Resources & Reserves Statement
The following statement of Mineral Resources and Ore Reserves conforms to the Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (JORC code) 2004 Edition. The Mineral Resources are inclusive of those Mineral Resources modified to produce the Ore Reserves. All tonnages reported are dry metric tonnes. Minor discrepancies may occur due to rounding to appropriate significant figures.
Mineral Resources
Ore Reserves
Competent Persons' Statement – Exploration Results and Mineral Resources The information in this public report that relates to Exploration Results and Mineral Resources is based on, and accurately reflects, information compiled by Mr Rodney Fraser for the Kangaroo Flat Mine and Mr Raul Hollinger for the Henty Gold Mine. Mr Fraser is a Member of the Australian Institute of Geoscientists. Mr Hollinger is a Member of both the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. Both Mr Hollinger and Mr Fraser are full time employees of the Company and have more than five years experience in the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Both Mr Fraser and Mr Hollinger have given prior written consent to the inclusion in this report of the matters based on their respective information in the form and context in which it appears.
Competent Persons' Statement – Ore Reserves The information in this public report that relates to Ore Reserves is based on, and accurately reflects, information compiled by Mr Rob McLean for the Kangaroo Flat Mine and Mr Matt Daly for the Henty Gold Mine. Both Mr McLean and Mr Daly are Members of the Australasian Institute of Mining and Metallurgy. Both Mr McLean and Mr Daly are full time employees of the Company and have more than five years experience in the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr McLean and Mr Daly have given prior written consent to the inclusion in this report of the matters based on their information in the form and context in which it appears.
Notes
Mineral Resources
1. Kangaroo Flat Mine
During late 2008 and early 2009 the Company conducted a trial mining program of the Gill reef which generated data that could be reconciled with grade estimates using varying techniques. This was done to determine the suitability of various techniques in a coarse gold deposit.
The trial mining of the Gill, Dale and Dean reefs has shown geological continuity along the length of each reef and gold production confirmed grade continuity to a level suitable to be classified as resources.
The trial program determined that close spaced drilling on 15 metre horizontal sections, with vertical separation of 5 metres, could establish geological and grade continuity and the application of a 150 g/t Au top cut was shown to estimate the grade suitable for an Indicated Resource using a rolling average method.
The grade estimation of the gold-bearing quartz reefs based solely on drill hole intercepts has adopted an approach which utilises physical characteristics and the presence sulphide minerals associated with gold. The coarse grained nature of the gold mineralization has shown that it is difficult to establish grade continuity from drill intercepts greater than 15 m apart without the use of supporting data such as mine development. The presence of the physical characteristics of the quartz and the sulphide minerals serve as proxies for gold and are used to infer grade continuity.
The method is described below and involves assigning a “score” to each drill intercept based on the physical features observed in the drill core. This score is combined with a score based on the assays of an intercept to generate an overall score which is correlated with grade ranges established from mining and production experience. This is then reported as a grade range with an arbitrary +/- 2 g/t range to reflect the uncertainty in the method. The reconciliation of grade using this “scorecard” approach with production results from Gill reef is regarded as sufficient to use the method to classify resources in the Inferred category.
Drill interval grade estimation method – grade scorecard
The large gold particle size of mineralisation at Bendigo, termed the nugget effect, means that a single drill intersection cannot accurately represent the grade of the reef surrounding the drill hole, as drill core will tend to miss the large particles of gold. The approach taken by the Company is to use the physical characteristics of the reef intercept, in combination with the assays to estimate the grade range of each intercept. The key geological textures that are used in this technique are:
(i) Quartz abundance – The quartz is the sole host of the gold in a Bendigo style reef system, hence the more quartz there is in an intercept, the greater the chance of there being gold in that intercept.
Underground development face in Gill reef showing high quartz abundance
(ii) Quartz texture – The deposition of the quartz in a reef, although occurring over a relatively short geological time frame, comprised many different pulses of gold-bearing silica rich fluid. The texture of the quartz in a reef intercept is the best guide to how many fluid pulses occurred, with multiple fluid events increasing the chance of gold mineralisation. Therefore a quartz intercept with a large number of fluid flow textures (called stylolites or laminations) will have a greater chance of containing gold bearing phases than a plain white featureless quartz vein.
Drill core of a quartz vein with stylolitic textures, Gill reef.
Drill core of a quartz vein with minimal texture.
(iii) Gold abundance – The gold in Bendigo generally occurs as large (>1 mm) nuggets which are visible when intersected in drill core. Hence, the relative abundance and size of visible gold particles in an intercept will have a significant bearing on the estimated grade of the reef.
