Professional Documents
Culture Documents
GULLEWA GOLD-COPPER
PROJECT,
YALGOO MINERAL FIELD
Qualified Person:
TABLE OF CONTENTS
Contents
Page
3 EXECUTIVE SUMMARY 1
3.1 Project Area 1
3.2 Mineralization 2
3.3 Opportunities 3
3.3.1 Deflector Deposit 4
3.3.2 Other Mineral Resources 6
3.3.3 Other Deposits 6
3.3.4 Geological Anomalies 7
3.3.5 Stockpiles and Tailings Material 7
3.3.6 Exploration 7
3.4 Data Consolidation and Review 8
3.5 Surface Infrastructure 9
3.6 Processing and Tailings Disposal 10
3.6.1 Gullewa Processing Plant 10
3.6.2 Tailings Storage Facility 11
3.7 Recommendations 11
4 INTRODUCTION 12
4.1 Qualified Person 13
4.2 Site Visit by Author 13
4.3 Data Sources 14
Contents continued….
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8 HISTORY 69
8.1 Early Mining Activity (1897 to 1942) 70
8.2 Recent Mining Activity (October 1994 to January 2003) 70
8.2.1 Pre-Mining Corporate Activity 70
8.2.2 National Resources Exploration Limited 71
8.2.3 Gullewa Gold NL 71
8.2.4 King Solomon Mines Limited 72
8.2.5 Menzies Gold Limited 72
8.3 Corporate Developments, 2003 73
8.3.1 Hallmark Consolidated Limited 73
8.3.2 Batavia Mining Limited 73
8.4 Historical Base Metal Exploration (mid-1960s to mid-1980s) 74
8.5 Historical Gold Exploration (mid-1980s to 2000) 74
8.5.1 Goldfields Exploration Limited 74
8.5.2 Sons of Gwalia Limited 75
8.5.3 Gullewa Gold NL/Limited 76
8.5.4 Sipa Resources International NL 76
Contents continued….
Page
9 GEOLOGICAL SETTING 79
9.1 Regional Geology 79
9.1.1 Yilgarn Craton 79
9.1.2 Gullewa Greenstone Belt 79
9.2 Property Geology 81
9.2.1 Structure 81
9.2.2 Lithologies 81
10 DEPOSIT TYPES 85
10.1 Vein-Type Deposits 84
10.2 Secondary Enrichment Zones 84
10.3 Geological Model 84
11 MINERALIZATION 87
11.1 Deflector Deposit 87
11.2 Golden Stream Deposit 90
11.3 King Solomon/New Phoenix Deposit 91
11.4 Michelangelo Deposit 91
11.5 Monarch Deposit 92
11.6 Mugga King Deposit 92
11.7 Rock Steady Deposit 92
11.8 Shannadoah Deposit 93
12 EXPLORATION 94
12.1 Exploration Activities – 1990 to 2003 94
12.1.1 Sons of Gwalia Limited 94
12.1.2 National Resources Exploration Limited 95
12.1.3 Gullewa Gold NL/Limited 95
12.1.4 Menzies Gold Limited 96
12.2 2003 Exploration Activities – Batavia Mining Limited 97
12.3 2004 Exploration Activities – Batavia Mining Limited 98
12.3.1 Drilling Programs 99
12.3.2 Outcomes 99
12.3.3 Structural Study 102
12.3.4 Regional Targeting 102
Contents continued….
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13 DRILLING 111
13.1 Summary 111
13.2 Collar Surveys 113
13.3 Downhole Surveys 113
13.4 Geological Interpretation 114
13.5 Mineralized Intersections 114
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22 RECOMMENDATIONS 247
23 REFERENCES 251
APPENDIX B – Gold Variography Model Plots, May 2004 Mineral Resource Estimate,
Michelangelo Deposit 265
APPENDIX C – Gold Variography Model Plots, July 2004 Mineral resource Estimate,
Rock Steady Deposit 277
LIST of TABLES
Table
Page
Table 3.1 Summary of Snowden’s Undiluted, August 2006 Mineral Resource Estimate
for the Deflector Deposit, above a 1.0 g/t AuEq Grade Cut-Off
(2.5 g/t Au = 1.0% Cu) 4
Table 3.2 Summary of Key Metallurgical Testwork Results, Independent Metallurgical
Laboratories (Pty) Ltd. in 2006 10
Table 6.1 Summary of Mining Tenements held, and Mining Tenement Applications
made, by Batavia Mining Limited and South Murchison Mines (Pty) Ltd,
June 10, 2008 23
Table 6.2 Summary of Licenses held by Batavia Mining Limited, June 10, 2008 38
Table 6.3 Summary of Specific Rate Royalties Payable Since July 01, 2005 43
Table 6.4 Summary of Mining Tenements for which a One Percent of Gross Revenue
Royalty is Payable to Gullewa Limited 45
Table 6.5 Summary of the Locations of the Historical and Recent Mine Workings
Visited During SGA’s April 2008 Site Visit 46
Table 7.1 Access Roads from Perth to Gullewa Mining Centre 59
Table 7.2 Summary of Estimated Sustainable Yields from Water Boreholes,
Gullewa Project Area 67
Table 8.1 Summary of Best Estimate Gold Production, Gullewa Project Area,
1897 to January 2003 (not including Prince George Mine) 78
Table 8.2 Summary of Best Estimate Gold Production by Menzies Gold Limited,
April 2002 to January 2003 78
Table 13.1 Summary of Historic and Recent Surface Exploration Drilling Programs,
Deflector Deposit 112
Table 13.2 Summary of Significant Drillhole Intersections, Deflector Deposit,
2003 to 2007 115
Table 14.1 Summary of Field Experiment Results on Washing RC Samples to Assess
its Influence on Metal Grades 128
Table 15.1 Summary of Snowden’s Length Weighted, Bulk Density Statistics for
Deflector Mineralized Material and Waste 138
Table 16.1 Summary of Assay Results for RC holes twinned with Diamond Holes
Drilled by Batavia 140
Table 18.1 Summary of King Solomon Mines Ltd 2002 Metallurgical Composite of
Rock Steady Gold Vein Mineralized Material 143
Table 18.2 Summary of Key Metallurgical Testwork Results, Independent Metallurgical
Laboratories (Pty) Ltd. in 2006 144
Table 18.3 Summary of Final Flotation Concentrate Assays, 2006 Metallurgical
Testwork Program 144
Table 18.4 Summary of Key Metallurgical Testwork Results, Optimet Laboratories
in 1995 145
Table 18.5 Summary of Key Metallurgical Testwork Results, Ammtec Ltd. in 1999 146
Table 18.6 Summary of Diagnostic Analyses of the 2005, Oxide and Transitional
Metallurgical Testwork Composites 147
Table 18.7 Summary of Diagnostic Analyses of the 2005, Primary/Fresh Metallurgical
Testwork Composites 147
Table 18.8 Summary of Gold and Copper Recovery Rates and Grades, 2005 Oxide and
Transitional Metallurgical Testwork Composites 148
Table 18.9 Summary of AM2 Flotation Testwork Results for Gold and Copper Recovery
Rates and Grades, 2005 Oxide and Transitional Metallurgical
Testwork Composites 148
Table 18.10 Summary of Gold Gravity Recovery Rates and Grades, 2005 Primary/Fresh
Metallurgical Testwork Composites 149
Table 18.11 Summary of Gold and Copper Performance, 2005 Primary/Fresh
Metallurgical Testwork Composites 149
Table 18.12 Summary of Samples and Composites, 2006 Metallurgical Testwork
Program 151
Table 18.13 Summary of Crushing Indices, 2006 Metallurgical Testwork Program 151
Table 18.14 Summary of Grinding Indices, 2006 Metallurgical Testwork Program 152
Table 18.15 Summary of Gravity Testwork Gold Recoveries, 2006 Metallurgical
Testwork Program 152
Table 18.16 Summary of Batch Flotation Test Results, 2006 Metallurgical Testwork
Program 153
Table 18.17 Summary of Batch Flotation Test Results, 2006 Metallurgical Testwork
Program 154
Table 18.18 Summary of Cyanide Leaching of Primary Cleaner Tailings Results, 2006
Metallurgical Testwork Program 155
Table 18.19 Summary of Primary Cleaner Tailings Results, 2006 Metallurgical Testwork
Program 155
Table 18.20 Summary of Concentrate Physical Characteristics, 2006 Metallurgical
Testwork Program 156
Table 19.1 Summary of Snowden’s Undiluted, January 2004 Mineral Resource
Estimate for the Deflector Deposit, above a 1.0 g/t AuEq Grade Cut-Off
(1.0% Cu = 2.0 g/t Au) 164
Table 19.2 Summary of Snowden’s Undiluted, January 2004 Mineral Resource
Estimate for the Deflector Deposit, above a 1.0 g/t AuEq Grade Cut-Off
(1.0% Cu = 1.8 g/t Au) 166
Table 19.3 Summary of Snowden’s Undiluted, November 2004 Mineral Resource
Estimate for the West and Central Lodes of the Deflector Deposit, above a
1.0 g/t AuEq Grade Cut-Off (1.0% Cu = 1.8 g/t Au) 167
Table 19.4 Summary of Snowden’s Undiluted, August 2006 Mineral Resource
Estimate for the Deflector Deposit, above a 1.0 g/t AuEq Grade Cut-Off
(1.0% Cu = 2.5 g/t Au) 169
Table 19.5 Summary of Snowden’s Domains and Lode Identifier used in the August
2006 Mineral Resource Estimate for the Deflector Deposit 170
Table 19.6 Summary Statistics by Sulphide Oxidation State, West Lode (including
splays), August 2006 Mineral Resource Estimate, Deflector Deposit 172
Table 19.7 Summary Statistics by Sulphide Oxidation State, Central Lode, August
2006 Mineral Resource Estimate, Deflector Deposit 173
Table 19.8 Summary Statistics for Gold, West and Central Lodes, August 2006
Mineral Resource Estimate, Deflector Deposit 173
Table 19.9 Summary Statistics for Silver, West and Central Lodes, August 2006
Mineral Resource Estimate, Deflector Deposit 176
Table 19.10 Summary Statistics for Copper, West and Central Lodes, August 2006
Mineral Resource Estimate, Deflector Deposit 178
Table 19.11 Correlation Matrix, Domains 11 & 14, West Lode, August 2006
Mineral Resource Estimate, Deflector Deposit 180
Table 19.12 Correlation Matrix, Domain 20 (Central Lode), August 2006
Mineral Resource Estimate, Deflector Deposit 180
Table 19.13 Summary of Top Cut Analysis Results for Gold, August 2006 Mineral
Resource Estimate, Deflector Deposit 181
Table 19.14 Summary of Top Cut Analysis Results for Silver, August 2006 Mineral
Resource Estimate, Deflector Deposit 181
Table 19.15 Summary of Top Cut Analysis Results for Copper, August 2006 Mineral
Resource Estimate, Deflector Deposit 181
Table 19.16 Summary of Back-Transformed, Variogram Model Parameters, August
2006 Mineral Resource Estimate, Deflector Deposit 183
Table 19.17 Summary of Block Model Parameters, August 2006 Mineral
Resource Estimate, Deflector Deposit 183
Table 19.18 Summary of Back-Transformed, Variogram Model Parameters,
All Metals, August 2006 Mineral Resource Estimate, Deflector Deposit 184
Table 19.19 Summary of Mean Input Composite Grades With Block Model Grades,
August 2006 Resource Estimate, Deflector Deposit 185
Table 19.20 Summary of Undiluted, Global Mineral Resource Estimates at Different
Gold Equivalent Cut-Offs, August 2006 Resource Estimate,
Deflector Deposit (1.0% Cu = 2.5 g/t Au) 186
Table 19.21 Summary of Undiluted, Global Mineral Resource Estimates at a 1.0 g/t
AuEq Grade Cut-Off, August 2006 Resource Estimate, Deflector
Deposit (1.0% Cu = 2.5 g/t Au) 187
Table 19.22 Summary of Undiluted, Mineral Resource Estimates by Category,
above a 1.0 g/t AuEq Grade Cut-Off, August 2006 Mineral Resource
Estimate, Deflector Deposit (1.0% Cu = 2.5 g/t Au) 190
Table 19.23 Summary of Undiluted Mineral Resource Estimates by Mineral
Resource Category and Oxidation Category, above a 1.0 g/t AuEq
Grade Cut-Off, August 2006 Mineral Resource Estimate, Deflector
Deposit (1.0% Cu = 2.5 g/t Au) 191
Table 19.24 Summary of Geostat’s Undiluted, May 31, 2004 Mineral Resource
Estimate for the Michelangelo Deposit, above a 0.5 g/t Au Grade Cut-Off 192
Table 19.25 Summary of Geostat’s Uncut and Cut Composite Statistics for the
Seven Mineralized Laterites, May 2004 Mineral Resource Estimate
for the Michelangelo Deposit, above a 0.5 g/t Au Grade Cut-Off 195
Table 19.26 Summary of Geostat’s Uncut and Cut Composite Gold Statistics for the
38 Primary Lodes, May 2004 Mineral Resource Estimate for Michelangelo
Deposit, above a 0.5 g/t Au Grade Cut-Off 196
Table 19.27 Summary of Variogram Model Parameters, May 2004 Mineral Resource
Estimate, Michelangelo Deposit 197
Table 19.28 Summary of Block Origins and Models’ Extents, May 2004 Mineral
Resource Estimate, Michelangelo Deposit 198
Table 19.29 Summary of Search Ellipse Dimensions, May 2004 Mineral Resource
Estimate, Michelangelo Deposit 199
Table 19.30 Summary of Search Ellipse Orientations, May 2004 Mineral Resource
Estimate, Michelangelo Deposit 200
Table 19.31 Summary of Statistical Validation Results of Lode Interpolated Gold
Grades, May 2004 Mineral Resource Estimate, Michelangelo Deposit 201
Table 19.32 Summary of Geostat’s Undiluted, May 31, 2004 Mineral Resource
Estimate for the Michelangelo Deposit, above a 0.5 g/t Au Grade Cut-Off 206
Table 19.33 Summary of Geostat’s Undiluted, June 04, 2004 Inferred Mineral
Resource Estimate for the King Solomon/New Phoenix Deposit,
above a 1.0 g/t Au Grade Cut-Off 207
Table 19.34 Summary of Geostat’s Cut and Uncut Composite Gold Statistics for the
13 Mineralized Veins, June 2004 Mineral Resource Estimate for the
King Solomon/New Phoenix Deposit, above a 1.0 g/t Au Grade Cut-Off 211
Table 19.35 Summary of Block Origins and Model Extents, June 2004 Mineral
Resource Estimate, King Solomon/New Phoenix Deposit 212
Table 19.36 Summary of Search Ellipse Orientations and Dimensions, June
2004 Mineral Resource Estimate, King Solomon/New Phoenix Deposit 213
Table 19.37 Summary of Statistical Validation Results of Vein-Interpolated
Gold Grades, June 2004 Mineral Resource Estimate, King Solomon/
New Phoenix Deposit 213
Table 19.38 Summary of Geostat’s Undiluted, June 04, 2004 Global Mineral
Resource Estimate for the King Solomon/New Phoenix Deposit,
above a 1.0 g/t Au Grade Cut-Off 217
Table 19.39 Summary of Geostat’s Undiluted, June 04, 2004 Inferred Mineral
Resource Estimate for the King Solomon/New Phoenix Deposit,
above a 1.0 g/t Au Grade Cut-Off 218
Table 19.40 Summary of Geostat’s Undiluted, July 20, 2004 Global Mineral
Resource Estimate for the Rock Steady Deposit, above a 1.0 g/t Au
Grade Cut-off (Primary Veins) 219
Table 19.41 Summary of Geostat’s Uncut and Cut Composite Gold Statistics for the
Primary Veins, above a 1.0 g/t Au Grade Cut-Off, July 2004 Mineral
Resource Estimate, Rock Steady Deposit 222
Table 19.42 Summary of Variogram Model Parameters, July 2004 Mineral Resource
Estimate, Rock Steady Deposit 223
Table 19.43 Summary of Block Origins and Model Extents, July 2004 Mineral
Resource Estimate, Rock Steady Deposit 224
Table 19.44 Summary of Search Ellipse Orientations, July 2004 Mineral Resource
Estimate, Rock Steady Deposit 225
Table 19.45 Summary of Search Ellipse Orientations, July 2004 Mineral Resource
Estimate, Rock Steady Deposit 226
Table 19.46 Summary of Geostat’s Undiluted, July 20, 2004 Global Mineral
Resource Estimate for the Rock Steady Deposit, above a 1.0 g/t Au
Grade Cut-Off (Primary Veins) 227
Table 20.1 Summary of Batavia’s Mineralized Material Dump Tonnage and
Grade Estimates 233
Table 20.2 Summary of Snowden’s Production Schedule, 2006 Feasibility Study 235
Table 20.3 Summary of Expected Gullewa Plant Performance, 2006 Feasibility Study 235
Table 20.4 Summary of Capital Cost Estimates, 2006 Feasibility Study, in
Australian Dollars 236
Table 20.5 Summary of Snowden’s Designed Bench Geometries, 2006 Feasibility Study,
Deflector Deposit 239
Table 20.6 Summary of Inter-Ramp Pit Angles, Designed and Optimized Deflector
Openpit, 2006 Feasibility Study 241
Table 20.7 Summary of Snowden’s Estimated In-Stope Dilution Rates, West Lode,
Deflector Underground 243
Table 20.8 Summary of Snowden’s Estimated In-Stope Dilution Rates, Central Lode,
Deflector Underground 244
LIST of FIGURES
Figure
Page
Figure 3.1 A Plan of The Main Gullewa Project Tenement Area, in UTM
Co-ordinates 1
Figure 3.2 A General View of the CIL Plant at Gullewa Mining Centre 2
Figure 3.3 A Google Earth Image of the Positions of the Historical Mine Workings
Visited During SGA’s April 2008 Site Visit 3
Figure 19.1 Deflector Deposit Drilling Section 19,300N, looking North 5
Figure 6.1 A General View of the CIL Plant at Gullewa Mining Centre 21
Figure 6.2 A Google Earth Image of the Location of Gullewa Project, within the
State of Western Australia 21
Figure 6.3 A Google Earth Image of the Regional Location of Gullewa Project 22
Figure 6.4 A Location Plan of the Two Gullewa Mining Tenement Areas 24
Figure 6.5 A Plan of The Main Gullewa Project Tenement Area, in UTM
Co-ordinates 25
Figure 6.6 A Plan of the Yalgoo Tenement (Mining Lease), in UTM Co-ordinates 26
Figure 6.7 A Plan of the Mining Tenements Relating to the Gullewa Mining
Centre and Deflector Mineral Deposit 26
Figure 6.8 Open Stopes and Surface Rock Dumps at the Historical Mugga King
Workings 39
Figure 6.9 Some Rusting Scrap Metal and other Mining Trash near the Historical
Shannadoah Underground Workings 39
Figure 6.10 The Headgear and some of the Surface Works and Rock Dumps at King
Solomon/New Phoenix Mine 40
Figure 6.11 The Rock/Waste Dump at Michelangelo Openpit 40
Figure 6.12 A Google Earth Image of the Positions of the Historical Mine Workings
Visited During SGA’s April 2008 Site Visit 47
Figure 6.13 A Google Earth Image of the Deflector Openpits and Associated Dumps 47
Figure 6.14 A Prospect Geology Plan of the Gullewa Project Area Highlighting the
Positions of the Historical Mine Workings and Main Geological Anomalies 48
Figure 6.15 A General View, Looking West, of a Portion of the Licensed Tailings
Storage Facility (Cell #1) at Gullewa Mining Centre, with the CIL
Processing Plant in the Background 52
Figure 11.2 An In-Pit Geology Plan the Deflector West and Central Mineralized
Veins/Lodes 89
Figure 12.1 Summary Aeromagnetic and Interpretive Plan of the General Area of the
Deflector Deposit 98
