drillhole CS001. The textures of the epithermal veins indicate that the surface exposures are high in the epithermal system and well above the likely bonanza target zones.

Figure 3. Geological map with selected drill and rock sample results.

Catak – Exploration Program

The Company plans to carry out an initial program of geophysics and surface sampling in order to more clearly identify and map additional veins on the property. This will allow targets to be prioritised prior to drilling the most promising targets. The planned program of mapping, geochemistry and geophysics will also undoubtedly unearth additional exploration targets on the property.

Catak – Ownership

Chesser has signed a Letter of Intent whereby it can earn a 63% interest in the Catak property by spending USD 2.5 million on exploration over four years and making staged payments of 500,000 shares and USD 175,000 to the property owner. At the end of year four, the underlying owner has a 90 day period in which to elect whether or not to earn back 28% (bringing its total ownership to 65%) by spending USD 5,000,000 on exploration in the subsequent two years (years 5 and 6 of the agreement). Should the underlying owner not exercise their earn back option, Chesser can earn a further 37% (taking its ownership to 100%) by spending an additional USD 1,500,000 and issuing 250,000 additional shares in year 5, at which point the property owner will retain a 2.5% Net Smelter Return royalty. Chesser’s minimum exploration expenditure required before withdrawal is USD 200,000 - as well as payment of 50,000 shares and USD 15,000.