Karaayi, Turkey

(Chesser earning up to 100%, Turkish Partner 100%)

Karaayi — Location

The Karaayi prospect is situated some 40 kilometres to the southwest of the Kestanelik project and is well serviced by roads and other public infrastructure.

Figure 1 - Map of Turkey showing location of Karaayi prospect in NW Turkey

Karaayi – Previous Exploration

The Karaayi project is known to be well mineralised and it lies within a district that has already yielded a million-ounce-plus resource and numerous other high grade intercepts (Figure 2). The targets defined on this prospect have the potential to return wide high grade gold intercepts of the type seen in nearby properties in the area.

The Karaayi prospect contains a known and previously drilled porphyry gold-copper prospect. Drilling carried out on the property by the previous owner has shown strong bulk tonnage potential. There are twenty eight historical drill holes on the property (21 RC and 7 diamond), with best drill intersections of 115.5 metres at 0.52 g/t gold and 87.1 metres at 0.62 g/t gold (Figure 2).

In 2010, Chesser carried out a program of detailed mapping, soil sampling, IP and magnetic surveys (Figure 3). This work resulted in the identification of a number of previously unrecognised and untested targets, for both bulk-tonnage porphyry copper-gold and epithermal gold mineralisation. The surveys identified areas of high-chargeability and co-incident anomalous soil samples and surface alteration, which together indicate a large amount of untested potential in the area.

Figure 2 – Karaayi tenements showing results of previous drilling and other surrounding gold occurrences – see Figure 4 for stylised geology in the north of the tenement.

Figure 3. - Soils and drillholes (with selected historical drill results) superimposed on the 50 to 150 metre chargeability depth slice (white areas are high chargeability and purple areas are low chargeability.

Karaayi – Geology

The Karaayi prospect is a porphyry-related gold-copper target hosted in altered Lower Miocene volcanics that are underlain by medium to high-level Mesozoic granodiorite intrusions. Mineralisation in the area is characterised by disseminated or fracture-controlled pyrite, variable amounts of silicification, and hematite/pyrite matrix breccias produced by intense fracturing of siliceous rocks. There is also moderate to weak saccharoidal to crystalline quartz stringer stockwork veining in small breccia pipes.

Figure 4. - Stylised plan of Karaayi geology - showing historical drill holes & the previously unrecognised and untested bulk-tonnage porphyry copper-gold and epithermal gold targets

Ownership

Chesser can earn 100% in the Karaayi project by completing exploration expenditures of US$2.5 million and issuing 800,000 shares to the underlying owner of the property. On Chesser vesting 100%, the underlying owner will retain a 2.5% Net Smelter Return Royalty.