Figure 12.2 A Drillhole Collar Location Plan for the 2004 AirCore Drilling Program
on the Prospects Near the Deflector Deposit 101
Figure 12.3 A Drillhole Collar Location Plan for all Exploration Holes Drilled on the
Deflector Deposit, up to and including 2004 102
Figure 12.4 A 2004 Aeromagnetic Plan of the King Solomon-Rock Steady Area with
the Collar Positions of Previously Drilled Holes, the Positions of Known
Outcrops and Other Geological Information Highlighted 103
Figure 12.5 The Area Mapped by Dr. J.A. Hallberg during 2006, for Batavia 105
Figure 12.6 The Location of the 2006 Deflector IP Traverses, Overlain on a Reduced
to Pole Magnetic Image 106
Figure 12.7 A Drillhole Location Plan for Batavia’s 2006 Deflector Drilling Program 107
Figure 12.8 The Interpreted, GIS-based, Results of Batavia’s 2006 Aeromagnetic-
Radiometric Survey 109
Figure 14.1 A Comparison of Primary Gold Assay Values (Au ppm1) and Laboratory
Duplicate Values (Au ppm2) in the 2003/2004 Deflector Deposit Database,
for Au ppm1 Values over 0.01 ppm 129
Figure 14.2 A Comparison of Original Assay Values with Re-Split Duplicate
Sample Assays 129
Figure 15.1 Some of the RC Sample Split Trays Housed in a Covered Workshop at
Gullewa Mining Centre 131
Figure 15.2 Some of the (apparently) Informal Core Tray Stacks Located Behind the
CIL Plant at Gullewa Mining Centre 132
Figure 15.3 A Comparison of 1996 Fire Assay and Aqua Regia Assay Results for Gold,
Deflector Mineralized RC Assay Composites 134
Figure 17.1 A Generalized Geology Plan Showing the Locations of the Major Mineral
Deposits found across the Western Margin of the Yilgarn Craton 142
Figure 19.1 Deflector Deposit Drilling Section 19,300N, looking North 166
Figure 19.2 A 3-D Perspective View of the Deflector Mineralized Lodes, August 2006
Mineral Resource Estimate, Deflector Deposit 170
Figure 19.3 Log Probability Plot of Sample Lengths for the West and Central Lodes,
August 2006 Mineral Resource Estimate, Deflector Deposit 172
Figure 19.4 Log-Scale Histogram and Probability Plots for Gold, Domain 11, West Lode,
August 2006 Mineral Resource Estimate, Deflector Deposit 174
Figure 19.5 Log-Scale Histogram and Probability Plots for Gold, Domain 14, West Lode,
August 2006 Mineral Resource Estimate, Deflector Deposit 174
Figure 19.6 Log-Scale Histogram and Probability Plots for Gold, Central Lode, August
2006 Mineral Resource Estimate, Deflector Deposit 175
Figure 19.7 Log-Scale Histogram and Probability Plots for Silver, Domain 11, West Lode,
August 2006 Mineral Resource Estimate, Deflector Deposit 176
Figure 19.8 Log-Scale Histogram and Probability Plots for Silver, Domain 14, West Lode,
August 2006 Mineral Resource Estimate, Deflector Deposit 177
Figure 19.9 Log-Scale Histogram and Probability Plots for Silver, Central Lode,
August 2006 Mineral Resource Estimate, Deflector Deposit 177
Figure 19.10 Log-Scale Histogram and Probability Plots for Copper, Domain 11,
West Lode, August 2006 Mineral Resource Estimate, Deflector Deposit 178
Figure 19.11 Log-Scale Histogram and Probability Plots for Copper, Domain 14,
West Lode, August 2006 Mineral Resource Estimate, Deflector Deposit 179
Figure 19.12 Log-Scale Histogram and Probability Plots for Copper, Central Lode,
August 2006 Mineral Resource Estimate, Deflector Deposit 179
Figure 19.13 A Perspective View, Looking Southeast, of Snowden’s Mineral Resource
Classification Scheme, August 2006 Mineral Resource Estimate,
Deflector Deposit 188
Figure 19.14 Snowden’s Resource Classification Scheme for the West Lode, August
2006 Mineral Resource Estimate, Deflector Deposit 189
Figure 19.15 Snowden’s Resource Classification Scheme for the Central Lode, August
2005 Mineral Resource Estimate, Deflector Deposit 189
Figure 19.16 A Three-Dimensional Plan View of the Laterite Lodes, Looking North,
May 2004 Mineral Resource Estimate, Michelangelo Deposit 193
Figure 19.17 A Three-Dimensional Perspective View, Looking South, of the Primary
Lodes in the Central Area of the Michelangelo Deposit, May 2004 Mineral
Resource Estimate 194
Figure 19.18 A Three-Dimensional Perspective View, Looking North, of Primary Lode
240, (Showing a Southwest Plunge) in the Central Area of the Michelangelo
Deposit, May 2004 Mineral Resource Estimate 194
Figure 19.19 Gold Grade versus Easting Validation Plot, Laterite Lode 120, May 2004
Mineral Resource Estimate, Michelangelo Deposit 202
Figure 19.20 Gold Grade versus Easting Validation Plot, Laterite Lode 130, May 2004
Mineral Resource Estimate, Michelangelo Deposit 202
Figure 19.21 Gold Grade versus Easting Validation Plot, Primary Lodes 200 to 390,
May 2004 Mineral Resource Estimate, Michelangelo Deposit 203
Figure 19.22 Gold Grade versus Northing Validation Plot, Laterite Lode 120, May
2004 Mineral Resource Estimate, Michelangelo Deposit 204
Figure 19.23 Gold Grade versus Northing Validation Plot, Laterite Lode 130, May
2004 Mineral Resource Estimate, Michelangelo Deposit 204
Figure 19.24 Grade-Tonnage Curves for Laterite and Primary Lodes at Different
Gold Grade Cut-Offs, May 2004 Mineral Resource Estimate,
Michelangelo Deposit 205
Figure 19.25 Combined Grade-Tonnage Curve for all Lodes at Different Gold Grade
Cut-Offs, May 2004 Mineral Resource Estimate, Michelangelo Deposit 205
Figure 19.26 A Three-Dimensional Perspective View, Looking Northwest, of
the Mineralized Veins, King Solomon/New Phoenix Deposit, June 2004
Mineral Resource Estimate 209
Figure 19.27 A Three-Dimensional Perspective View, Looking North, of the Flat-Lying
Mineralized Veins in the Western Portion of the King Solomon/New
Phoenix Deposit, June 2004 Mineral Resource Estimate 209
Figure 19.28 A Two-Dimensional View of the Relative Positions of the Mineralized
Veins that Comprise the King Solomon/New Phoenix Deposit, June 2004
Mineral Resource Estimate 210
Figure 19.29 A Three-Dimensional Perspective View of Mineralized Lode 200, King
Solomon/New Phoenix Deposit, with the Drillhole Composites
Highlighted, June 2004 Mineral Resource Estimate 214
Figure 19.30 A Three-Dimensional Perspective View of Mineralized Lode 300, King
Solomon/New Phoenix Deposit, with the Drillhole Composites
Highlighted, June 2004 Mineral Resource Estimate 215
Figure 19.31 Gold Grade versus Depth Validation Plot, Mineralized Vein 100, June
2004 Mineral Resource Estimate, King Solomon/New Phoenix Deposit 215
Figure 19.32 Gold Grade versus Depth Validation Plot, Mineralized Vein 200, June
2004 Mineral Resource Estimate, King Solomon/New Phoenix Deposit 216
Figure 19.33 Gold Grade versus Depth Validation Plot, Mineralized Vein 300, June
2004 Mineral Resource Estimate, King Solomon/New Phoenix Deposit 216
Figure 19.34 A Combined Grade-Tonnage Curve for Mineralized Veins 100 to 300
and 500 to 700, at Different Gold Grade Cut-Offs, June 2004 Mineral
Resource Estimate, King Solomon/New Phoenix Deposit 218
Figure 19.35 A Three-Dimensional Perspective View, Looking Northwest, of the
Mineralized Laterite and Primary Veins, Rock Steady Deposit, July
2004 Mineral Resource Estimate 221
Figure 19.36 Gold Grade versus Depth Validation Plot, Primary Vein 200, July
2004 Mineral Resource Estimate, Rock Steady Deposit 226
Figure 19.37 Gold Grade versus Depth Validation Plot, Primary Vein 400, July
2004 Mineral Resource Estimate, Rock Steady Deposit 226
Figure 19.38 A Grade-Tonnage Curve for the Remaining Primary Vein Mineral
Resources at Different Gold Grade Cut-Offs, July 2004 Mineral
Resource Estimate, Rock Steady Deposit 227
Figure 20.1 One of the Mineralized Material Dumps at Deflector West Openpit 231
Figure 20.2 A General Location Plan of the Available Mineralized Material Dumps 231
Figure 20.3 A General Location Plan of the Mineralized Material Stockpiles at the
Deflector West Re-Sort Pad 233
Figure 20.4 A General Location Plan of the Mineralized Material Stockpiles at the
Deflector West Waste Dump 234
Figure 20.5 A View of the Thickly Developed Laterite Cover forming Part of an
Excavated Slope of the Michelangelo Openpit 239
Figure 20.6 A View of the Weathered Rockmass forming an Excavated Slope of the
Monarch Openpit 240
Figure 20.7 A View of the Oxide Rockmass and Laterite Cover forming an Excavated
Slope of the Deflector West Openpit 240
Figure 20.8 An Example of the Generally Massive to Widely Jointed Nature of the
Fresh/Unoxidized Host Rockmass of the Deflector Deposit 241
Figure 20.9 A Summary of the Construction of Pit Slope Angles for the Software used
by Snowden for Purposes of Deflector Pit Optimization 242
All dollar figures are in Australian dollars (A$), unless otherwise stated.
3 EXECUTIVE SUMMARY
This Technical Report has been prepared for ATW Venture Corp. (the “Company”), in
accordance with National Instrument (“NI”) 43-101. Its purpose is to provide an overview of the
mineral property known as the Gullewa Gold-Copper Project (“Gullewa Project”). Details of
Gullewa Project are presented, including all current, CIMM Code compliant Mineral Resource
estimates and all known exploration programs that have been carried out across the Gullewa
Project area, up to the data cut-off date for this report of June 10, 2008. The presented
information is in part based on observations made during an April 2008 site visit by the author of
this Technical Report.
Figure 3.1 – A Plan of the Main Gullewa Project Tenement Area, in UTM Co-ordinates
(mining leases are highlighted in PURPLE and exploration licenses in shades of OLIVE GREEN. The thin strips
of ground that comprise Prospecting licenses [P59/1736 & /1737] are in the southeast corner.
The miscellaneous license areas are too small to be individually identified)
According to the best information available to S. Godden & Associates Ltd. (“SGA”), all the
Gullewa tenements are in good standing and no granted Special Prospecting Licences for Gold
(“SPLs”) are in force over any part of the Gullewa Project area (information based on title
opinion by M & M Walter Consulting of Subiaco, W.A., on behalf of the Company; SPLs are
defined and described in Sub-Section 6.4.3 of this Technical Report).
Gullewa Mining Centre (the “Mining Centre”) forms a convenient focal point of the main
tenement block, hence the Gullewa Project area. The Mining Centre is located in the northern
part of the main tenement block (on Mining Lease 59/049 and adjacent to Monarch openpit); the
dominant structure is a carbon-in-leach (“CIL”) plant located at Latitude 28° 39’ 44.0” South,
Longitude 116° 18’ 19.30” East (Figure 3.2).
Figure 3.2 – A General View of the CIL Plant at Gullewa Mining Centre
(taken by SGA during the April 2008 site visit)
With the exception of iron mineralization located across various portions of the Gullewa project
area, which mineralization is subject to a Joint Venture Agreement between the Company and
Batavia Mining Limited (“Batavia” and the “JV Agreement”), the Company will acquire fully
and exclusively the mining tenements and all related assets of Gullewa Project (rights,
infrastructure, processing plant, tailing storage facility, equipment and intellectual property) from
Batavia, contingent on various terms and conditions set out in a definitive agreement dated April
18, 2008 with amendemants dated June 10, 2008 (the “Definitive Agreement”). A summary of
the key points of the Definitive Agreement, inclusive the JV Agreement, are presented in Sub-
Section 6.1 of this Technical Report.
3.2 Mineralization
Iron mineralization is not considered within the scope of this Technical Report that concentrates
on gold and gold-copper mineralization only. The gold and gold-copper mineralization
sometimes includes secondary silver and it occurs in two dominant forms:
3.3 Opportunities
The Gullewa Project area contains six mined-out or partially mined-out openpits (Deflector
Central, Deflector West, Golden Stream, Michelangelo, Monarch and Rock Steady – Figure 3.3),
at least five areas of historical underground workings (King Solomon’s Mine [that is sometimes
referred to as New Phoenix], Mugga Queen, Mugga King, Shannadoah and Shannadoah SE) and
up to eighty (80) known soil geochemistry, gravity or aeromagnetic (“geological”) anomalies.
Gold or gold-copper mineralization (plus some secondary silver) was exploited at each of the
openpits and underground workings. Operations, that mainly comprised opencut mining with
CIL processing to extract gold, were last suspended in January 2003.
The available information suggests that each of the geological anomalies might be associated
with gold or gold-copper mineralization. Gold mineralization was also exploited at Prince
George Mine, located on the Yalgoo Tenement, but no verified information concerning these
workings is available and they are not considered within the scope of this Technical Report.
Figure 3.3 - A Google Earth Image of the Positions of the Historical and Recent
Mine Workings Visited During SGA’s April 2008 Site Visit
(the positions, determined by ground-based GPS readings by SGA and later refined
by SGA using Google Earth, are highlighted by the yellow pin markers)
Despite previous mining activity, there are a number of opportunities for short- to medium-term
Project development through exploration, drilling to define additional Mineral Resources, the
development of an openpit and underground mining operation on the Deflector deposit and the
processing of existing stockpiles of mineralized material and tailings. A considerable supporting
database exists as regards the various opportunities, which in key areas is well defined but in
other areas requires either consolidation and interpretation or the capture of additional data.
Table 3.1
Summary of Snowden’s Undiluted, August 2006 Mineral Resource Estimate
for the Deflector Deposit, above a 1.0 g/t AuEq Grade Cut-Off (1.0% Cu = 2.5 g/t Au)
(CIMM 2005 compliant, data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Au Ag Cu AuEq AuEq
Category Tonnes (g/t) (g/t) (%) (g/t) (oz)
Measured 535,000 3.87 8.03 1.18 6.81 117,000
Indicated 1,169,000 4.32 6.34 0.96 6.72 252,000
Measured + Indicated 1,704,000 4.18 6.87 1.03 6.75 369,000
Inferred 1,616,000 6.50 3.41 0.48 7.71 400,000
It is emphasized that a portion of the Mineral Resource estimate summarized on Table 3.1 is in
the Inferred category, which category may be considered geologically speculative. There is no
guarantee that Inferred Mineral Resources will be upgraded to Mineral Reserve status. The
Mineral Resource estimate is stated for a gold equivalent cut-off grade of 1.0 g/t AuEq only -
selective extraction dictated by the results of on-going in-pit/in-stope grade control to define
areas or zones within individual veins above a desired minimum gold equivalent grade cut-off is,
for all reasonable and practical purposes, not a viable option by virtue of the nature of the
mineralization that is confined to one to five metre wide mineralized veins (termed lodes) that:
• dip steeply to the east and west within a sub-vertical shear zone that trends northeast-
southwest for approximately 600 metres; and
• are oxidized to a depth of approximately 35 metres below surface, following which there is a
mixed/transitional zone above the start of the primary/fresh mineralized material at about 70
metres below surface.
The wall rocks of the veins consist of stockwork quartz and strongly silicified pyritic basalt that
passes abruptly into fine-grained basalt. Figure 3.4 identifies the seven interpreted lodes, based
on gold-copper-silver geochemistry, that together comprise the three main mineralized veins
(West, Central and Contact Lodes) identified by drilling below a thin cover of sheetwash
laterites.
• Michelangelo – 1.69 million tonnes with an average grade of 1.19 g/t Au, in the Inferred
category, inclusive of 1.07 million tonnes of secondary gold enrichment in laterites with an
average grade of 1.05 g/t Au;
• King Solomon/New Phoenix - 86,000 tonnes with an average grade of 7.48 g/t Au, in the
Inferred category; and
• Rock Steady – 38,000 tonnes with an average grade of 3.60 g/t Au, in the Inferred category.
The Michelangelo, King Solomon/New Phoenix and Rock Steady deposits have not been fully
appraised, to which end data consolidation and reviews could and should be carried out to
establish the viability of their development through additional resource drilling and/or
exploitation using either opencut or underground mining methods. In this regard, it is
emphasized that the estimated Mineral Resources have uniformly been re-classified (by SGA)
into the Inferred category due to uncertainties concerning the available databases. With data
consolidation and verification, some of the estimated Mineral Resources could probably be
reclassified into the Indicated category.