(iv) Proxy sulphide abundance – When the gold was deposited in the quartz reefs, a number of other minerals were typically deposited at the same time. These minerals comprise three main sulphide species: arsenopyrite, sphalerite and galena. Arsenopyrite is by far the most abundant proxy sulphide species in the Bendigo Goldfield and wherever it occurs as large clasts or bands in the quartz, it is regarded as an indicator of gold mineralisation. Sphalerite and galena, although less abundant and more sporadic than the arsenopyrite are very closely associated with gold, hence intersecting these sulphides in drill core can indicate strong gold mineralisation.
Drill core of a quartz vein with intense arsenopyrite alteration.
The physical characteristics of each drill intercept are logged in detail, with their relative abundance and importance ranked to derive a visual grade range for the intercept. The visual characteristics are quantified by assigning values to the specific features for each sample interval, which are then length-weighted across reef intersections.
Values are also allocated to the assays for the drill hole intersection. The drill core samples are assayed via screen fire assay, which is regarded as a robust analytical method for high nugget ores.
The visual score and the assays are combined in a two-third/one third ratio to produce a final score, which is correlated with arbitrary gold grade ranges based on mining experience. Where intersections consist of only one or two samples the weighting of the assay score is reduced 10% and 20% respectively.
The method is regarded as being suitable as establishing grade continuity for estimating Inferred Resources but would require additional data required to support estimation of grade at a higher resource classification.
For tonnage estimation, a bulk density of 2.7 t/m3 has been applied
Mineral Resource grade estimation methods
Four grade estimation methods have been used in estimating resource grades dependant on the amount of sample data available for each mineralised reef.
(i) Inverse distance to the power of zero with a 150 g/t gold top cut.
The inverse distance estimation technique used either a half or one metre composite assay data coded by reef wireframes (known as domains). The estimation process was constrained to populate blocks, within a block model, using composite data from the same domain. A distance power of 0 was used, negating the effect of the sample distance. A top cut of 150 g/t gold of raw assay grades was determined by statistical analysis of assay data and is represented by a significant inflection on a cumulative grade plot. The orebody is modelled by geological interpretation and all assays and blocks within the reef geometry were utilized and hence a cut-off value was not applied.
(ii) Polygonal Method using scorecard grade estimates
A polygonal grade estimation approach was used with individual wireframes created around each drill hole domain in the resource wireframe. The blocks centred within a particular drill hole domain are attributed the scorecard visual, assay and combined scores from the drill hole intercept. The block model treats the scorecard scores as pseudo-assays to estimate the tonnes and grade of the reef. The grade range estimate that relates to this score is derived by applying a sliding factor to the score which corresponds to the grade range. A range of plus and minus 2 g/t gold is then applied to indicate the uncertainty of the grade.
(iii) Nearest neighbour method based on scorecard estimates
A nearest neighbour grade estimation was made using the intercept scorecard data (visual, assay and total scores). These values were then composited to one metre intervals. Composited data resulted in a more representative estimate, especially for holes drilled at high angles to mineralisation. The block closest to the composited data was populated with that value. A range of plus and minus 2 g/t gold is then applied to indicate the uncertainty of the grade.
(iv) Historic and recent mining and production data
This method has been applied where the geological continuity of the reef has been proven by mine development on several levels throughout the vertical extent of the reef. The grade continuity of the reef has been inferred by use of production data of mined areas contiguous with the current resource and the use of production data from the processing of defined blocks of material from the current development. A range of plus and minus 2 g/t gold is then applied to indicate the uncertainty of the grade.
2. Henty Gold Mine
Estimation of Mineral Resources at Henty utilise diamond drill assays from within mineralised zones. All samples are composited to 1 metre intervals within the geological boundaries, with top cuts applied to all datasets. Mineral Resource grade estimates were derived by ordinary kriging. A bulk density of 2.8 t/m3 has been applied.
Ore Reserves
Probable Ore Reserves have been estimated by creating planned practical mining shapes appropriate for the Indicated Resources. The design of these shapes is based on guidelines for minimum mining widths which vary according to the width of the mineralised zone and the planned mining method. The recoverable Mineral Resources and planned dilution within each mining shape provides the tonnage and grade estimate for that shape. Factors are also applied for each mining method with respect to external dilution. This dilution is incorporated into the tonnage and grade estimate. Economic criteria including a gold price of A$1150 per ounce and current site unit costs for mining, processing and administration, adjusted for specific conditions, are applied to each diluted Mineral Resource to test its viability prior to inclusion within the Ore Reserve estimate.
