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NARROW VEIN MINING
Nature of the Veins
The Co-O Mine narrow veins can be thought of as
sheets of white paper generally 1-2 metres thick suspended in green
space. The white sheets or veins are essentially filling spaces in
the green volcanic wall rocks which form when the rocks crack or are
faulted. These spaces are not regular hence the vein which fills the
crack will take the shape of the crack and form sheets which change
in width and attitude according to the shape of the original crack.
Some cracks are long and continuous, others are shorter and less
continuous. Veins can have complex shapes, with branches or splits,
and many other variations.
The volcanic wall rocks are green hence the white
veins are visually distinctive underground and are easily followed
by the miners. The veins can develop at any depth so the tops of
different veins can be at different depths and the bottoms as well
at different depths. Not all veins are the same size in terms of
lateral extent or vertical extent.
In summary, the geometry oF narrow veins can be very
complex, and cannot always be simplistically interpreted from
drilling results.
Narrow Vein Mines
As a generalisation, many narrow vein mines do not
have long life reserves, but in general have significant resource
bases. This applies not only to narrow vein gold mines, but also to
silver and tin narrow vein mines, diamond fissure mines, base metal
narrow vein mines, and others.
Narrow veins are challenging to evaluate because of
their geologically variable nature. They are generally less than 3
metres wide, discordant, of variable dip (<30 to 90º) and
display complex structure and paragenesis (the sequence of
formation). A high degree of grade and geometrical discontinuity is
generally observed which makes it difficult to assess their shape
and reserves from drill data alone. There is thus a need for
expensive underground development and in-fill drilling typically on
25 metre centres or less.
Hence many operators of narrow vein mines use
drilling to initially locate the veins and to estimate Inferred
Resources, but use underground development along the veins to raise
the category of the resource to Indicated (and maybe Measured) as
the level of confidence in the resource interpretations increases.
There is a limit to the amount of development that
can be done in a period (drilling and blasting advance is limited
each time the process is repeated), and to the cost effectiveness of
doing this work beyond the amount required to maintain planned
production levels, ie, to use massive development programmes just to
define large resources which will not be mined for many years.
In today's mining and investment environments it is
common for a company to drill up large resources (predominantly as
open pit operations), firstly because they generally have to justify
funding for a development, and secondly to maximise market leverage
with a large resource base. Medusa does not require funding, and has
the policy of deploying exploration funds into finding new deposits,
not drilling to define large resources to great depth at the Co-O
Mine as the Company has confidence that the deposit will continue to
depth as supported by exploration drilling to date (but not yet to
resource status, see Conceptual Exploration Target below).
A well known Australian example of long lived narrow
vein gold mine is the Norseman Mine in Western Australia which has
been in almost continuous operation for some 70 years but is
understood to have rarely had more than 2 years reserve life. A well
known United Kingdom example is the South Crofty Tin Mine in
Cornwall.
Resources and Reserves Policy
The Company has adopted the policy of replacing the
ounces it mines each year, both as resources and reserves within the
area of the current Co-O Mine resource model. Using extensive and
expensive deep drill drilling to increase resources at depth in the
mine, in areas which will not be mined for many years, is viewed as
not being an efficient deployment of capital, hence this capital is
being deployed into making new discoveries at shallow depths where
additional mine infrastructure can be installed to increase the
production profile.
Hence, with respect to resources, sufficient
drilling is conducted each year to replace the Inferred Resources
(that become converted to Probable Reserves by on-going underground
development).
With respect to reserves, sufficient underground
development is undertaken each year to replace the reserves that are
mined through stoping operations each year.
Additional resources may be added to the resource
inventory through the discovery of new vein systems either
immediately adjacent to or as extensions to the Co-O Mine resource
model, or new discoveries within the general area of the Co-O Mine.
Resources and Reserves
Inferred Resources
Inferred Resources at the Co-O Mine are drill
indicated, ie, the drill hole intersections are used to develop the
3-dimensional computer model for the shapes of the veins.
3-dimensional computer modelling involves fixing the shape of both
walls of the vein in space so that the volume and grade of the
material between the walls can be estimated.
Inferred resources are the category of resource with
the lowest level of confidence.
Indicated Resources
Indicated Resources are Inferred Resources that have
been converted by underground development along the vein, ie,
tunnelling along the vein so that the veins can be joined
continuously laterally and vertically. This development is conducted
on each level which are spaced every 50 metres vertically.
Development along veins in the Inferred Resources
category to convert the Inferred Resources results in ore production
which contributes to the mill feed.
Indicated Resources are the category of resources
with the middle level of confidence.