The King Solomon/New Phoenix Mineral Resource estimate excludes an estimated total of
approximately 282,000 tonnes of mineralized material with an average grade of approximately
2.36 g/t Au. This material was excluded due to a paucity of geological and grade information
that renders the material speculative at best. The reader should, therefore, be aware that the
stated potential tonnage and potential average grade of this mineralized material are conceptual
in nature and cannot be relied upon. There has been insufficient exploration to define a Mineral
Resource and it is uncertain if further exploration will result in the material being delineated as a
Mineral Resource. The material in question includes mineralized quartz-sulphide veins that
could be exploited using underground mining methods, as well as a surface expression of
secondary gold enrichment in laterite.
• between 40,000 and 50,000 tonnes of mineralized material remains at Monarch openpit,
which could be exploited using openpit and underground mining methods (average grade
unknown);
• that approximately 23,000 tonnes of mineralized material grading 2.93 g/t Au remain in the
Golden Stream openpit; and
• mineralized material containing 4,000 Troy ounces of gold is available for exploitation at
Prince George Mine (the tonnes and grade of the mineralized material are unknown).
Formal Mineral Resource estimates have not been compiled for the material remaining at the
deposits outlined (Monarch, Golden Stream and Prince George), which were previously
exploited using openpit and underground mining methods. The reader should, therefore, be
aware that the potential tonnages and potential grades of the material outlined are conceptual in
nature and cannot be relied upon. There has been insufficient exploration to define Mineral
Resources and it is uncertain if further exploration will result in the various materials being
delineated as Mineral Resources.
3.3.6 Exploration
Exploration activity across the Gullewa Project area has for the most part been constrained by a
sometimes thickly developed Tertiary sheetwash laterite and/or Quaternary alluvial cover that
extends over much of W.A. Various exploration methods have been tried and each method has
met with a degree success. However, in the opinion of SGA, the Gullewa Project area remains
under-explored, not least because it is only recently that targeting has been used as an
exploration tool, based in part on an understanding of the structural controls on the vein-type
gold and gold-copper mineralization.
• the closest spacing that has thus far been employed was 100 metres during the 2006 survey
by Batavia; whereas
• experience elsewhere suggests that in order to illuminate the structural geology to the level
required, flight-line spacings of 50 metres might be needed.
The preceding point is made because preliminary and provisional analysis (by SGA) suggests
that the structural controls on the location of gold and gold-copper, vein-type mineralization
might be more complex than have thus far been identified.
The influence of the narrow, usually steeply dipping nature of the thinly developed mineralized
veins on the potential for exploration success also requires consideration, not least because the
geophysical signatures of such mineralized bodies are most often small. The resolution of any
planned geophysical survey should, therefore, reflect this constraint, which the planned gravity
survey (Sub-Section 12.7) will to an extent help to overcome. However, in the opinion of SGA,
exploration targeting is the best way forward, based on the results of refined aeromagnetic
surveys designed to illuminate the complexities of the structural environment in the bedrocks
below the sometimes thickly developed sheetwash laterite/alluvial cover.
There is poor correlation between the geochemistry of the Tertiary laterite/Quaternary alluvial
cover and the presence or lack of insitu, gold vein-type mineralization in the Archaean bedrocks.
This does not, however, suggest that the large database of historical and recent laterite
geochemistry results should be ignored. The data needs first to be consolidated and compiled
into a user-friendly digital database, following which geochemistry anomaly maps should be
prepared, taking into account the possibility of variations with increasing depth of cover below
surface. Areas of potential interest as regards zones of secondary gold enrichment might then be
identified. In this regard, reviews of the viability of excavating, transporting and processing
what amounts to low-grade gold mineralization would be of benefit.
To the extent possible, the surface of the Archaean bedrocks should also be contoured, if only to
facilitate interpretation of the sub-surface geology. In this regard, the subtle topographic highs
evident at the Golden Stream deposit and at King Solomon mine are emphasized.
• a fairly comprehensive system of good quality, internal access roads (that require only minor
repair and regrading) exists, rough tracks lead to the historical underground workings, the
last of which closed in 1942;
• a gravel airstrip, suitable for light aircraft, was developed about two kilometres north of the
Mining Centre (minor repair and regarding of the strip would be required before it could
safely be used);
• an established, permanent camp for approximately 50 persons exists near the Mining Centre,
which facility is currently (May 2008) serviceable in part but requires minor refurbishment
and upgrade before it could fully be used;
• plentiful amounts of potable water are available, by virtue of an established water extraction
and purification system, and a water abstraction license for 20,000 kilolitres per annum is in
place;
• a range of air-conditioned and equipped offices workshop facilities exist at the Mining
Centre, along with limited changehouse facilities and a small, but extensively equipped,
laboratory (limited refurbishment of these facilities would be required before they could fully
be put into service and the laboratory equipment would have to be checked and re-calibrated,
as appropriate);
• working microwave communications facilities, powered by solar panels, are available at the
Mining Centre offices;
• a 1,728 kilowatt capacity powerhouse was previously built to supply sufficient power for the
Mining Centre operations (however, at the time of writing [May 2008], the diesel engines
and ancillary equipment remained the property of Kalgoorlie Power Systems of Kalgoorlie,
W.A.); and
• an abundance of operations’ water is available from established water boreholes and by
means of pumping from the existing openpits, but a license for the abstraction of such water
is required.
Table 3.2
Summary of Key Metallurgical Testwork Results, Independent
Metallurgical Laboratories (Pty) Ltd. in 2006
(data from IML’s December 2006 metallurgical testwork program report to Batavia)
Headgrade Recovery (%)
Sample Cu Au Gold Copper Concentrate
Type (%) (g/t) Gravity Flotation Total Flotation Grade (% Cu)
Oxide 2.5 5.6 40.0 37.8 77.8 58.5 21.4
Transitional 2.0 5.1 50.9 31.6 82.5 46.5 16.1
Primary 1.4 6.1 65.5 26.1 91.6 93.7 22.7
The preceding points are emphasized because of the difficulties experienced in 2002 and January
2003, prior to suspension of the Gullewa operations - what brought about the ultimate demise of
the operators (Menzies Gold Limited through King Solomon Mines Limited) was the decision in
late 2002 to mix and treat some copper-rich mineralized material from Deflector West with other
mineralized material available on the crusher pad. This resulted in the blocking of all the carbon
in the CIL circuit, thereby rendering the plant inoperable. Coxhell & O’Ferrall (2003) reported
at the time that ‘The first signs of metallurgical and milling problems had begun by late
November 2002, when the mill was first shut down for a week to acid strip the copper. By
December certain metallurgical features arose that helped pinpoint the problem’ (chalcocite and
cuprite were identified as the main causes of the metallurgical problems). Despite attempts to
blend the millfeed, by early January ‘the copper problem arose again, as well as later that month
as well. ‘Recoveries were down to 50 percent and cyanide consumption peaked at four
kilograms per tonne. The carbon was totally replaced in mid-January, but a few days later the
mill was shut down again to strip the copper. Samples taken from the cyclone overflow gave
values around 0.9% Cu, whereas previous copper values, around the 0.5% Cu level, had been
treated successfully over the Christmas period’.
suppose that sites for one or more heap leach pads could not be identified and utilized, if such a
process was at some future point identified as suitable for Gullewa mineralized material.
It should be noted that, depending on the Company’s processing strategy of available
mineralized material, a flotation circuit may not in the first place be required. Of the known
deposits, only Deflector contains significant amounts of copper; mineralized material from the
other known Gullewa deposits could readily be processed through a rehabilitated CIL plant to
thereby recover approximately 88 percent of the contained gold (figure based on previous plant
performance). The re-processing of suitable tailings material might also be possible through a
rehabilitated CIL processing plant.
3.7 Recommendations
Section 22 of this Technical Report contains a number of recommendations relating to Gullewa
Project development options and data acquisition. The recommendations are based on the
findings of the due diligence and technical investigations discussed and described in this
Technical Report. They are presented in summary form and they are not repeated here.
4 INTRODUCTION
This report has been prepared for ATW Venture Corp. (the “Company”) that is incorporated in
British Columbia, Canada (“B.C.”). The Company has its head office at 2007-1177 West
Hastings Street, Vancouver, B.C., V6E 2K3. It is listed both on the Venture Exchange of the
Toronto Stock Exchange (TSX-V trading symbol: ATW) and on the Frankfurt Stock Exchange
(DAX trading symbol: A3N).
The Company is planning to develop gold and gold-copper deposits located on the Gullewa
Project area in the Yalgoo mineral field of Western Australia (“W.A.”), in part through
exploration on, and the re-establishment of mining operations at, the Deflector gold-copper
deposit. The various mineral deposits, exploration targets and development programs, together
with the mining tenements and related assets (rights, infrastructure, processing plant, tailings
storage facility, equipment and intellectual property) are collectively termed the Gullewa Gold-
Copper Project (“Gullewa Project”). Gullewa Project will comprise one of the Company’s three
material mineral properties, the other two are:
• Burnakura Gold Mine in the West Yilgarn goldfield, W.A., some 300 kilometres northeast of
the Gullewa Project area; and
• Amarillo gold-copper-silver project located within the Veladero-El Indio gold belt of San
Juan Province, Argentina (source: www.atwventure.com).
A definitive agreement, dated April 18, 2008 with amendements dated June 10, 2008 (the
“Definitive Agreement” – Sub-Section 6.1), establishes the terms and conditions under which the
Company, through its 100 percent owned subsidiary ATW Venture (Australia) (Pty) Ltd. of
Ground Floor, 282 Rokeby Road, Subiaco, W.A., 6008 (the “Subsidiary”, ACN 128 372 396),
will acquire fully and exclusively the Gullewa mining tenements and related assets from:
• Batavia Mining Limited (“Batavia”, ACN 009 075 861 of Level 1, 282 Rokeby Road,
Subiaco, W.A., 6005, which company is listed on the Australian Stock Exchange - ASX
trading symbol: BTV); and
• South Murchison Mines (Pty) Ltd (ACN 103 103 626 of Level 1, 282 Rokeby Road,
Subiaco, WA, 6005), a wholly owned subsidiary of Batavia.
Contingent on various terms and conditions set out in the Definitive Agreement, the Company
will hold a 100 percent interest in the gold and gold-copper deposits and exploration targets
found across the Gullewa Project area. Iron mineralization, which occurs across the Gullewa
Project area in the form of banded ironstone formations, is subject to a Joint Venture Agreement
between the Company and Batavia, the terms and conditions of which are also set out in the
Definitive Agreement (Sub-Section 6.1). Iron mineralization is not considered within the scope
of this Technical Report that concentrates on gold and gold-copper mineralization only.
At June 10, 2008, the Gullewa Project area comprised 535.45 square kilometres in 29 contiguous
mining tenements (the “main tenement block”) plus 2.0 square kilometres in one separate mining
tenement. Gullewa Mining Centre forms a convenient focal point of the main tenement block;
for purposes of this report it is the location of the carbon-in-leach (“CIL”) plant at Gullewa
Mining Centre that is used as the point identifier of the Gullewa Project area. The processing
plant is located at Latitude 28° 39’ 44.0” South, Longitude 116° 18’ 19.30” East, which point is
approximately 368 kilometres north of Perth, W.A. The centre point of the separate mining
tenement (at Latitude 28° 18’ 25.44” South, Longitude 116° 42’ 16.62” East) is approximately
55 kilometres northeast of CIL plant.
This report is entitled ‘Technical Report on the Gullewa Gold-Copper Project, Yalgoo Mineral
Field, South Murchison District, Western Australia’ (this “Technical Report”), the data cut-off
date for which is June 10, 2008. It has been prepared in accordance with National Instrument
(“NI”) 43-101. Its purpose is to provide an overview of Gullewa Project, inclusive of the key
points of the Definitive Agreement.
While details of Gullewa Project are presented, the importance of the Mineral Resources at the
Deflector deposit is emphasized: it is the Deflector deposit that is the main focus of interest as
regards the Company’s short- to medium-term, Gullewa Project development plans; and the
Deflector deposit was the primary reason why the Company entered into an agreement with
Batavia and South Murchison to purchase the Gullewa tenements and related assets.
• examined/inspected the CIL processing plant, tailings storage facility, laboratory facility,
office facilities, workshops, drillcore storage area and accommodation camp;
• reviewed historical project plans and reports that were available on site;
• completed surface tours of each of the known mineral showings/historical mining operations
located on the main tenement block (the Deflector Central & West, Golden Stream,
Michelangelo, Monarch and Rock Steady openpits and the King Solomon mine, Mugga
King, Mugga Queen, Shannadoah and Shannadoah SE underground workings);
• examined selected (by the Qualified Person) rock samples on each of the rock dumps related
to the historical workings; and
• examined drillcore, geology plans and sections and held discussions with Mr. Brent Butler,
President and CEO of ATW Venture Corp., who accompanied the Qualified Person during
the site visit.
The CIL processing plant and related infrastructure have been held on care-and-maintenance
since January 2003 when production was suspended in the Project area (Sub-Section 8.3). The
Qualified Person did not visit the separate mining tenement, to the northeast of the main
tenement area, on which is located the historical Prince George Mine, as the assets are not
material to either the purchase or future planned development of Gullewa Project.
Prior to and following the April 2008 site visit, the Qualified Person visited the Perth offices of
Snowden Mining Industry Consultants (Pty) Ltd., who compiled various Mineral Resource
estimates for, and completed various studies on, the Deflector deposit. The Qualified Person
also visited Batavia’s Perth offices to discuss Gullewa Project with Batavia management, to
further review historical project plans and reports and to collate available information about
Gullewa Project.
• the Definitive Agreement, dated April 18, 2008 with amendments dated June 10, 2008,
between the Company, the Subsidiary, Batavia and South Murchison, in respect of the
purchase of Gullewa Project;
• the Mining Act 1978 (W.A.), available on either www.mpr.wa.gov.au or
www.austlii.edu.au/au/legis/wa/consol_act/ma197881/s10.html;
• a letter to Batavia by Resource Access (Pty) Ltd. entitled ‘Agreement Review – Mullewa
Wadjari Deed’, dated May 19, 2004;
• a consultancy report by Keith Lindbeck & Associates for Batavia entitled ‘Biophysical
Report for Deflector Minesite, Gullewa Operations’, dated September 2004;
• a consultancy report by Keith Lindbeck & Associates for Batavia entitled ‘Gullewa
Operations, Annual Environmental Report, 2005 & 2006’, dated March 2007;
• a consultancy report by Graeme Campbell & Associates (Pty) Ltd. (“Campbell”) for Batavia
entitled ‘Geochemical Characterisation of Mine Waste Samples, Implications for Mine
Waste Management’ (Campbell Job No. 0411), dated May 2004;
• a consultancy report by Campbell for Batavia entitled ‘Geochemical Characterisation of
Process-Tailings-Slurry Samples (‘Static Testwork’), Implications for Process Tailings
Management’ (Campbell Job No. 0631), dated November 2006;
• a consultancy report by Groundwater Services (Pty) Ltd. for Batavia entitled ‘Review of
Existing Water Supply, Deflector Copper-Gold Project, Murchison District, Western
Australia’, dated June 2004;
• various Western Australia government documents relating to taxation and royalty matters,
available on www.dtf.wa.gov.au and www.doir.wa.gov.au;
• internal Batavia memorandums detailing Batavia’s estimates of the amount and average
grades of mineralized material on various rock dumps located at the Deflector openpits and
Gullewa Mining Centre;
• a consultancy report by D.E. Cooper & Associates (Pty) Ltd. (“Cooper”) for Batavia entitled
‘Gullewa Copper-Gold Project: Tailings Management’ (Report No: 139-04), dated October
2004;
• a consultancy report by Cooper for Batavia entitled ‘Gullewa Copper-Gold Project: Tailings
Management, Review of Current Storage (Cooper Report No. 139-04)’ (Report No: 139-04),
dated October 2004;
• a consultancy report by Metplant Engineering Services (Pty) Ltd. for Batavia entitled
‘Deflector Gold Copper Project, Processing Plant and Infrastructure, Definitive Feasibility
Study’, dated December 2006;
• an assessment and valuation report by Northwind Resources (Pty) Ltd. for the administrators
of King Solomon Mines Limited and Menzies Gold Limited entitled ‘Independent
Assessment & Valuation of Gullewa Exploration Tenements & Rothsay Project Interest’,
dated February 2003;
• a valuation report by Continental Resource Management (Pty) Ltd. to KPMG Corporate
Finance (Aust) (Pty) Ltd. (CRM Report No WA03/014), dated April 2003;
• an internal company report by Goldfields Exploration (Pty) Ltd entitled ‘Gullewa Project
E.L. 59/35 Progress Report, P/3/85’, dated February 1985;
• the regulatory, Annual Technical Report to the Department of Industry and Resources
(“DoIR”) by King Solomon’s Mines Limited for the year ending December 2002, dated
February 2003;
• the regulatory, Annual Technical Reports to DoIR by Batavia for the years ending December
2003, December 2004, December 2005, December 2006 and December 2007;
• a consultancy report by Fluid Focus (Pty) Ltd for Batavia entitled ‘The Structural Geology of
the Deflector Au-Cu Deposit, Gullewa W.A.’, dated September 2004;
• a consultancy report by Geostats (Pty) Ltd. for Batavia entitled ‘Preliminary Evaluation of
Assay Data within the Deflector Database’, dated July 22, 2004;
• a consultancy report by Snowden Mining Industry Consultants (Pty) Ltd. (“Snowden”) for
Batavia entitled ‘Batavia Mining Limited, Deflector Deposit Database Audit’, dated June 14,
2004 (Snowden Project #4768);
• a consultancy report by Como Engineers (Pty) Ltd. for Hallmark Consolidated Ltd. entitled
‘Review of Deflector Metallurgical Reports/Testwork, 1992-2002’, dated September 2003;
• consultancy reports by Snowden for Batavia entitled ‘Batavia Mining Limited, Deflector
Deposit Resource Estimate’, dated March 08 and June 10, 2004 (Snowden Projects #4585B
and #4755);
• a consultancy report by Snowden for Batavia entitled ‘Batavia Mining Limited: Deflector
Project Gold and Copper Resource Update’, dated February 2005 (Snowden Project #4953);
• a consultancy report by Snowden for Batavia entitled ‘Batavia Mining Limited, Deflector
Au-Cu Deposit, Resource Estimate, January 2006’, dated January 2006 (Snowden Project
#5359);
• a consultancy report by Snowden for Batavia entitled ‘Batavia Mining Limited: Deflector
Feasibility Study, Deflector Au-Cu Deposit Mineral Resource Estimate’, dated August 2006
(Snowden Project #5560);
• a consultancy report by Geostat Services (Pty) Ltd. (“Geostat”) for Batavia entitled ‘Batavia
Mining Ltd., Michelangelo Project, Resource Estimate’, dated May 2004;
• a consultancy report by Geostat for Batavia entitled ‘Batavia Mining Ltd., King Solomon and
New Phoenix Project, Resource Estimate’, dated June 2004;
• a consultancy report by Geostat for Batavia entitled ‘Batavia Mining Ltd., Rock Steady
Project, Resource Estimate’, dated July 2004;
• an internal Batavia memorandum, by J. Bishop, inclusive of appendices, entitled ‘Deflector
Ore Stockpiles’, dated November 2003;
• a consultancy report by Snowden for Batavia entitled ‘Batavia Mining Limited: Deflector
Gold Copper Project, Feasibility Study’, dated November 2006 (Snowden Project #5560);
and
• various Company news releases available on www.atwventure.com and Batavia news
releases available on www.bataviamining.com.au.
