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MINING & EXPLORATION PROJECTS
Philippines
CO-O OPERATIONS
1.1 The Co-O Mine
The Co-O underground mine is developed on a series
of intermediate sulphidation, epithermal quartz veins and to date have been
worked to approximately 370 metres below the highest point. When the mine was originally developed in the late
1980s, the vein system had only been discovered on the west side
of the Oriental Fault (despite exploration drilling on the east
side) and all mine development was carried out on the west side
over approximately 600 metres of strike length. The mine is accessed through an adit for nearly 300 metres before
encountering the mineralised veins. The height above sea level of
the adit is 150 metres but for convenience this is now designated as
Level I (previously 3150 metre level).
The current bottom of the Mine at Level 6 is 250
metres below adit or Level 1. The sixth level at 250 metres
depth was commenced in the September 2010 quarter.
The Co-O Mine vein system trends westerly and is truncated by a
major north-trending fault (the Oriental Fault) which has
vertically downthrown the vein system on the eastern side of the
fault by an estimated 300 metres and moved the veins horizontally
by approximately 20 to 40 metres, with the east side moved to the
south. The effect of the downthrow is that the Co-O veins on the
east side of the fault are not exposed at surface and the tops of
most veins commence approximately 160 metres below
surface and below Level I.
Drilling, which
commenced in late 2004, intersected
the vein system on the east side of the Oriental Fault and
subsequently has delineated the vein system over a strike length of
approximately 850 metres to east of the Oriental Fault. Drilling to the west has
extended the veins giving a total strike
length of approximately 1,600 metres.
Additional geological information is available in
the announcement dated 24
August 2011.
It is important to note that drilling of narrow
epithermal veins at best generally provides only an indication of
the presence of the gold mineralised vein and rarely provides good
quantitative data with respect to accurate grade and volume
estimations for some or all of the following reasons:
-
Veins commonly pinch and swell and may be
brecciated or displaced by faults;
-
Gold distribution is commonly erratic, in
shoots or controlled by structures within the vein; and
-
Drill core recovery can be reduced because of
the brecciation and soft unconsolidated material and hence the
recovered material may not be representative of the material
drilled.
Consequently, the Company regards the initial
drilling as indicative only and operates the policy of using
drilling to locate the extent of the mineralised veins. This is
then followed by level development to support the drilling
results, to provide a more accurate estimate of vein grades and to
facilitate the estimation of resources and conversion of Indicated
Resources to Probable Reserves.
See the section on Narrow
Vein Mining for more information.
1.2 Gold Production
The production statistics are summarised in
Table 1.
Table 1. Gold production statistics for financial
years ended 30 June 2010 and 2011
| Period |
Unit |
Year
ended
30 June 2011 |
Year
ended
30 June 2010 |
| Tonnes mined |
wet tonnes |
262,610 |
198,693 |
| Ore milled |
dry tonnes |
266,613 |
179,609 |
| Recovered grade |
gpt |
12.63 |
16.52 |
| Recovery |
% |
94% |
94% |
| Gold produced |
ounces |
101,474 |
89,679 |
| Cash costs |
US$ |
$189 |
$184 |
| Gold sold |
ounces |
96,217 |
64,020 |
| Average gold price received |
US$ |
$1,371 |
$1,100 |
Note:
(1) Net of development costs and includes royalties
and local business taxes but no by-product credits
The Co-O Mine produced a record 101,474 ounces of
gold for the year, an increase of 11,795 ounces or 13% above the
previous year's production of 89,679 ounces, at a recovered grade of
12.63 g/t gold (2009: 16.52 g/t gold) and cash costs of US$189 per
ounce (2010: US$184 per ounce).
The production guidance for the forthcoming
financial year is between 100,000 to 110,000 ounces at cash costs of
circa US$200 per ounce (inclusive of royalties and local business
taxes and no by-product credits).
A breakdown of actual and forecasted production ounces and cost per
ounce by quarters for the last four quarters of this fiscal year is highlighted in Graph 1.
1.3 Resources and Reserves
In July 2011 the Company completed
resource estimations for the Co-O Mine based on
drilling and underground development. In August 2010 a
new reserve estimate was published. The estimations are
based on 3D mine frame models of the veins. The Resource
estimation has maintained the Indicated Resources and has increased
Inferred ounces by 238,000 ounces
to 898,000 ounces using a lower cut of 0 g/t gold.
Table 3: Global Resources
| Category |
tonnes |
g/t
gold |
ounces |
| Indicated |
1,601,000 |
12.0 |
616,000 |
| Inferred |
4,747,000 |
8.8 |
1,344,000 |
| Total |
6,348,000 |
9.6 |
1,960,000 |
Notes:
- A lower cut-off of 0 g/t gold has been applied;
- Various upper cuts have been applied; and
- Resources are inclusive of reserves. |
Resource estimations were undertaken
by Cube Consulting Pty Ltd of Perth, Western Australia.
Table 4: Reserve
Estimations
| Category |
tonnes |
g/t
gold |
ounces |
| Probable
reserves |
1,500,000 |
10.1 |
502,000 |
Notes:
- Reserves based on a a US$1,000 per ounce gold price
and a stope cut-off grade of 3.0 g/t gold; and
- Reserves are included in the resource estimate. |
The reserve estimations were undertaken by Carras
Mining Pty Ltd of Perth, Western Australia.
1.4 Co-O Mine
(a) Mine
The Mine has produced 101,474 ounces for the year
ended 30 June 2011. Forecast production for
FY 2011/12 is 100-110,000 ounces.
(b) Mill
The new leach tanks and thickener have been
completed, and the gold
room expansion completed.
(c) Tailings Dam
Construction of a new eight year life tailings dam
was completed.
(d) Power
A dedicated power line to the Company's operations
was completed on schedule in late November 2010.
Figure 3. Composite longitudinal projection of the
Co-O Mine and drill
hole intersections.
View
Enlargement. |
Figure 4. Regional map of the Co-O Mine and adjacent
veins.
View
Enlargement
** 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. Refer to Stock
Exchange announcement dated 24 August 2011. |
Tenement location map showing the gold mines and prospects.
View
enlargement |
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1.5 Co-O Mine Conceptual Target Size
Estimates (Table 2)
have been undertaken for the Co-O Mine conceptual target size**
based on a drill-defined strike length of approximately 1,600 metres
and up to 2,000 metres based on potential extensions.
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
2.
The additional support for this target is listed
below:
-
The total ounces already accounted 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) 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 3, all new drill holes since 30 June 2011
in the deposit with assays of ≥0.2
metres at ≥3 g/t
gold up to 30 June 2011 are incorporated and support the
mineralisation continuing to depth. The assays support levels
between 500 metres and 750 metres below surface is a function of
the amount of drilling completed to date.
View
Table 2 here.
1.6 New Co-O Plant
The Board on 17 November 2010 approved
construction of a new Co-O plant with capacity to produce 200,00
ounces per year.
Capital requirements of the new plant (inclusive
of mine development) have been reduced from US$80 million to US$70
million and will be
funded out of cashflow.
The construction schedule after regulatory
permitting is estimated to be approximately 18 months.
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