Reserves
Probable Reserves are estimated at a point in time
annually and are estimated by applying specified mining and
financial parameters to the Indicated Resources which are located in
areas of vein where development (in the
Inferred Resources) has been undertaken in the year subsequent to
the previous reserve estimate, and will also include reserves still
not mined from areas included in the previous year's estimate.
Probable Reserve blocks generally have development at least top and
bottom (on the level drives) and in some cases, some vertical
development. Some reserve blocks may be partially mined at the time
of the reserve estimate.
The reserve estimate takes into account the need to
leave pillars, ie, areas of unmined rock below each level (floor
pillar) and above each level (roof pillar) and other areas that need
to remain to hold the walls so the vein material can be safely
removed from between the walls. Hence not all the Indicated
Resources become Probable Reserves.
Co-O Mine Conceptual Exploration Target
Size
As we were frequently asked "how big do you
think this deposit will be?", in order to provide an
appreciation of the potential size of the Co-O Mine, an estimate of
the Conceptual Exploration Target Size** of the mine was undertaken.
Drilling since the previous estimate of the
Conceptual Exploration Target announced on 18 January 2010 has
continued to expand the vein system, as supported not only by the
new global resource estimate of 1,960,000 ounces, but also by drill
hole intersections in a significant number of veins to the north and
east of the of the previous resource model.
The range for the Conceptual Exploration Target
remains well supported at 3,000,000 ounces in 9,800,000 tonnes to
7,000,000 ounces in 23,500,000 tonnes using a grade range of 9 to 11
g/t gold with a preferred average grade of 10 g/t gold as shown in Table
1.
The combination of past production of approximately
450,000 ounces and the current global resource of 1,960,000 ounces
indicates the deposit size is approaching the lower end of the
Conceptual Exploration Target size range.
The additional support for this target is listed
below:
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The total ounces already accounted for by the
current global resource and past production is approximately
2,310,000 ounces;
-
An increase of 100 metres of strike length from
1,500 metres to 1,600 metres as supported by drilling as
described in the announcement dated 6 July 2011;
-
A change in the Specific Gravity
("SG") to the SG currently used of 2.62 for the
resource estimates (previously 2.45 previously) resulting in a
7% increase in tonnes as reported in the announcement dated 22
July 2010; and
-
As shown on the composite longitudinal
projection in Figure 10, all new drill holes since 30 June 2011
in the deposit with assays of ?0.2 metres at ?3g/t gold up to 30
June 2011 are incorporated and support the mineralisation
continuing to depth. The assay support levels between 500 meters
and 750 metres below surface is a function of the amount of
drilling completed to date.
It is estimated that when this deposit is eventually mined out, it
will produce between a range of 3,000,000 ounces in 9,800,000
tonnes to 7,000,000 ounces in 23,500,000 tonnes using a grade
range of 9 to 11 g/t gold with a preferred average grade of 10 g/t
gold. More details are contained in the announcement dated 23
August 2011. The metrics for these estimates is shown in Table
1.
View
Table 1 here. Co-O Mine conceptual exploration target parameters and
estimates **
Stoping
The challenge in mining narrow veins is to guide the
operations so as to produce ore economically with as little dilution
as possible, at the least cost commensurate with needs for safety
and the environment.
Stoping is the process of extracting the vein
material from above each development level and below the one above,
a vertical distance of approximately 50 metres.
Different stoping methods are used for different
orebodies in different mines based on factors such as wall rock
competence, vein widths, dips and grades and volumes of mineralised
material.
At the Co-O Mine, as the veins are generally 1-2
metres wide, the method used is Shrink Stoping. The diagram below
explains how this is achieved, remembering it represents a view of
the vein looking from one side.
Figure 1. Diagrammatic representation of shrink
stoping.
Stoping and Development Production
Stoping is carried out at present on the Central,
Great Hamish, Jereme, Roysan, Catto 2, Godfrey and Royal Veins.
Stoping ore provides approximately 50-70% of the mill feed.
Level development is currently a priority to open up
the mine for increased production and to maintain the stope development cycle.
The development rate is being progressively increased to
approximately 800 metres per month. Development ore from level
development (which converts Inferred Resources to Indicated
Resources which are then used to estimate the Probable Reserves)
will provide up to 60% of the mill feed.
The grade and ounces required to meet production
targets are achieved by blending development ore with stope ore.
** The potential target size and grade is conceptual
in nature, and there has been insufficient exploration to define a
mineral resource, and it is uncertain if further exploration will
result in the target being defined as a mineral resource.
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