Batavia’s and hence, under the terms of the Definitive Agreement, the Company’s legal title to
the Gullewa tenements in W.A.
5.3 Royalties
The royalty information presented in Sub-Section 6.7.3 of this Technical Report is based on
formal legal opinion by M & M Walter Consulting of Suite 1, 159 York Street, Subiaco, W.A.,
6008, that was compiled on behalf of the Company. SGA has made no attempt to verify, assess
or define royalty commitments or agreements between previous owners and Batavia, hence
between previous owners, Batavia and the Company in terms of the Definitive Agreement. SGA
is not qualified to assess legal royalty commitments or agreements between previous owners and
Batavia and hence, under the terms of the Definitive Agreement, previous owners, Batavia and
the Company.
• that Batavia meets the Prescribed Minimum Expenditures required to keep the tenements in
good standing (Prescribed Minimum Expenditures are described in Sub-Section 6.4.10); and
• the JV Agreement is extended in the event that either a feasibility study for exploitation of
iron mineralization, on the defined mining tenements, is completed or the farm-in position is
sold.
6.1.2 Ownership
The Company will have a 100 percent interest in Gullewa Project (tenement areas and related
assets, exclusive of iron mineralization that is subject to the terms of the JV Agreement outlined
above), following:
The Definitive Agreement provides for the payment or issuance, by the Subsidiary to Batavia
and as follows, the Purchase Price comprising a total of A$13,000,000 and 2,000,000 shares of
the Company:
a. within 14 days of the date of the acceptance for filing of the Definitive Agreement with the
Venture Exchange of the Toronto Stock Exchange and completion of a NI 43-101 compliant
report on Gullewa Project, A$3,000,000 (the “First Payment”) and 2,000,000 shares of the
Company;
b. on or before the 12th month anniversary of the First Payment being made to Batavia,
A$3,000,000 (the “Second Payment”);
c. on or before the 24th month anniversary of the First Payment being made to Batavia,
A$3,000,000 (the “Third Payment”); and
d. on or before the earlier of the 36th month anniversary of the First Payment being made to
Batavia or the completion of a positive bankable feasibility study by ATW, A$4,000,000 (the
“Fourth Payment”).
Provided that the market price of the Company’s shares is greater than or equal to C$1.00 (one
Canadian Dollar) per share, Batavia may, at its election, choose to:
a. be paid in Company shares to an amount equal to A$3,000,000 of the Second Payment, at the
market price of the Company’s shares at the time the Second Payment is made;
b. be paid in Company shares to an amount equal to A$3,000,000 of the Third Payment, at the
market price of the Company’s shares at the time the Third Payment is made; and
c. be paid in Company shares to an amount equal to A$4,000,000 of the Fourth Payment, at the
market price of the Company’s shares at the time the Fourth Payment is made.
However, the Company will not be obliged to issue any of its shares, as outlined above, if:
a. the issue of such shares would result in Batavia and any director, officer or related bodies
corporate collectively holding ten percent or more of the issued and outstanding Company
shares; or
b. immediately prior to an intended release, Batavia and any director, officer or related bodies
corporate collectively held ten percent or more of the issued and outstanding Company
shares.
Transfer to the Company of Gullewa Project’s mining tenements and assets, exclusive of Iron
Rights, will occur upon payment of the First Payment of A$3,000,000 and the issuance of
2,000,000 Company shares to Batavia. Upon making all the payments described, the Company,
through its Subsidiary, will have earned a 100 percent right, title and interest in and to the
tenements and assets of Gullewa Project, free and clear of all charges, encumbrances and claims.
In the event that the Company does not make any of the payments outlined, the Company must
transfer title to the Gullewa Project mining tenements and related assets back to Batavia. Until
the all the payments described are made, Batavia retains a security interest in the tenements and
assets that comprise Gullewa Project.
Figure 6.1 – A General View of the CIL Plant at Gullewa Mining Centre
(taken by SGA during the April 2008 site visit)
Figure 6.3 – A Google Earth Image of the Regional Location of Gullewa Project
(the approximate centre points of the CIL Plant at Gullewa
Mining Centre and of Prince George Mine are highlighted by the yellow pin markers)
Table 6.1
Summary of Mining Tenements held, and Mining Tenement Applications made, by Batavia
Mining Limited and South Murchison Mines (Pty) Ltd, June 10, 2008
(to be transferred, under the terms of the Definitive Agreement, to the Company through
its 100 Percent Owned Subsidiary ATW Venture [Australia] Pty Ltd.)
Tenement Area (Ha) Registered to Interest Granted Expiry Comments
Prospecting Licenses
P59/1736 66.00 Batavia 100% 29 Dec, 2006 28 Dec, 2010 -
P59/1737 154.00 Batavia 100% 29 Dec, 2006 28 Dec, 2010 -
Sub-total (2) 220.00
Exploration Licenses
E59/1240 13,414.90 Batavia 100% 10 July, 2007 09 July, 2012 Reversion
E59/1241 11,798.89 Batavia 100% 05 Aug, 2007 04 Aug, 2012 Reversion
E59/1242 12,869.43 Batavia 100% 10 July, 2007 09 July, 2012 Reversion
E59/1274 4,429.42 Batavia 100% 20 Nov, 2007 19 Nov, 2012 Brandy Hill
E59/1134 6,202.16 Batavia 100% 11 Jan, 2006 10 Jan, 2011 -
Sub-total (5) 48,714.80
Mining Leases
M59/0049 194.05 Batavia 100% 02 Mar, 2000 01 Mar, 2021 King Solomon’s Mine
M59/0068 140.30 Batavia 100% 09 Dec, 1987 08 Dec, 2008 Golden Stream
M59/0132 19.63 Batavia 100% 26 Jan, 1989 25 Jan, 2010 Shannadoah
M59/0133 371.75 Batavia 100% 02 Dec, 1988 01 Dec, 2009 Brandy Hill
M59/0224 233.72 Batavia 100% 02 July, 1991 01 July, 2012 Brandy Hill
M59/0294 584.80 Batavia 100% 07 Dec, 1993 06 Dec, 2014 -
M59/0335 31.58 Batavia 100% 18 Oct, 1994 17 Oct, 2015 Michelangelo
M59/0336 4.15 Batavia 100% 18 Oct, 1994 17 Oct, 2015 Michelangelo
M59/0356 129.95 Batavia 100% 06 Dec, 1994 05 Dec, 2015 -
M59/0391 264.70 Batavia 100% 07 Feb, 1996 06 Feb, 2017 Rock Steady
M59/0392 177.50 Batavia 100% 07 Feb, 1996 06 Feb, 2017 Rock Steady
M59/0394 200.00 Batavia 100% 22 Apr, 1996 21 Apr, 2017 Prince George Mine
M59/0442 763.40 South Murchison 100% 05 Nov, 1997 04 Nov, 2018 Deflector
M59/0507 8.85 Batavia 100% 14 Dec, 1998 13 Dec, 2019 Monarch
M59/0522 265.70 Batavia 100% 09 Mar, 2001 08 Mar, 2022 Gullewa Mining Centre
M59/0530 235.00 Batavia 100% 28 Aug, 2001 27 Aug, 2022 -
M59/0531 501.00 Batavia 100% 03 May, 2001 02 May, 2022 -
Sub-total (17) 4,126.08
Miscellaneous Licenses
L59/0035 26.80 Batavia 100% 25 Oct, 1994 24 Oct, 2009 Michelangelo haul road
L59/0049 22.00 Batavia 100% 02 Mar, 2000 01 Mar, 2021 Deflector haul road
L59/0050 9.00 Batavia 100% 02 Mar, 2000 01 Mar, 2021 Access road
Sub-total (3) 57.80
Miscellaneous License Applications
L59/0064 1.00 Batavia 100% - - -
L59/0070 570.00 Batavia 100% - - -
L59/0071 55.00 Batavia 100% - - -
Sub-total (3) 626.00
Totals (30) 53,744.68 - - - - -
Notes: Batavia is Batavia Mining Ltd. South Murchison is South Murchison Mines Ltd., a 100 percent owned subsidiary of Batavia.
To the best of SGA’s knowledge (based on the formal title opinion by M & M Walter
Consulting), no Special Prospecting Licenses for Gold are currently (May 2008) granted with
respect to the Gullewa Project tenements. Each of the listed and identified tenements is marked
out and/or surveyed in accordance with the requirements of Mining Act 1978 (W.A.), as are their
terms, hence expiry dates. A summary of the requirements of Mining Act 1978 (W.A.),
inclusive of the obligations of tenement holders, is presented in the following Sub-Section 6.4.
Yalgoo Tenement
(one mining lease)
Figure 6.4 – A Location Plan of the Two Gullewa Mining Tenement Areas
(compiled by the Company from an original, but out-dated, tenement plan from
the Department of Industry and Resources)
Figure 6.5 – A Plan of The Main Gullewa Project Tenement Area, in UTM Co-ordinates
(mining leases are highlighted in PURPLE and exploration licenses in shades of OLIVE GREEN. The areas that
are subject to the JV Agreement summarized in Sub-Section 6.1.2 are highlighted by WHITE cross-hatching. The
thin strips of ground that comprise Prospecting licenses [P59/1736 & /1737] are in the southeast corner.
The miscellaneous license areas are too small to be individually identified)
Figure 6.7 – A Plan of the Mining Tenements Relating to the Gullewa Mining
Centre and Deflector Mineral Deposit
(supplied by Batavia from its Gullewa Project files)
mining tenement must be lodged at an office of the Mining Registrar of the relevant mineral
field, in accordance with The Act.
All proceedings relating to a mining tenement must be filed in the Warden’s Court for the
designated district in which the mining tenement lies (the Yalgoo district, in the case of the
Gullewa Project tenements). The Warden’s Court operates to determine objections lodged
against tenement applications, to deal with disputes between competing applicants and to hear
other actions.
Any person or company may lodge an objection to the granting of a mining tenement within 35
days of the application, or a period specified by the Mining Warden (the “Warden”). The
Warden’s Court is constituted under The Act and its jurisdiction extends throughout W.A. The
Act confers both judicial and administrative functions on the presiding Warden, who can be any
person holding office as a Stipendiary Magistrate.
The types of mining tenements available under The Act are Prospecting Licenses, Special
Prospecting Licenses for Gold, Exploration Licenses, Retention Licenses, Mining Leases,
General Purpose Leases and Miscellaneous Licenses.
• that the holder of a license will prospect for minerals on the land covered by that license;
• that all minerals of economic interest discovered in or on the land will promptly be reported,
in writing, to the Minister;
• that no ground-disturbing equipment will be used by the licensee when prospecting - unless
the licensee has lodged, in the prescribed manner, a program of work in respect of that use
and the program of work has been approved in writing by the Minister or a prescribed
official;
• that all holes, pits, trenches and other disturbances to the surface of the land the subject of the
Prospecting License, which are made while prospecting and, in the opinion of a prescribed
official, likely to endanger the safety of any person or animal, will be filled in or otherwise
made safe to the satisfaction of the prescribed official; and
• that all necessary steps are taken by the holder to prevent fire, damage to trees or other
property and to prevent damage to any property or damage to livestock by the presence of
dogs, the discharge of firearms, the use of vehicles or otherwise.
The land that is the subject of a Prospecting License does not have to be surveyed, unless a
dispute arises, but it must be staked or otherwise marked out. The area of land in respect of any
one Prospecting License must not exceed 200 hectares, but a person or a company may be
granted more than one Prospecting License.
A Prospecting License remains in force for a period of four years from (and including) the date
on which it was granted, following which period the license expires. However, if the Minister is
satisfied that grounds for an extension exist, then the term can be extended by one period of
four years and, if the license has retention status (Sub-Section 6.4.5), by a further period or
periods of four years. While a Prospecting License remains in force, it authorizes the holder, on
the land the subject of the license, to:
• enter and re-enter the land with such agents, employees, vehicles, machinery and equipment
as may be necessary or expedient for the purpose of prospecting for minerals in, on or under
the land;
• prospect for minerals on the land and to carry on such operations and carry out such works as
are necessary for that purpose, including digging pits, trenches and holes and sinking
drillholes and tunnels to the extent necessary for the purpose;
• extract or disturb, in accordance with the license conditions, up to 500 tonnes of material
from the ground, including overburden, although the Minister may approve the extraction of
larger tonnages;
• take and divert, subject to the Rights in Water and Irrigation Act 1914 and any other relevant
legislation, water from any natural spring, lake, pool or stream situated in or flowing through
the land, to take water from any excavation previously made and used for mining purposes
and to sink a well or drill on the land to extract water that can then be used for domestic
purposes and for any purpose in connection with prospecting for minerals on the land.
The holder of a Prospecting License also has the right to apply for either one or more mining
leases, one or more general purpose leases, or both, in respect of any part or parts of the land that
is the subject of that Prospecting License.
• the Mineral Resource is uneconomic or subject to marketing problems, although the Mineral
Resource may reasonably be expected to become economic or marketable in the future;
• the Mineral Resource is required to sustain the future operations of an existing or proposed
mining operation; or
• there are existing political, environmental or other difficulties in obtaining requisite
approvals.
A Retention License may be granted in respect of the whole or any part of land within the
boundaries of a Prospecting License, Exploration License or Mining Lease, or a combination of
such tenements. Subject to The Act, a Retention License remains in force for an initial period of
five years from the day on which it was granted. The term may, however, be renewed, or further
renewed, for one further period not exceeding five years or on such terms and conditions as the
Minister thinks fit.
The holder of an Exploration License that has retention status has to show just cause why a
Mining Lease should not be applied for in respect of the whole or any part of the land the subject
of the Exploration License. If sufficient cause is not provided, the license holder may be forced
to apply for a Mining Lease. No maximum area applies to Retention Licenses.
• pay the rents and royalties due under the lease at the prescribed time and in the prescribed
manner;
• use the land in respect of which the lease is granted only for mining purposes in accordance
with The Act;
• comply with the prescribed expenditure conditions applicable to such land unless partial or
total exemption is granted in such manner as is prescribed (Sub-Section 6.4.10);
• not transfer or mortgage a legal interest in such land or any part thereof without the prior
written consent of either the Minister or a Government officer acting with the authority of the
Minister; and
• lodge with the DoIR such periodical reports and returns as may be prescribed.
The maximum area for a Mining Lease applied for before February 10, 2006 is 1,000 hectares.
After that date, the size applied for has to relate to the size of the identified deposit, as well as the
area required for mining- and processing-infrastructure. The boundaries of Mining Leases must
be marked out in the prescribed manner (as defined in the terms and conditions of grant). The
land that is the subject of a Mining Lease must also be surveyed after granting of the Mining
Lease.
Mining Leases authorize the lessees, as well as their agents and employees on their behalf, to:
• use, occupy and enjoy the land in respect of which the Mining Lease was granted;
• work and mine the land for any minerals that can be removed from the land for disposal (the
lessee is deemed to own all the minerals lawfully mined from the land);
• take and divert, subject to the Rights in Water and Irrigation Act 1914, water from any
natural spring, lake, pool or stream situated in or flowing through the land or from any
excavation previously made and used for mining purposes;
• to sink a well or bore on the land and to extract and use the water for his/her domestic
purposes and for any purpose in connection with mining for minerals on the land; and
• do all acts and things that are necessary to effectually carry out mining operations in, on or
under the land.
Subject to The Act, a Mining Lease remains in force for an initial term of 21 years. Application
for renewal can be made during the final year of the term of a Mining Lease; a further term of
21 years will be granted as of right, subject to the provisions of The Act.
the lease or, if no depth limitation is specified, to 15 metres below the lowest part of the natural
surface of the land to which the lease applies. An application for the grant of a General Purpose
Lease in respect of any land is made, and may be objected to, in same manner as outlined for a
Mining Lease.
A General Purpose Lease entitles the lessee, as well as his/her agents and employees, to the
exclusive occupation of the land in respect of which the General Purpose Lease was granted and
for one or more of the following purposes (that are specified in the lease):
• erecting, placing and operating machinery thereon in connection with the mining operations
carried on by the lessee in relation to which the General Purpose Lease was granted;
• depositing or treating thereon minerals or tailings obtained from any land in accordance with
The Act; and/or
• using the land for any other specified purpose directly connected with mining operations.
A General Purpose Lease remains in force where it is granted in relation to a particular Mining
Lease and contains no other provision for expiry, until it is surrendered or forfeited. A lease
renewal may be granted for a period not exceeding 21 years, subject to various terms and
conditions stated in The Act or deemed appropriate by the Minister.
6.4.9 Rents
Annual rent is payable on each granted mining tenement, the amount of which varies according
to the type and size of tenement.
• by or on behalf of the person who was the holder of the license or lease immediately prior to
the date of the surrender, forfeiture or expiry;
• by or on behalf of any person who had an interest in the license or lease immediately prior to
that date; or
• by or on behalf of any person who is related to a person referred to above.
For the purposes of the second preceding point, the holding of shares in a listed public company
that held the license or lease in question does not of itself constitute an interest in the license or
lease.
dated January 29, 1997, between Gullewa Gold NL and the Wadjari Native Title applicants (the
“Deed”).
The Deed was entered into to obtain the grant of various Mining Leases, including M59/0442
and other lease areas that no longer form part of the Gullewa Project area. It relates to an area of
the Wadjari claim WC 96/93 and an area within ten kilometres of the claim boundary. The term
of the Deed is for the period for which a responsible person or a company holds any mining
tenement within the Deed area, unless earlier terminated by agreement between the parties. It
was assigned to Batavia on purchase of the Gullewa Project from Menzies Gold Limited (Sub-
Section 8.3) and thence to the Company under the terms of the Definitive Agreement.
In May 2004, Resource Access (Pty) Ltd. of Mundaring, W.A. (“Resource Access”), undertook a
formal review of the Deed, on behalf of Batavia. Resource Access found that it ‘contains very
few obligations for the lessee’ (Gordon, 2004), which obligations may be summarized as:
• allowing Mullewa Wadjari people access to all tenement areas, subject to any operational
safety requirements;
• co-operation on heritage and cultural matters (Sub-Section 6.5.2); and
• payment of A$25,000 in three stages (payments previously made).
In return, Mullewa Wadjari agreed to grant the tenements that were the subject of the deed, grant
any new tenements required by the lessee, sign any document to allow the grant of any new
tenements and to allow the lessee to exercise its rights under any tenements (Gorden, 2004).
Mullewa Wadjari is also required to agree to the grant of any future tenements without the
obligation to pay any further financial consideration (Gordon, 2004).
On the basis of the findings outlined, SGA is not aware of any planned or existing land use or
rights that might adversely affect either exploration on the Gullewa Project area or development
of Gullewa Project.
In the past, Aboriginal groups have occupied the Gullewa Project area, although no evidence of
this occupation, including artifacts, has been found (Lindbeck, 2004). It would appear that no
systematic Aboriginal heritage surveys have been undertaken, either by Batavia or by previous
license or lease holders. However, in terms of the prevailing legislation, this should not be an
issue if the re-commencement of mining is undertaken on previously disturbed areas (Lindbeck,
2004).
A search of the records (by Lindbeck) of the sites register of the Department of Indigenous
Affairs covering the Gullewa Project area, west from the Mining Centre to east of the Deflector
opencuts (Sub-Section 6.8), indicated that there were no recorded sites in the search area.
However, an undisclosed ethnographic site exists to the south and east of Lindbeck’s search area,
within the Salt River floodplain (Sub-Section 7.1.2).
The possibility exists that a site or sites may exist within the general Gullewa Project area (i.e.
either inside or outside Lindbeck’s search area), which sites have not yet been identified or
surveyed. Under the State Aboriginal Heritage Act 1971, it is not an offence to destroy a site if it
was not known to exist. However, all persons within W.A. are required, under the 1971 Act, to
protect all known or identified sites or to cease operations if there is evidence that a site is likely
to exist.
6.6 Environmental
Under the terms of the Definitive Agreement, Batavia will transfer to the Company all
environmental obligations and liabilities with respect to the Gullewa Project, as well as all
applicable licenses and other approvals. In this regard, it should be noted that systematic surveys
of flora and fauna have not been undertaken across the Gullewa Project area, although a detailed
flora survey was undertaken by Lindbeck in September 2004. Lindbeck (2004) suggest that the
lack of detailed surveys is ‘not seen to be an issue for faunal species as the disturbance over the
last 100 years, in conjunction with pastoral activities, would have impacted on the local fauna
and mobile species would have moved from the area. For flora and vegetation communities,
these also would have been impacted by mining and pastoral activities. Changes to the flora and
communities undoubtedly would have occurred over the last 100 years’. However, ‘If currently
disturbed areas are to be disturbed by re-commencement of mining, it is recommended that a
botanist be commissioned to undertake a survey of the proposed disturbance to check for the
presence of rare and endangered flora species’. SGA concurs with this view.
rehabilitation of the ground at the conclusion of mining. These are routinely applied when a
Mining Proposal is considered for a Mining Lease; they are calculated according to a specified
formula (details unknown).
It is anticipated that the Company will submit the required documentation, at the required times
or times, in respect of its Gullewa Project development plans, inclusive of re-commencement of
production from the Deflector openpits. Environmental bonds totalling A$357,000 for the
Gullewa tailings storage facility (Sub-Section 6.10) and mineralized rock dumps (Sub-Sections
6.8.6 and 20.1) are currently (May 2008) held by DoIR. Statutory Securities for the Gullewa
haul roads and other disturbed ground amount to A$23,000.
6.6.2 Permits
Prospecting and exploration activities do not require separate environmental licenses or permits -
unless special constraints apply, as specified within the terms and conditions of the Prospecting
Licenses or Exploration License (i.e. they are addressed at the time of initial mining tenement
application). In the case of Mining Leases, and in addition to the State Mining Engineer's
written approval to commence mining under the Act, statutory environmental approvals or
licenses may be required by other Government agencies before mining can begin.
In the case of the Gullewa Project area and to the best of SGA’s knowledge, no special
permitting or licensing terms or conditions apply to the Prospecting Licenses or Exploration
Licenses (the license areas do not fall within any specific environmentally sensitive location as
defined under the Environmental Protection Act 1986). In the case of any planned re-
commencement of mining activity, four permitting phases are anticipated (Lindbeck, 2004):
• project approval (by means of issuing a Notice of Intent, although various exemptions apply
to projects involving the re-commencement of mining in previously disturbed areas);
• project licensing (Works Approval, Permit to Clear Land, Pollution Prevention License,
Water & Rivers Commission Licenses and Dangerous Goods Licenses);
• project reporting (tenement conditions and permit requirements require regular reporting,
usually on an annual basis, including Annual Technical Reports, Annual Environmental
Reports, Annual Monitoring Reports, annual reports on water extraction and quality and
triennial Water Extraction Reports); and
• auditing.
It is anticipated that the Company will undertake the required reviews and submit the required
reports and applications, at the appropriate time or times. Batavia already holds the licenses
summarized on Table 6.2, certified copies of which have been seen by SGA. The listed licenses
will be transferred to the Company, under the terms of the Definitive Agreement.
Table 6.2
Summary of Licenses held by Batavia Mining Limited, June 10, 2008
(to be transferred, under the terms of the Definitive Agreement, to the Company through its 100 Percent
Owned Australian Subsidiary ATW Venture [Australia] Pty Ltd.)
License Type Granted Expiry Comments
GWL163208(1) Water abstraction (20,000 kilolitres per annum) June 04, 2008 Dec. 31, 2011 Note 1
7798/4 Environment Nov. 19, 2006 Nov. 18, 2008 Notes 2,4
DSG013999 Dangerous Materials - Jul. 07, 2008 Note 3
Notes: 1 – allows the abstraction of water for camp purposes only, water borehole monitoring required
2 – the license valid in respect of Categories 05 (processing), 06 (mine dewatering) and 64 (landfill)
3 – this license should be adjusted because LPG gas and diesel only are currently on site
(Sub-Section 7.4.6)
4 – as from May 09, 2005, Batavia was exempt from all water monitoring, except in the camp
water borehole (GPB1 – Sub-Section 7.4.7)
6.6.3 Liabilities
SGA is not aware of any environmental liabilities relating to the Gullewa Project area and SGA
is not qualified to assess any liabilities that might exist. The reader should, however, be aware
that:
• historical underground workings exist across the Gullewa Project area (Prince George,
Mugga Queen, Mugga King, Shannadoah and Shannadoah SE, amongst others - total number
unknown), variously associated with which are –
o vertical shafts and open stopes that extend to surface (Figure 6.8), some of which are
filled with water,
o the broken remains of small surface structures,
o the concrete foundations of a small processing plant (at Mugga King, the equipment and
buildings have previously been removed),
o small tailings impoundments (some unconstrained), dumps containing mineralized
material, rock/waste dumps and small amounts of rusting scrap metal (Figure 6.9);
• the headgear, winding equipment, various associated infrastructure and a covered vertical
shaft at King Solomon’s Mine (sometimes referred to as New Phoenix), near the Mining
Centre (Figure 6.10);
• six historical and/or recent openpit excavations (Deflector Central, Deflector West, Golden
Stream, Michelangelo, Monarch and Rock Steady), associated with each of which are various
rock/waste dumps (for example, Figure 6.11); and
• dumps of mineralized material at the West Deflector openpit site, as well as at and near the
Mining Centre (Sub-Sections 6.8.6 and 20.1).
Figure 6.9 – Some Rusting Scrap Metal and other Mining Trash
near the Historical Shannadoah Underground Workings
(taken by SGA during the April 2008 site visit)
Figure 6.10 – The Headgear and some of the Surface Works and
Rock Dumps at King Solomon/New Phoenix Mine
(taken by SGA during the April 2008 site visit)
As regards the dumps of mineralized material and rock/waste, Batavia commissioned Graeme
Campbell and Associates (Pty) Ltd. of Bridgetown, W.A. (“Campbell”, ACN 061 827 674), to
undertake geochemical characterizations of Deflector soil and mine rock materials. While the
study cannot be considered comprehensive, its principal findings were as follows (Campbell,
2004):
• the distal basalts should not pose concerns for acidification and/or the release of soluble
forms of minor elements;
• the proximal basalts and porphyry materials were variously classified as Non-Acid Forming
(“NAF”) and Potentially Acid Forming (“PAF” – due to the presence of trace amounts of
sulphide minerals);
• oxide mineralized material may be classified as NAF, whereas transition and primary/fresh
mineralized material may be classified PAF (definitions of the types of mineralized material,
by oxidation state, found on the Deflector deposit are presented in Sub-Section 11.1).
As regards tailings material, Campbell was in 2006 commissioned by Batavia to carry out
geochemical testwork on process tailings samples derived from the 2006 bench scale
metallurgical testwork program described in Sub-Section 18.4. Campbell’s work focused on the
acid forming potential, element composition and mineralogy of the tailings samples. In
summary, Campbell’s report states that (Campbell, 2006):
• tailings from oxide, transitional and primary/fresh mineralized material should each be
classed as NAF, which reflects minute/trace-sulphides in a gangue that is at least partly
calcareous;
• tailings from oxide and transitional mineralized material may be appreciably enriched in
copper due to copper association with silicate and carbonate materials; and
• the tailings slurry waters should be neutral to alkaline and brackish with low concentrations
of minor elements.
Campbell (2006) concludes that: ‘In brief, on the premise that the tailings slurry samples tested
herein are representative of the ex-mill streams produced during the Gullewa Project, there
should be no geochemical concerns associated with the process-tailings management. At
(tailings storage facility) closure it may be possible to employ a thin cover of topsoils and
regoliths to prevent tailings dusting and essentially revegetate’.
of certain taxable Australian assets, if they were acquired on or after September 20, 1985. The
Federal Government also levies a multi-stage tax of 10 ten percent on the supply of most goods
and services by entities registered for Goods and Services tax.
A company is considered to be resident for taxation purposes if: it is incorporated in Australia; it
carries on business in Australia and both central management and control are located in
Australia; or its voting power is controlled by shareholders who are Australian residents.
Taxable Australian assets generally include: assets used by the non-resident to carry on business
in Australia; real estate located in the country; interests in resident partnerships, trusts, or private
companies; and shareholdings of more than ten percent in resident public companies.
The State of Western Australia does not impose additional corporate or sales taxes, but it does
impose payroll tax. Pay-roll tax is a general purpose tax assessed on the wages paid by
an employer, at a rate of 5.5 percent. The tax is self-assessed in that the employer calculates the
liability and then pays the appropriate amount to the Office of State Revenue, by way of a
monthly, quarterly or annual return. State taxes are administered by the (W.A.) Office of State
Revenue of the Department of Treasury and Finance.
According to information sourced on www.deloitte.com, proposed legislation was introduced
into the W.A. Parliament on November 28, 2007 to replace the Stamp Act 1921 (W.A.). If
passed by Parliament, the proposed commencement date of the new legislation is July 01, 2008.
As regards company taxation, the proposed legislation represents substantial changes to the
existing tax law, insofar as it includes measures to:
• introduce a new landholder regime that imposes duty on relevant acquisitions of interests in
companies and unit trusts that directly or indirectly own interests in land in W.A. valued at
A$2 million or more (which measure will replace the existing landrich regime whereby
relevant acquisitions of interests in companies that directly or indirectly own Western
Australian land valued at A$1 million or more, and where the value of all direct or indirect
interests in land represent 60 percent or more of the value of all property to which the
company is directly or indirectly entitled [excluding certain asset categories] are subject to
duty);
• extend the availability of exemptions from stamp duty for intra-group transfers of property
(currently, existing corporate reconstruction exemptions require the parties to be associated
for three years before the transfer and to remain associated for a five year period after the
transfer, and exemption is not available if one of the entities is a trust. Under the new
provisions, the pre-transfer association requirement will be abolished, the post-transfer
association requirement will be relaxed and the exemption will be extended to allow transfers
to and from unit trusts); and
• reduce stamp duty rates by approximately five percent, with the maximum rate of duty
applying to a transfer of property being reduced to 5.15 percent (the maximum rate is
currently 5.4 percent).
• a specific rate that is generally applied to low-value construction materials, based on a flat
rate per tonne produced (Table 6.3);
• an Ad Valorem or value-based royalty, calculated as a proportion of the royalty value of the
mineral that, in relation to a mineral other than gold, means the gross invoice value of the
mineral less any allowable deductions for the mineral; and
• a profit based rate, where royalties are calculated as a percentage of the net profit of the mine
(all project revenues less allowable project costs).
Table 6.3
Summary of Specific Rate Royalties Payable Since July 01, 2005
(based on royalty rates paid before July 01, 2005, source: www.doir.wa.gov.au)
Royalty Royalty
Mineral Production Period Previously Previously
Paid at A$0.30/t Paid at A$0.50/t
July 01, 2005 to June 30, 2006 A$34 cents/t A$56 cents/t
July 01, 2006 to June 30, 2007 A$38 cents/t A$62 cents/t
July 01, 2007 to June 30, 2008 A$42 cents/t A$68 cents/t
July 01, 2008 to June 30, 2009 A$46 cents/t A$74 cents/t
July 01, 2009 to June 30, 2010 A$50 cents/t A$80 cents/t
As regards Ad Valorem royalties, the following rates apply: bulk material (subject to limited
treatment) - 7.5 percent of the royalty value; concentrate material - 5.0 percent of the royalty
value; and metal - 2.5 percent of the royalty value (source: www.doir.wa.gov.au). The system
takes into account price fluctuations and grade of material, insofar as the different rates are
intended to adjust for the change in the value as mined mineralized material is processed and
value is added. As regards the calculation of royalty values:
• gross invoice value means the amount, in Australian dollars, obtained by multiplying the
quantity of the mineral, in the form in which it is first sold, for which payment is to be made
(as set in invoices relating to the sale) by the price for the mineral in that form (as set out in
those invoices);
• allowable deductions means the amount, in Australian dollars, of any costs in transporting
the mineral, in the form in which it is first sold, incurred after the shipment date by the
person liable to pay the royalty for the mineral – unless the mineral is not exported from
Australia in which case allowable deductions means, the price, in Australian dollars, paid or
to be paid by the person liable to pay the royalty for the mineral, for packaging materials
used in transporting the mineral, in the form in which it is first sold; and
• shipment date means, if the mineral is exported from Australia, the day on which the aircraft
or ship transporting the mineral first leaves port in this State or if the mineral is not exported
from Australia, the day on which the mineral is first loaded on a vehicle for transport to the
purchaser.
Where, for the purpose of determining the gross invoice value of, or allowable deductions for, a
mineral, it is necessary to convert an amount or a price to Australian currency, the conversion
must be calculated using the Reserve Bank of Australia rates for the quarter in which the
shipment date for the mineral occurred.
Profit-based royalties are project based and are sometimes combined with ad valorem royalties to
thereby provide a profit royalty of 22.5 per cent over the life of the project while ensuring a
minimum ad valorem royalty payment of 7.5 per cent in any year. Examples where such
combined profit system/ad valorem royalties apply include Argyle Diamond and Ellendale
Diamond Project (source: www.doir.wa.gov.au).
• one percent of the gross revenue, derived from the mining tenements listed on Table 6.4, to
Gullewa Limited, where gross revenue equals the total amounts actually received from the
sale of metal or other mineral products derived from the treatment of ore mined from the
mining tenements listed on Table 6.4.
• with respect to mining lease M59/0068 (Golden Stream) and to James Dickinson Woods,
Peter James Woods and Donald James Searle, whichever is the greater amount of –
o either a royalty equivalent to one gram of gold for every 100 grams of gold recovered
from any mining operations that may be established on mining lease M59/0068, or
o a three percent net profits royalty derived from the sale of all mineral containing products
mined from mining lease M59/0068; and
• five percent of profit royalty to Excelsior Resources in respect of the Yalgoo tenement
(mining lease M59/394, to the north of the main tenement area), where –
o the profit is to be determined from an assessment of the costs of the operation and the
revenues generated from gold won through the treatment plant, and
o costs are to be audited by a ‘reputable firm’.
Table 6.4
Summary of Mining Tenements for which a One Percent of Gross Revenue
Royalty is Payable to Gullewa Limited
(the tenements to be transferred, under the terms of the Definitive Agreement, to the Company through
its 100 Percent Owned Subsidiary ATW Venture [Australia] Pty Ltd.)
Tenement Area (Ha) Registered to Interest Granted Expiry Comments
Exploration Licenses
E59/1241 11,798.89 Batavia 100% 05 Aug, 2007 04 Aug, 2012 Reversion
E59/1242 12,869.43 Batavia 100% 10 July, 2007 09 Jul, 2012 Reversion
Mining Leases
M59/0049 194.05 Batavia 100% 02 Mar, 2000 01 Mar, 2021 King Solomon’s Mine
M59/0068 140.30 Batavia 100% 09 Dec, 1987 08 Dec, 2008 Golden Stream
M59/0132 19.63 Batavia 100% 26 Jan, 1989 25 Jan, 2010 Shannadoah
M59/0294 584.80 Batavia 100% 07 Dec, 1993 06 Dec, 2014 -
M59/0335 31.58 Batavia 100% 18 Oct, 1994 17 Oct, 2015 Michelangelo
M59/0336 4.15 Batavia 100% 18 Oct, 1994 17 Oct, 2015 Michelangelo
M59/0356 129.95 Batavia 100% 06 Dec, 1994 05 Dec, 2015 -
M59/0391 264.70 Batavia 100% 07 Feb, 1996 06 Feb, 2017 Rock Steady
M59/0392 177.50 Batavia 100% 07 Feb, 1996 06 Feb, 2017 Rock Steady
M59/0442 763.40 South Murchison 100% 05 Nov, 1997 04 Nov, 2018 Deflector
M59/0507 8.85 Batavia 100% 14 Dec, 1998 13 Dec, 2019 Monarch
M59/0522 265.70 Batavia 100% 09 Mar, 2001 08 Mar, 2022 Gullewa Mining Centre
M59/0530 235.00 Batavia 100% 28 Aug, 2001 27 Aug, 2022 -
M59/0531 501.00 Batavia 100% 03 May, 2001 02 May, 2022 -
Miscellaneous Licenses
L59/0035 26.80 Batavia 100% 25 Oct, 1994 24 Oct, 2009 Michelangelo haul road
L59/0049 22.00 Batavia 100% 02 Mar, 2000 01 Mar, 2021 Deflector haul road
L59/0050 9.00 Batavia 100% 02 Mar, 2000 01 Mar, 2021 Access road
Notes: Batavia is Batavia Mining Ltd. South Murchison is South Murchison Mines Ltd., a 100 percent owned subsidiary of Batavia.
6.8 Opportunities
The Gullewa Project area contains six mined-out or partially mined-out openpits (Deflector
Central, Deflector West, Golden Stream, Michelangelo, Monarch and Rock Steady), at least five
areas of historical underground workings (King Solomon’s Mine [that is sometimes referred to
as New Phoenix], Mugga Queen, Mugga King, Shannadoah and Shannadoah SE) and up to
eighty (80) known soil geochemistry, gravity or aeromagnetic (“geological”) anomalies.
Historical workings also exist at Prince George Mine, located on the Yalgoo Tenement, but no
verified information concerning these workings is available so they are not considered further
here. The metals of interest are gold, silver and copper (not listed in order of economic
significance).
Table 6.5 and Figure 6.12 summarize the positions of the historical and recent mine workings
that were visited during SGA’s April 2008 site visit; the names were cross-checked against
information contained in historical and recent documents and on historical and recent project
plans. Clear, Google Earth images of each of the mine workings listed on Table 6.5 may readily
be obtained and Figure 6.13 provides an example of this – it is a Google Earth image of the
Deflector pits. Figure 6.14, supplied by Batavia, is a portion of a geology plan for the Gullewa
Project area that identifies the positions of various mine workings and the main geological
anomalies within the figure’s area (for example, Bellini, Tintoretto and Titian anomalies around
the Golden Stream opencut). The entire plan is not presented here due to its size - it would
become illegible, hence not permissible under Item 26 of Form 43-101F1. The plan is in UTM
coordinates – the coordinate lines are 5,000 metres apart and are represented as faint dotted lines.
Table 6.5
Summary of the Locations of the Historical and Recent Mine Workings
Visited During SGA’s April 2008 Site Visit
Located
Mine Workings Latitude Longitude
Openpits
Deflector Central 28° 40’ 08.78” S 116° 22’ 46.06” E
Deflector West 28° 40’ 09.29” S 116° 22’ 41.51” E
Golden Stream 28° 38’ 54.41” S 116° 23’ 28.07” E
Michelangelo 28° 41’ 01.61” S 116° 17’ 04.01” E
Monarch 28° 39’ 49.75” S 116° 18’ 51.31” E
Rock Steady 28° 41’ 33.57” S 116° 16’ 28.56” E
Underground Workings
King Solomon’s Mine 28° 39’ 33.51” S 116° 18’ 51.31” E
Mugga Queen 28° 42’ 30.00” S 116° 14’ 30.74” E
Mugga King 28° 42’ 09.14” S 116° 14’ 26.43” E
Shannadoah 28° 40’ 16.04” S 116° 16’ 47.28” E
Shannadoah SE 28° 40’ 19.96” S 116° 17’ 07.35” E
Figure 6.12 - A Google Earth Image of the Positions of the Historical Mine
Workings Visited During SGA’s April 2008 Site Visit
(the positions determined by ground-based GPS readings by SGA, which were later refined
by SGA using Google Earth, are highlighted by the yellow pin markers)
Re-Sort Pad
Main Internal
Access Road
Deflector Central
Openpit
Waste Dump
Deflector West
Openpit
Figure 6.13 - A Google Earth Image of the Deflector Openpits and Associated Dumps
(the openpits as shown are partially full of water)
Figure 6.14 - A Portion of the Prospect Geology Plan of the Gullewa Project Area
Highlighting the Positions of the Historical Mine Workings and Main Geological Anomalies
(Batavia’s hardcopy plan was digitized by the Company into the presented format)
• Sub-Section 19.5 (Michelangelo – 1.69 million tonnes with an average grade of 1.19 g/t Au,
in the Inferred category, inclusive of 1.07 million tonnes of secondary gold enrichment in
laterites with an average grade of 1.05 g/t Au);
• Sub-Section 19.6 (King Solomon/New Phoenix - 86,000 tonnes with an average grade of
7.48 g/t Au, in the Inferred category); and
• Sub-Section 19.7 (Rock Steady – 38,000 tonnes with an average grade of 3.60 g/t Au, in the
Inferred category).
The King Solomon New Phoenix Mineral Resource estimate excludes an estimated total of
approximately 282,000 tonnes of mineralized material with an average grade of approximately
2.36 g/t Au, due to a paucity of geological and grade information that renders the material
speculative at best (Sub-Section 19.6). The reader should, therefore, be aware that the stated
potential tonnage and potential average grade of this mineralized material are conceptual in
nature and cannot be relied upon. There has been insufficient exploration to define a Mineral
Resource and it is uncertain if further exploration will result in the material being delineated as a
Mineral Resource. The material in question includes mineralized quartz-sulphide veins that
could be exploited using underground mining methods and a small surface expression of
secondary gold enrichment in laterite (definition of these deposit types are presented in Section
10).
• between 40,000 and 50,000 tonnes of mineralized material remains at Monarch openpit,
which could be exploited using openpit and underground mining methods (average grade
unknown);
• that approximately 23,000 tonnes of mineralized material grading 2.93 g/t Au remain in the
Golden Stream openpit; and
• mineralized material containing 4,000 Troy ounces of gold is available for exploitation at
Prince George Mine (the tonnes and grade of the mineralized material are unknown).
Formal Mineral Resource estimates have not been compiled for the material remaining at these
deposits that were previously exploited using openpit and underground mining methods. The
reader should, therefore, be aware that the potential tonnages and potential grades of the material
outlined are conceptual in nature and cannot be relied upon. There has been insufficient
exploration to define Mineral Resources and it is uncertain if further exploration will result in the
various materials being delineated as Mineral Resources. The remaining materials are not
considered further in this Technical Report.
6.9.2 Suitability
The plant as currently configured is unsuitable for processing mineralized material from the
Deflector deposit, due to the presence of significant copper grades (indeed, it was due to the then
current owners attempting to process copper-rich material in late 2002/early 2003 that the plant
become inoperable, leading to the closure of the Gullewa operations in January 2003 - Sub-
Section 8.3). A reconfigured processing plant would instead have to be built, inclusive of a
conventional flotation circuit to recovery gold and copper into concentrates (Sub-Section 18.1).
The existing plant could, however, successfully be used (following appropriate upgrades,
refurbishment and recommissioning) to process mineralized material from other Gullewa Project
areas or deposits (inclusive of secondary gold-enriched laterite and tailings material) that do not
appear to include significant base metal components.
6.9.3 Options
Metplant Engineering Services (Pty) Ltd. of Belmont, W.A. (“Metplant”, ACN 009 256 508),
reviewed the CIL plant in 2006 and prepared a refurbishment and re-commissioning report for
Batavia that forms part of Metplant’s aforementioned report dated December 2006 (Sub-Section
4.3). In summary, Metplant found that the crushing and grinding facilities, together with some
of the plant-related infrastructure, could be used, wherever practical, to develop and construct a
new/revised processing facility for treating mineralized material from the Deflector deposit.
New or second-hand flotation, gravity concentration, reagent preparation and concentrate
dewatering equipment would, however, be required.
Figure 6.15 - A General View, Looking West, of a Portion of the Licensed Tailings Storage
Facility (Cell #1) at Gullewa Mining Centre, with the CIL Processing Plant in the Background
(taken by SGA during the April 2008 site visit)
The existing tailings storage facility was originally designed for a mill throughput rate of
300,000 tonnes per annum (Cooper, 2004a). It is located in a shallow valley closed by the
construction of a main embankment along the southern side, with smaller embankments across
the saddles on the western and eastern sides. Figure 6.16 provides a summary layout of the
existing facility. Based on the estimated, currently available storage capacity and the industry
standard ratio of 40 hectares per million tonnes per annum, it is provisionally estimated that the
existing facility could support a tailings production of up to approximately 390,000 tonnes per
annum (Cooper, 2004b).
6.10.1 Structure
The tailings dam was designed to be operated as a single cell, sub-aerial facility with the tailings
discharged from the main embankment towards the higher ground at the rear of the storage basin.
A permanent central pump-out decant was constructed near the centre of the storage area, but it
was never commissioned due to the limited volume of tailings deposited into the storage facility.
Subsequent to its original operation, the storage area was split into three smaller cells:
• the southeastern cell (Cell #1), which has an estimated area of 3.7 hectares and which is filled
with previously deposited tailings;
• the northeastern cell (Cell #2), which has an estimated area of approximately 7.0 hectares, in
which exists a small volume of deposited tailings (most of which appears to have flowed
through a breach in the internal embankment separating Cell #1 from Cell #2) and in which is
located the central pump-out decant; and
• the western cell (Cell #3), which has an estimated area of approximately 8.7 hectares and in
which no tailings appear to have been deposited.
6.10.2 Condition
The last, formal inspection of the existing embankments was in 2004, by D.E. Cooper &
Associates (Pty) Ltd. of Shenton Park, W.A. (“Cooper”, ACN 059 190 420). The main
embankments were found to be in a good condition. No obvious, subsequent degradation was
apparent at the time of SGA’s April 2008 site visit:
• some minor erosion gullies are evident on the downstream face of the main southern
embankment (the southern embankment curves around to the north at the western end) that
has been partially re-vegetated (plant growth has been poor) but despite this, the overall
surface stability appears to be good and the slope angle is close to the required 20 degrees;
• the eastern embankment has been backed-up by waste rock and may reasonably be construed
to be competent; and
• the northern or saddle embankment also appears to be in a good condition; but
• the internal embankments are not in a good condition - the embankment between Cells #1
and #2 appears to have been constructed by simply pushing material up from within the basin
and it has failed at around the mid point; although
• the embankment forming the eastern side of Cell #3, which was originally the decant access
causeway (to a single cell arrangement), appears to be stable and competent.
area of the Mining Centre. Similar land types were seen elsewhere within the Gullewa Property
area; their development appears to vary with the local geology, hence the local topography.
The Tindalarra Land System comprises hardpan (indurated Quaternary alluvium), sheetwash
plains supporting acacia shrublands with sparse drainage channels and associated drainage floors
supporting saltbush/bluebush under snakewood. The area is a very gently inclined, broad plain
with a mantle of quartz or ironstone pebbles and is subject to sheet flow. The soils (shallow
hardpan loams) are uniform textured, shallow loams overlying red-brown siliceous or
ferruginous hardpan at depths of less than 50 centimetres.
The Gabanintha Land System comprises greenstone ridges and hills supporting sparse acacia
shrublands. The area is located on concave hill-slopes that are inclined at approximately six
degrees with mantles of abundant greenstone, ironstone, dolerite and other pebbles and cobbles.
Soil cover is limited (less than 50 centimetres); it is characterized by a lack of soil development
and a dense mantle of rocks, boulders and rock outcrop.
The Violet Land System comprises undulating stony and gravely plains and low rises
supporting mulga shrublands. The Mining Centre is located on a rounded low rise with
ferruginous duricrust and mantles of abundant pebbles and cobbles. The soils are shallow (less
than 50 centimetres) and are characterized by a lack of soil development and a dense mantle of
rocks, boulders and rock outcrop. In some places shallow, gradational or uniform red earths
occur that typically overly sheetwash laterites, hardpan or weathered rock.
Covering much of the Gullewa Project area are accumulated layers of Tertiary sheetwash
laterites (Figure 7.2) that can be in excess of ten metres thick and locally as much as 40 metres
thick. Much thinner layers exist on topographic highs and in areas characterized as of the
Gabanintha Land System type. The presence of a Quaternary hardpan cover and/or Tertiary
sheetwash laterite cover presents unique challenges to exploration, not least because, according
to the results of a regional mapping exercise by Dr. J. Hallberg in 2006 (Sub-Section 12.4), only
about 15 percent of the basement rocks outcrop across the Gullewa Project area. Historical
exploration activity was, as a result, for the most part centred on rotary air blast (“RAB”) drilling
and geochemical laterite/hardpan surveys followed by reverse circulation (“RC”) and diamond
drilling in areas of special interest. More recently, geophysical techniques have been used,
including aeromagnetic, gravity and induced polarity (“IP”) surveys, to identify potential
exploration targets, followed by RC and diamond drilling in identified areas of interest. Each of
the methods outlined may reasonably be construed as appropriate for purposes of exploration,
within the limitations of understanding of the geology that applied at the time the exploration
programs were undertaken.
The historical underground workings noted in Sub-Section 6.8 are located in areas that may
reasonably be described to be of the Gabanintha Land System type, where little or no sheetwash
laterite accumulation exists. Several of the mineralized deposits that were mined in the 1990s
using opencut methods were highlighted by the presence of earlier, underground workings dating
from the early part of the 20th Century (Sub-Section 8.1).
7.1.3 Groundwater
Fresh to brackish groundwater is reported to be present across the Gullewa Project area, at depths
of approximately 40 to 50 metres (Lindbeck, 2004); water boreholes have been drilled to access
the water (Sub-Section 7.4.7). During SGA’s April 2008 site visit, each of the openpits
contained significant volumes of fresh to brackish water accumulated, in part, as a result of
recent rains. Rock Steady openpit is reported to contain comparatively fresh water that contains
high levels of nitrates (resulting from agricultural activity). The water is reported to flow freely
into the openpit along an unknown/unidentified, sub-surface structure.
Salt River
Figure 7.3 – A Google Earth Image of the Area to the East of Gullewa
Mining Centre, Covering an Area of Salt River
7.2 Accessibility
The Mining Centre is approximately 430 kilometres by road from the centre of Perth, W.A., (the
journey takes approximately four-and-a-half hours) and approximately 160 kilometres from
Geralton, W.A., (the journey takes between two and two-and-a-half hours).
Table 7.1
Access Roads from Perth to Gullewa Mining Centre
From To Type Number Approx. Distance
Perth Turning Left (north) Paved Highway 95 4.8 kilometres
(Great Northern Highway) northeast of Bindoon
Turning left (north) Turning right (north) Paved Bindoon-Moora Road 4 kilometres
Turning right (north) Moora ditto Bindoon-Moora Road -
Moora Three Springs ditto Highway 116 (Midlands Road) -
Three Springs Turning right (northeast) ditto Morawa-Three Springs Road In Three Springs
Turning right (northeast) Turning left (north) ditto Morawa-Three Springs Road -
Turning left (north) Morawa ditto Highway 115 4 kilometres
Morawa Turning right (northeast) Paved Morawa-Yalgoo Road In Morawa
Entrance Gate* ditto Morawa-Yalgoo Road 42 kilometres
- Gravel Morawa-Yalgoo Road 32 kilometres
Entrance Gate* Gullewa Mining Centre Gravel Internal Access Road 1.5 kilometres
Note: – the entrance gate is at Latitude 28° 39’ 59.26” South, Longitude 116° 18’ 51.77” East
To
Airstrip Yalgoo
Morawa-Yalgoo
Road
Tailings Storage
Facility
Internal Access
Barnong Road (to Deflector)
Station Road
King Solomon’s
Mine
Monarch
Openpit
Camp Site
7.3 Climate
The climate in the Gullewa Project area is typical of the Murchison District, insofar as it may be
characterized as a semi-desert, Mediterranean type (Payne et al, 1998). Dry weather occurs for
nine to 11 months of the year, summers are hot and dry and winters are mild and intermittently
wet. Irregular incursions of moist air from the north, often associated with the remnants of
tropical cyclones, produce infrequent rain (with the prevailing winds ranging east to southeast,
the air has a lengthy passage overland so it produces little rain). The presence of summer low
pressure systems over the Australian interior, commonly referred to as heat lows, produce
intensely hot, dry conditions (Payne et al, 1998).
Summer weather is characterized by high daily temperatures, with little relief at night, and
easterly winds that ease and turn southeast at night. In winter, anticyclones often remain
stationary for several days over the Australian continent, during which times the prevailing cool,
moist westerly winds and associated cold fronts produce rain periods. The dominant wind
direction tends to be from the western quadrant in the morning, after which wind speeds
generally increase and blow from the northwest. According to Yalgoo Weather Station records
that extend back to 1896 (Lindbeck, 2004):
• the mean annual rainfall totals 257.6 millimetres and the wettest months are May to August,
although rainfall is both irregular and highly variable;
• the mean daily annual maximum temperature is 27.9 degrees Celsius with the highest mean
maximum month being January (37.2 degrees Celsius) and the lowest mean maximum month
being July (18.2 degrees Celsius);
• the mean daily annual minimum temperature is 13.2 degrees Celsius with the lowest mean
minimum month being July (6.2 degrees Celsius) and the warmest mean minimum months
being January and February (both 20.7 degrees Celsius);
• the mean annual relative humidity is 50 percent at 0900 hours and 30 percent at 1500 hours;
• the mean daily evaporation rate is 8.7 millimetres and the total average annual evaporation is
3,175 millimetres; and
• average wind speeds are between ten and 20 kilometres per hour.
7.4 Infrastructure
Operations at Gullewa have in the past been operated mainly on a fly-in-fly-out (FIFO) basis
with some personnel driving to and from local communities. As such, well-developed
residential, communications, production- and processing infrastructure, inclusive of the internal
access roads earlier outlined, was in the past developed. The existing facilities require minor
refurbishment and upgrading only to enable them to be used for purposes of any future, Gullewa-
based operation. The facilities have been on a care-and-maintenance basis since January 2003
(Sub-Section 8.3). A caretaker is present on-site, on a ten day on, three day off basis.
7.4.1 Accommodation
Existing air-conditioned accommodation for up to 50 persons is located in a well-established
village environment, off the main road access to the site (Figure 7.5). Facilities within the
accommodation area include a mess hall and kitchen, wet mess, recreation rooms, laundries,
ablution units and a mixture of single, self-contained and shared bathroom accommodation units
(Figure 7.7). Some refurbishment would be required to make the facilities fully useable,
including an upgrade to the sewerage pumping system. Visitors currently (May 2008) use only
those facilities that are regularly maintained. Food is cooked on site/in the kitchen facility.
Perishables are stored in a functioning cold room located in the kitchen area.
Figure 7.8 - Some of the Existing Office Facilities at Gullewa Mining Centre
(taken by SGA during the April 2008 site visit)
7.4.4 Communications
Working microwave communications facilities, powered by solar panels, are available at the
Mining Centre offices. Internet facilities are not currently available.
7.4.6 Power
A 7.5 cubic metre LPG cylinder, located at the accommodation centre, provides gas to the
kitchen, as well as heating for hot water. Electricity in sufficient quantity to service current
accommodation and office needs is supplied by means of a rented, portable 110 kVA diesel
generator located at the Mining Centre. Diesel is stored in a bunded tank farm, comprising three
50,000 litre storage tanks, that too is located at the Mining Centre (Figure 7.10).
A 1,728 kilowatt capacity powerhouse was previously built to supply sufficient power for the
Mining Centre operations (Figure 7.11). It contains six Cummins diesel engines driving 380
kVA Stanford alternators that distributed power at 415 volts (Figure 7.12). The cooling system
comprises electrically driven, fixed speed axial flow fans mounted externally to the powerhouse
building.
Repair and maintenance work would be required before the facility could once more become
fully operational. According to available information (a letter from Como Engineers to King
Solomon Mines Limited dated February 26, 2003), No. 6 diesel engine was, at the time, over-
loaded and might have incurred internal damage as a result. At the time of writing (May 2008),
the diesel engines and ancillary equipment remained the property of Kalgoorlie Power Systems
of Kalgoorlie, W.A. (ACN 008 895 672).
Electricity was distributed throughout the plant area via transformers to supply the offices, camp
site, process plant area, mine operations and workshop. The cabling is still in place, sections of
which are currently (May 2008) used. Separate diesel generators are located at the water
borehole site and at Monarch pit to power the water extraction pumps.
Table 7.2
Summary of Estimated Sustainable Yields from Water Boreholes, Gullewa Project Area
(data from the aforementioned June 2004 report by Groundwater Services [Pty] Ltd. to Batavia)
Borehole Approximate Location Salinity Range Potential Yield
GPB1 500m ENE of Shannadoah SE workings 920 to 1,200 mg/l 20 kL/h
GPB2 at Shannadoah SE workings 635 to 960 mg/l 12 kL/h
GPB3 850 metres E of Rock Steady Openpit 500 to 700 mg/l 10 kL/h
GPB4 350 metres ENE of Michelangelo openpit 1,130 to 1,500 mg/l 20 kL/h
GPB5 1,000 metres ENE of King Solomon’s Mine 2,700 to 2,900 mg/l 10 kL/h (estimated)
The water boreholes supplied production and processing water requirements for the then active
Gullewa gold mine operations, which resource was supplemented by pumping water from local
openpits and flooded underground workings. This was achieved by pumping from water
boreholes WB1 (intersecting the old workings at King Solomon’s Mine) and WB2 adjacent to
Monarch pit. The dewatering volume, calculated for a 12 hour day, was approximately nine
kilolitres per hour from both boreholes (Boyes, 2004). The true capacity of the holes has not
been determined.
There is also potential for significant water supply from Rock Steady openpit – anecdotal
evidence suggests that large volumes of water were drawn from the pit during its operation
(closed in 2003) and that the rate of water inflow limited the achievable mining depth. No data
concerning the water supply potential from this openpit is available.
It was estimated by Snowden Mining Industry Consultants (Pty) Ltd. (“Snowden”) that
dewatering Deflector openpit could supply an additional 19 kilolitres per hour of water: in
January 2005, Batavia pumped both the West and Central Deflector openpits dry to enable
drilling for metallurgical samples (the salinity range of the water was found to be between 5,000
milligrams per litre and 11,000 milligrams per litre). The recharge rate in the pit was monitored
and recorded at approximately 15.6 kilolitres per hour for the West openpit and approximately
3.6 kilolitres per hour for the Central pit. Both recharge values should be verified as regards
their long-term sustainability.
Combined with the openpit and underground water sources, but exclusive of the Rock Steady
openpit, there appears to be a sustainable potential supply of water on the Gullewa Project area
of at least 95 kilolitres per hour (2.28 megalitres per day). According to available records
supplied by Batavia, during 1995 (i.e. roughly at the time of peak production) the CIL processing
plant used a total of some 0.75 megalitres per day of water from the borehole field and mine
dewatering combined. This suggests that an abundance of operations’ water is available in the
Gullewa Project area. Available pumping rates and water supply and demand balances should,
nevertheless, be assessed and defined as part of any feasibility process for re-starting production
in the Gullewa Project area.
8 HISTORY
As may reasonably be anticipated given the size and location of the main Gullewa tenement area,
its history is complex in that it involves many different companies, a number of joint venture
agreements, company name changes and different periods of exploration and mining activity at
different places and with different objectives. To facilitate understanding, a summary of the
considerable database of available information is presented in six main parts in the following
Sub-Sections 8.1 to 8.6:
• early mining activity that covers the historical mining period from 1897 to 1942;
• recent mining activity (from October 1994 to January 2003) that covers the period of openpit
mining and some underground mining;
• corporate developments in 2003, leading to Batavia’s acquisition of Gullewa Project;
• base metal exploration (from the mid-1960s to the mid-1980s);
• gold exploration (from the mid-1980s to 2000); and
• Batavia’s exploration and Deflector project development period from 2003 to date.
The text was compiled from the key references listed in Sub-Section 4.3 of this Technical
Report, with cross-references to the original source documents (where available) to check key
information that is sometimes repeated verbatim by different companies in different years. No
details of any exploration activity on the Yalgoo tenement or Prince George Mine are available –
the sum of unverified information (that cannot be relied upon) suggests that historical gold
production totaled 42 ounces from 276 tonnes of mineralized material won from pyritic and
quartz veined shears in coarse grained gabbroic rocks.
exercise its pre-emptive right over the sale of the fixed assets and withdrew from the exploration
joint venture in June 1999, having first completed a mining study for the Deflector deposit.
Goldfields found little mineralization of interest outside the previously mined areas and lost
interest in further exploration as a result, not least because of perceptions regarding the potential
size of any mineralization that might in future be identified. Goldfields also dropped their
tenements in the Pipeline Bore area (Figure 8.1, near where Brandy Hill deposit was later
discovered), in part due to difficulties associated with the cover of sheetwash laterites that
Goldfields reported to be up to 40 metres thick at places.
Figure 8.1 - A 1985 Plan of the Tenements held by Goldfields Exploration (Pty) Ltd.
(from the aforementioned 1985 Gullewa exploration activities report by Goldfields)
A significant outcome of SOG’s work was the identification of the Deflector deposit as an area
of prospective gold mineralization where outcrop was/is limited to less than ten percent overall.
Initial RAB drilling of bedrock at Deflector returned maximum grades of 1,900 ppb Au and
2,760 ppm Cu, with subsequent RC drilling during October 1992 marking the discovery of
significant gold mineralization with a best intercept of eight metres, from 12 metres below
surface, grading 10.6 g/t Au. By June 1993, metallurgical test work had been initiated on the
deposit and a Mineral Resource had been estimated (Grieg, 1993).
• a preliminary Mineral Resource estimate by Snowden that was completed in January 2004,
with updates in both March and May 2004 following additional surface exploration drilling;
• a feasibility study, started by Batavia in June 2004, of openpit and underground mining by
contract miners, followed by gravity recovery of free gold and a standard
rougher/cleaning/re-cleaning flotation circuit to recover gold, silver and copper into
concentrates;
• following additional surface exploration drilling, an updated Mineral Resource estimate was
completed by Snowden in November 2004, with the final report completed in February 2005;
• a scoping study, completed by Batavia in December 2004, of openpit and underground
mining by contract miners with acid/cyanide leaching to separately recovery gold and
copper;
• following additional surface exploration drilling, an updated Mineral Resource estimate for
the Deflector deposit was completed by Snowden in January 2006;
• a scoping study of openpit and underground mining on the Deflector deposit was completed
by Snowden in March 2006;
• following further additional surface exploration drilling between March and July 2006, a
further updated Mineral Resource estimate for the Deflector deposit was completed by
Snowden in August 2006; and
• a final feasibility study, completed by Snowden in November 2006, of openpit and
underground mining by contract miners, followed by gravity recovery of free gold and a
standard rougher/cleaning/re-cleaning flotation circuit to recover gold, silver and copper into
concentrates.
Table 8.1
Summary of Best Estimate Gold Production, Gullewa Project Area,
1897 to January 2003 (not including Prince George Mine)
(data compiled from a variety of references that are listed in Sub-Section 4.3)
Tonnes Average Gold Ounces Average
Period Mined Grade (g/t Au) Produced Recovery Rate Operators
1897 to 1942 24,000 46.30 32,000 90% Various
1994 to 1996 304,236 2.31 20,000 88% NRE
1996 2,862 22.00 1,800 90% NRE
2002 210,000 2.69 16,000 88% Menzies/KSM
January 2003 12,833 3.17 875 67% Menzies/KSM
Totals 553,931 4.48 70,675 88% -
Table 8.2
Summary of Best Estimate Gold Production by Menzies Gold Ltd, April 2002 to January 2003
(data from the aforementioned annual report to December 2002 by King Solomon Mines Ltd)
Tonnes Average Gold Ounces Average
Mine/Deposit Mined Grade (g/t Au) Produced Recovery Rate
Deflector Central 8,000 4.20 951 88%
Deflector West 15,547 3.50 1,443 83%
Michelangelo Oxide 35,600 2.44 2,597 93%
Michelangelo Low Grade 16,000 0.81 375 90%
New Phoenix Underground 1,913 8.02 444 90%
Rock Steady Primary 36,000 3.30 3,247 85%
Rock Steady Low Grade & Laterite 20,000 2.00 1,093 85%
Brandy Hill 76,940 2.63 5,920 91%
Totals 210,000 2.69 16,070 88%
9 GEOLOGICAL SETTING
The text contained in the following sections relates to the mineralization located across the main
tenement area, as defined and described in Sub-Section 6.3. No information concerning the
geology of the Yalgoo tenement (on which the Prince George Mine is located) is available or can
be found.
Figure 9.1 – A Regional Geology Plan for the Gullewa Project Area
(the plan is dated 2004 so the defined tenement area no longer applies)
(taken from Batavia’s DoIR Annual Report for the period ended December 31, 2004)
According to Muhling & Low (1977), the stratigraphic sequence in the GGB comprises a lower
group of mafic and ultramafic units with oxide and silicate facies banded iron formation (“BIF”)
units, overlain by (oldest to youngest):
• oxide BIF with more intermediate and felsic volcanic rocks that are extensively intruded by
mafic and ultramafic rocks (which association is missing at Gullewa);
• felsic clastic rocks (shales, sandstones and conglomerates) that unconformably overly both
older associations; and
• basalt, high-magnesium basalt and both mafic and ultramafic intrusives with felsic and
intermediate volcanic rocks.
Watkins & Hickman (1987) divide the Murchison Supergroup into a lower Luke Creek Group
and an upper Mount Farmer Group, the principal difference between them being the presence or
absence of significant quantities of BIF, respectively (Standing, 2004). Watkins & Hickman
(1987) correlate the mafic and ultramafic stratigraphy of the GGB with the Windaning and
Gabanintha Formations of the Luke Creek Group. The clastic rocks belong to the Mougooderra
Formation.
9.2.1 Structure
The GGB is folded into a broad, east-west trending, east-plunging regional syncline with the
clastic sediments at its core (Figure 9.2). The northern limb is intruded by several phases of
felsic plutonism that locally refold the stratigraphy (Hayden & Steemson, 1998). The syncline is
truncated to the east by the north-south trending Salt River fault that juxtaposes east-west
striking Luke Creek Group greenstone stratigraphy against north-south trending Luke Creek
Group greenstone stratigraphy (Watkins & Hickman, 1987).
Undeformed Proterozoic dolerite dykes intruded both greenstones and granites along northeast-
southwest and east-west trends in the northern part of the province. In the southwest, north-
south and north-northwest-south-southeast trends are also important, which trends mirror the
western boundary of Yilgarn craton.
The Salt River fault is a major structure of regional significance that comprises a series of
multiple, parallel shears occurring over a width of three kilometres or more. Secondary,
generally northeast-southwest trending shears splay off the southwestern side of the structure;
both the Salt River fault and the splay zones have been associated with gold mineralization
(Section 10).
9.2.2 Lithologies
The GGB is enveloped by granitic rocks and there are minor granite and felsic porphyry
intrusives throughout. Several gold prospects are closely related to the porphyries; aeromagnetic
and drilling data suggest blind intrusions may occur at shallow depth below or close to some of
these prospects. As earlier outlined, undeformed Proterozoic dolerite dykes intruded both the
greenstones and granites, at various different orientations.
A stock of mildly alkaline trachyandesite (the Gearless Well intrusion) occurs immediately
southeast of the Deflector deposit. Intermediate biotite porphyry dykes, that are associated with
this intrusion, are widespread and the intrusion itself has been intersected in a number of
drillholes. It lies towards the centre of the GGB and it covers an area of some 15 square
kilometres, based on its distinctive magnetic character. Rubidium/strontium age-dating of
drillcore (Johnson et al, 1989) gives it an age of 2188 ±11 Ma (i.e. Lower Proterozoic), which is
unexpected as the intrusive is locally schistose and appears to carry structures that have been
interpreted as being associated with gold mineralization elsewhere in the general area.
Most of the Archaean and Proterozoic bedrocks underwent prolonged lateritic weathering during
the Tertiary period, followed by a period of minor uplift, dissection and deposition of locally
derived Quaternary sediments in alluvial, lacustrine and aeolian environments. This has given
rise to a wide variety of landforms (Sub-Section 7.1.1), weathering profiles and cover sequences.
As earlier outlined (Sub-Section 7.1.1), outcrop is in general limited to about 15 percent of the
total Gullewa tenement area, with the result that the basement geology is known only from the
results of aeromagnetic surveys and data collected from drilling. In 2004, Batavia completed a
basement geology interpretation over the northern portion of the Gullewa Property area. The
results are summarized on Figure 9.3 (it should be noted that Figure 9.3 is a scanned, digital copy
of a hard copy plan available on-site – most of the tenement boundaries and tenement numbers
detailed on the plan no longer apply).
(digitized from a hard-copy plan found in the Gullewa Project offices during SGA’s April 2008 site visit)
S. GODDEN & ASSOCIATES LTD. Page 84
GULLEWA GOLD-COPPER PROJECT
10 DEPOSIT TYPES
• under the humid tropical conditions that locally prevailed some 100 million years ago,
primary gold was dissolved by rainwater and precipitated in horizontal layers immediately
below the water table;
• about 15 million years ago, the climate became increasingly arid and the water table dropped;
and
• the gold dissolved in the saline groundwater and was carried downwards, settling into
discrete layers or zones during periods when the water table was stable.
The presence or lack of zones of secondary enrichment should not be construed as a key
indicator of the presence or lack of underlying vein-type gold or gold-copper mineralization.
The Deflector deposit is a case in point:
In 2004, Batavia completed a structural interpretation of the Gullewa Project area, from the
results of geophysical surveys and geological mapping (Sub-Section 12.4). Two apparent
controls to mineralization were identified – a well-documented northeast-southwest set of
structures or stratigraphic horizons and a more subtle set of north-northwest – south-southeast
trending structures (Figure 9.4). This result agrees well with empirical evidence in the area of
the Deflector deposit. For example, mineralization in the Deflector area is generally associated
with northeast-southwest trending stratigraphic boundaries such as flow contacts or
sediment/mafic contacts (Figure 9.5). It is generally believed that subtle northwest - southeast
trending horsetail splay structures derived from the Salt River fault were conduits for gold-
bearing hydrothermal fluids, with the Gearless Well intrusion interpreted as the possible heat
source.
The co-incidence of the dominant northeast – southwest structural trend with the orientation of
the mineralized veins at the Golden Stream, Deflector and, to a lesser extent, the Michelangelo
deposits cannot be ignored. However, consideration of the structural trends summarized on
Figure 9.3 suggests excellent conjugate agreement between the defined structural trends, but
poor conjugate agreement with the Salt River fault (a conjugate angle approximating to 50
degrees might reasonably be expected). This suggests a separate source and/or
dominant/primary strike-slip structural trend that resulted in (what appears to be) a northeast –
southwest / north-northwest – south-southeast conjugate pair. A case may also be made for
offsets along the Salt River fault, at the intersection points of dominant, northeast – southwest
trending faults.
The coincidence of two structural trends, or a single structural trend with some other locally
dominant feature, is supported by the highly localized nature of the gold mineralization at the
Monarch and Rock Steady deposits (that suggest ‘hot spot’ mineralization). The visual evidence
of the geology seen in the Rock Steady openpit during SGA’s April 2008 site visit further
suggests that the second influencing factor might be the presence of a BIF horizon, in
conjunction with a (northeast – southwest trending?) structure. The postulated effect of the BIF
would have resulted in locally elevated rockmass disturbance, as evidenced by the abnormal
depth of local surface weathering, hence a local conduit for the passage of mineralizing
hydrothermal fluids.
Figure 9.5 – A Summary Basement Geology Plan of the Deflector – Golden Stream Area
(from Snowden’s aforementioned 2006 feasibility study report for Batavia)
• the trend suggests excellent conjugate agreement with the Salt River fault (which might
predate the northeast – southwest / north-northwest – south-southeast conjugate pair, for the
reasons earlier outlined); and
• the Mugga King deposit has the appearance of a well-developed, relative tension/third-order
structure that would have acted as a conduit for the preferential passage of mineralizing
hydrothermal fluids.
The structural circumstance outlined is distinctly different from that found at Golden Stream and
Deflector where strongly developed, talcose schists exist in what appears to be first- or second-
order, relative compression strike-slip structural features. Whatever the case, the possibility of
more than two structural controls on the development of mineralization exists and this should be
considered within the scope and detail of future exploration programs. Some of SGA’s
recommendations made in Section 22 relate to this suggestion.
11 MINERALIZATION
No base metal mineralization has been identified in the Gullewa district, other than the quartz
vein-associated copper mineralization at Deflector. Isolated intercepts of lead and zinc
mineralization (one metre at 3.5% Pb at Rock Steady and one metre at 5.5% Zn in a hole beneath
a gossan at Murdalyou Range) have been reported, but have not been shown to be of economic
significance. They are not considered further here.
The available information suggests that the majority of the gold mineralization found on the
Gullewa Project area occurs as disseminations and discrete stringers in narrow quartz veins, at or
near the contact between felsic porphyries and the mafic volcanic rocks they have intruded or
within either basalts or BIF within a dominantly basaltic sequence. Wallrock alteration is
generally weak and tends to be limited in extent. The dominant minerals are pyrite with
secondary chalcopyrite and minor chlorite.
No information concerning mineralization at Prince George Mine is available or can be found.
The following text instead concentrates on mineralization at the main deposits located across the
main tenement area that is defined and described in Sub-Section 6.3.
basalt. Shearing along the margins of the veins is restricted to very narrow zones only (Standing,
2004). Graindorge (2006a) notes that the drillhole assay results show very abrupt changes in
grade between the barren basalt host rock and the mineralized zones. The mineralization is
dominated by biotite+carbonate+pyrite that, in the Central Lode, is strongly overprinted by
chlorite+carbonate alteration (Standing, 2004).
Figure 11.1 is a schematic diagram of the vein sets; it is orientated for the local mine grid (the
mine grid is rotated by 40 degrees to the east with respect to Magnetic North). The northwest-
southeast trending structural lineament has been interpreted to be a sub-vertical fault zone with
an apparent sinistral offset.
Figure 11.1 – A Schematic Diagram of the Surface Expressions of the Deflector Mineralized
Vein Sets (orientated for the local mine grid – rotated 40 degrees east of Magnetic North)
(from Snowden’s August 2006 Mineral resource estimate report to Batavia)
As Figure 11.1 suggests, three main vein sets have been identified (the West, Central and
Contact Lodes, the latter being on the contact between black shales and siliceous felsics). Each
of the mineralized veins/lodes has been found to have good vertical and horizontal continuity and
each of which are easily traced by surface drilling (Standing, 2004). Current interpretations of
the structural setting suggest the mineralization may form part of a Riedel structure. Figure 11.2,
which is orientated for the local mine grid, is an in-pit geology plan for the Deflector West and
Central mineralized veins/lodes.
Figure 11.2 – An In-Pit Geology Plan the Deflector West and Central Mineralized
Veins/Lodes (orientated for the local mine grid – rotated 40 degrees east of Magnetic North)
(supplied by Batavia from the company’s Gullewa Project files)
Significant surface weathering has occurred along individual veins and oxide, transitional and
fresh/primary types of mineralized material have been identified:
Although the depths of oxide and transitional mineralized material outlined are convenient for
purposes of deposit, hence Mineral Resource characterization, the distribution of the copper and
sulphide minerals within the oxide and transitional zones is not that clear-cut. In general, oxide
copper minerals extend to a depth of 45 m bs; transition zone copper sulphide minerals
(chalcocite and digenite) extend from between 15 and 70 m bs and the primary zone sulphides
can extend from approximately 25 m bs. Limonite/goethite, which contains free gold, can also
be present to a depth of 45 m bs. Thus:
• oxide minerals only are present to 10 m bs (the major oxide minerals are malachite,
chrysocolla and limonite/goethite and the minor oxide minerals are azurite, cuprite and native
copper);
• a mixture of oxide, secondary sulphides and primary sulphides exists between 10 and 35 m
bs (the major secondary sulphides are chalcocite and digenite);
• a mixture of secondary and primary sulphides is developed between 35 and 70 m bs; and
• primary sulphides only exist below 70 m bs (predominantly pyrite, chalcopyrite, gold and
electrum that can sometimes be coarse (individual grains can be up to five millimetres
across]).
Outcrop is generally excellent in the immediate area of the deposit, which is located on a subtle
topographic high. The shear is known to extend to the southwest and northeast where the sheet
laterite cover can be up to 20 metres thick. The historical Cagacaroon underground workings
were located on the Golden Stream deposit and the Deflector deposit is postulated to be
developed on the same shear structure (Figure 9.5).
• laterite-hosted – horizontal to gently north dipping, one metre to five metre thick sheet,
containing most of the gold mineralization) overlain by one metre to 15 metre of Quaternary
laterites, alluvial clays and gravels;
• saprolite-hosted – in sericite altered, silica-rich saprolitic clays derived from extreme
weathering of felsic porphyry intruded into metabasalt (some supergene enrichment of the
gold mineralization was evident); and
• primary – hosted along steeply dipping shears, both marginal to and internal to the felsic
quartz porphyry intrusive, which porphyry cross-cut and truncated the BIF units.
Coxhell & O’Ferrall (2003) suggest that the mineralization was/is related to a highly sheared
contact between a mafic porphyry rock and a highly schistose mafic basalt, with strong chloritic
alteration adjacent to the south dipping contact along which preferential surface weathering
occurred. The majority of the gold mineralization was reported to be ‘contained within strongly
siliceous zones that cross-cut the mafic intrusive and sigmoidal, anastomozing quartz veins
localized into two main orientations of grid south and grid northeast’ (Coxhell & O’Ferrall,
2003). The rocks are strongly oxidized to approximately 55 m bs with deeper weathering
following the south dipping basalt/porphyry contact. The Michelangelo mineralized shear
appears to be the same structure as passes through, or close to, the King Solomon, Monarch and
Rock Steady deposits (Figure 9.4).
The BIF units were/are tightly folded into steeply plunging, northeast trending syncline marked
by at least two folding events, as evidenced by refolded folds and doubly plunging synclines seen
during openpit operations.
The mineralized cherty BIF was/is flanked by two well-developed fault breccia zones/shears
(striking 020 and 120 degrees) that act to limit the extent of gold mineralization. The best gold
grades were encountered where the chert BIF unit swelled in thickness in the centre of the pit.
According to Coxhell & O’Ferrall (2003) ‘the gold mineralisation is complex and has both
lithological and structural controls. Several important mine geology observations include:
12 EXPLORATION
The Company has not carried out any exploration work on the Gullewa Project area and no
exploration work on behalf of the Company has been carried out on the Gullewa Project area.
However, Batavia undertook a series of exploration programs on the Project area following its
purchase of the Gullewa tenements in 2003. Summaries of Batavia’s exploration programs are
presented in the following Sub-Sections 12.2 to 12.6, following a description of exploration
activity by previous owners.
seven RC drilling programs for 187 holes totalling 10,396 metres, as well as one diamond
drilling program in June 1996 totalling five holes for a total of 1,077.3 metres (Hayden, 1996).
At this point:
• the upper part of West Lode had been drilled on lines spaced 20 metres apart, over a strike
length of 600 metres, with individual holes spaced an average of 10 metres apart yielding
pierce points spaced about 15 metres apart in the plane of the lode;
• the shallowest portion of Central Lode (to the north) had been drilled on a ten by five metre
spacing and the southern portion of Central Lode had been drilled on a 20 by ten metre
pattern;
• the Contact Lode had been tested on lines spaced 20 metres apart with hole spacings ranging
from ten to 20 metres;
• all the holes were inclined at 60 degrees below the horizontal, hole azimuths varied but
generally the holes testing the West Lode and the southern part of the Central Lode had grid
east azimuths, whereas the holes drilled into Contact Lode and the northern portion of
Central Lode had grid west azimuths;
• the West Lode had been closely drilled to a vertical depth of approximately 70 metres and
very sparsely drilled to a depth of 160 metres, whereas Central and Contact Lodes had been
‘adequately’ tested to a vertical depth of 60 metres (Hayden, 1997); but
• none of the three lodes had been definitively closed-off along strike.
• a total of 47 RC holes were drilled on the Deflector deposit between June and July, 1997, for
a total of 3,618.7 metres;
• two diamond drillholes were drilled in September 1997 for a total of 140.7 metres; and
• a further 11 RC holes were drilled in October 1997 for a total of 692 metres.
No particular outcome from the drilling outlined was reported by GUL, other than an in-house,
informal estimate of uncut Mineral Resources that totaled 664,990 tonnes at 5.7 g/t Au and 1.8%
Cu. Thereafter very little exploration activity appears to have taken place, although GUL
completed a further three RC holes on the Deflector deposit in November 1999, for a total of 168
metres, to test for extensions of the mineralization to the north and south of the West and Central
Lodes. GUL also undertook a ground electromagnetic survey to identify any massive sulphides
and to assess the conductivity of black shale. Geologists Australia (“GeoA”, ABN 54 986 292
383) also completed a ‘brief study of the Gullewa mining tenements’ (Hill, 2003), noting that ‘the
soil geochemistry poorly defined the extent of mineralization at Deflector West compared to
other nearby deposits. This indicates that good targeting and an understanding of the geology is
required prior to drilling. The (mineralized) zone sizes may not be proportional to the
geochemical signatures’.
In 1998 and 1999 Gullewa Gold entered into a joint venture agreement with Acacia (Sub-Section
8.2.2) which included 13 tenements, but not those relating to the Deflector deposit. Very little
exploration activity appears to have taken place during this period, except for some local RAB
and RC drilling, but Tesla Airbourne Geoscience (Pty) Ltd. of Applecross, W.A., did complete a
fairly extensive aeromagnetic survey, on behalf of Acacia. It comprised two surveys flown at
right angles to one another: the first along lines orientated at 060 degrees (hence parallel to the
local stratigraphy) and the second along line orientated at 150 degrees (hence parallel to various
structures including faults and Proterozoic dykes). The results of Acacia’s survey are discussed
in Sub-Section 12.2.
July of 2003, following which Batavia drilled an additional 62 RC holes (8,394.5 metres) during
September 2003 and 25 RC holes for 4,228 metres with a diamond tail (“RCDT”, the tail being
drilled through the mineralized horizon/s). This expanded the area of defined mineralized
material, but no other outcome was reported by Batavia for the period (Ragless, 2004).
Limited exploration also continued on the King Solomon/New Phoenix deposit, with a total of
eight RC holes being completed for a total of 1,273 metres (Ragless, 2004). Again, no particular
outcome was reported for this work, other than the results allowed the known mineralized
material to be more closely defined.
Perhaps the most significant exploration effort during 2003 was a review of all the available
results from previous aeromagnetic surveys, by Geologists Australia (“GeoA”, ABN 54 986 292
383) on behalf of Batavia. The available data included the results of NRE’s 1995 Acacia’s 1998
aeromagnetic surveys, the latter having been previously merged into a single digital plan.
Summary plans are available in digital format, but the quality of reproduction does not warrant
their presentation here.
In their progress report to Batavia dated December 26, 2003 (Hill, 2003), GeoA stated that the
‘initial observations indicated that the Deflector West orebody is located within a slightly more
siliceous and weakly magnetic unit. The lode vein margins appear to conform to the edges of
this unit. A brief examination of the longitudinal sections indicate that the wide and more
enriched lode areas occurs at the intersection of oblique trending magnetic features and the main
vein structure’. On a more generalized note, Hill (2003) also stated that their preliminary
interpretations of the aeromagnetics indicate:
• the intercept of 040 to 045 degrees trends with 075 to 080 degrees trends appears to define
ore positions, which structural style can also be seen at Tintoretto and Bellini, as well as near
Titian;
• the Deflector lode structure appears to extend over two kilometres northeast and one
kilometre southwest (which does not suggest that the structure is continuously mineralized);
and
• the 060 degrees trending magnetic survey does not appear to add materially to the outcomes
of data interpretation (exploration targeting).
Ten exploration targets were identified as a result of GeoA’s work (Figure 12.1):
• Target 1 (probably Bellini) and Target 2 (Tintoretto, on the same northeast trending structure
as Deflector, but in a slightly different rock type);
• Target 3 (immediately along strike from the Deflector lode line and ‘one of the more
interesting and possibly unexplored targets’);
• Target 4 (probably the Deflector Contact Lode;
• Targets 5, 6, 7 and 8 (near Titian and appear to be splays off the Deflector Lode structure);
and
• Target 9 near Tintoretto and Target 10 (that show small offsets that are probably related to
mineralization, the ‘soil geochemistry and drillhole data for which should be reviewed
together with the magnetics’).
• a total of 30 holes (3,419.9 metres) were drilled on the Deflector deposit, including 21 RC
holes (2,171 metres), three RCDT holes (393.8 metres) and six diamond drillholes (852.1
metres); and
• a total of 191 AC holes (9,267 metres) were drilled, including 56 holes (1,306 metres) at the
Michelangelo deposit, two holes (92 metres) at the King Solomon/New Phoenix deposit; 13
holes (210 metres) at the Rock Steady deposit, nine holes (359 metres) at Bellini, 12 holes
(464 metres) at Deflector North, 97 holes (6,604 metres) at Tinteretto and 48 holes (2,255
metres) at Titian (Figure 12.2).
Figure 12.3 summarizes the collar positions of all the RC and diamond exploration holes drilled
on the Deflector deposit up to and including Batavia’s 2004 drilling campaign. At this stage,
both the West and Central Lodes had been tested to a depth of 200 m bs, and:
• over the main part of the West Lode (between section lines 19,100 mN and 19,480 mN),
drilling had been carried out on sections spaced 20 metres apart, with pierce points at 15 to
20 metre intervals to about 100 m bs and approximately 20 metres by 40 metres at depths
greater than 100 m bs; whereas
• in the area immediately below and adjacent to the existing openpit, the West Lode had been
tested at a drill spacing of approximately ten metres by 10 metres;
• between section lines 19,080 mN and 19,400 mN, drilling on the Central Lode had been
carried out on sections spaced 20 metres apart, with pierce points at –
o 15 to 20 metre intervals to about 60 m bs
o approximately 20 metres by 40 metres between 60 metres and 120 m bs; and
o 40 metres by 40 metres between 120 metres and 200 m bs.
12.3.2 Outcomes
The results of the drilling programs outlined were combined with verified (by Batavia) drilling
and assay datasets, the significant outcomes of which work were the 2004 Resource Estimates
for the Deflector, Michelangelo, King Solomon/New Phoenix and Rock Steady deposits that are
detailed in Section 19. As earlier outlined (Sub-Section 8.6.1), following completion of the June
and November, 2004 Mineral Resource estimates for the Deflector deposit, Batavia:
• in June 2004, started a feasibility study of openpit and underground mining by contract
miners, followed by gravity recovery of free gold and a standard rougher/cleaning/re-
cleaning flotation circuit to recover gold, silver and copper into concentrates; and
Figure 12.2 – A Drillhole Collar Location Plan for the 2004 AirCore Drilling Program
on the Prospects Located Near the Deflector Deposit
(from Batavia’s DoIR Annual Report for the period ended December 31, 2004)
Figure 12.3 – A Drillhole Collar Location Plan for all Exploration Holes Drilled
on the Deflector Deposit, up to and including 2004
(from Batavia’s DoIR Annual Report for the period ended December 31, 2004)
• Deflector North (the northern extension of the Deflector deposit, to the north of the
northwest-southeast trending fault identified on Figure 11.1);
• Deflector East (high-grade mineralization had previously been intersected about 300 metres
east of the Central Lode of the Deflector deposit, including drillhole GWC005 grading 20.14
g/t Au over two metres from 45 metres and 1.27 g/t Au over one metre from 54 metres, and
drillhole GWC016 grading 3.78 g/t Au over two metres from a depth of 16 metres);
• three areas in the vicinity of Brandy Hill that had at the time (2004) received only limited
exploration coverage;
• a broad area of anomalism in a regional fold nose at the southwest end of the Gearless Well
trachyandesite (Figure 12.4, which anomalism occurs in quartz veins with intermediate
intrusive rocks that had been intersected in diamond drillhole GLC075 [1.72 metres grading
1.71 g/t Au from 63 metres], GLA0233 [grading 2.17 g/t Au over four metres from 30
metres, in transported cover] and GLA0236 [grading 1.02 g/t Au over three metres from 51
metres]); and
• Michelangelo deposit, where recent drilling results had ‘returned above average gold grades
for the deposit’ (Libby, 2005).
Figure 12.4 – A 2004 Aeromagnetic Plan of the King Solomon-Rock Steady Area with the
Collar Positions of Previously Drilled Holes, the Positions of Known Outcrops
and Other Geological Information Highlighted
(colour-coding system unknown, except for RAB holes that are identified by black dots)
(from an internal Batavia Memorandum appended to Batavia’s DoIR Annual Report
for the period ended December 31, 2004)
sampling). The main aim of the drilling program was to locate the northern strike extension of
the West Lode across the interpreted fault zone identified on Figure 11.1. The holes intersected
mineralization, but no significant outcomes were realized as a result of this work. Three RC
holes (150 metres) were also drilled into an area north of the Michelangelo deposit to ‘follow-up
on a previous high-grade intercept’ (Ragless, 2006).
• Sample 59971 returned a gold grade of 3.86 g/t Au, thereby confirming that additional work
is warranted in the Brandy Hill area;
• Samples 59972 and 59973 returned anomalous gold values associated with BIF, north of
Brandy Hill; and
• Sample 59986 returned a slightly elevated gold value from a small tailings dam located at the
historical underground Shannadoah workings (Mattinson, 2007).
12.5.2 Mapping
Batavia contracted Murchison specialist Dr. J.A. Hallberg of J. Hallberg & Associates Pty Ltd.
(company number unknown) to map portions of ten standard 1:25,000 scale map sheets covering
most of the GGB (Figure 12.5). This was completed during October and November 2006;
Figure 6.14 is copy of Hallberg’s geology map. Detailed descriptions of the principal rock types
he encountered are presented in his mapping report (Hallberg, 2006), as well as generalized
reviews of the stratigraphy, structure, metamorphism and mineralization he encountered.
Portions of his report formed the basis for the discussions of Section 11 of this Technical Report.
Figure 12.5 - The Area Mapped by Dr. J.A. Hallberg during 2006, for Batavia
(from Hallberg’s mapping report to Batavia, dated December 2006)
12.5.4 IP Survey
The massive sulphide intersections seen in some of the Deflector diamond drillcores prompted
Batavia to conduct an IP survey over the Deflector deposit. It was designed to identify
additional drilling targets and to improve the understanding of the geology in the general area of
the deposit. Montana GIS of Norwood, South Australia (ABN 61 073 425 724) was contracted
to complete the survey on behalf of Batavia. A total of 11 traverses were completed in February
and March 2006 for a total of 23.5 line kilometres (Figure 12.6).
The results of the IP survey identified numerous high quality chargeability targets that Montana
GIS recommended ‘require further investigation (drill testing)’ (Bubner, 2006). ‘Some of the
chargeable bodies are associated with resistivity features, indicating increased silicification.
Others are coincident with two north/south (local grid) conductive bodies that possibly represent
regional shears or faults’. Bubner (2006) concluded that the resistivity and chargeability
models’ depth slices strongly indicate a fault corridor, which the Deflector deposit straddles. He
goes on to state that ‘It is interesting to note the correlation between the Deflector pits and one of
the strong conductors that strikes through the area. Does this strong conductor represent a
regional shear? Also coincident with the deflector pits is a moderate chargeability feature in the
shallowest depth slice. The extension of this shallow chargeable feature rates as a high priority
target. Within the fault corridor there is a complex pattern of chargeable bodies most likely
truncated by cross-cutting faults. The chargeable bodies within the fault corridor, and those
adjacent to it, also rate as highly prospective targets’. Plotting the collar positions of historical
and recent drillholes on the chargeability and resistivity plans and sections showed that only
some of the targets had previously been tested by drilling.
• infill drilling the upper portion of the West Lode (to a program designed by Snowden); and
• step-out drilling along strike and down dip of targets associated with the West Lode to test
areas identified from the results of the earlier IP survey.
The drilling program was completed in July, 2006, following which the final, and current,
Mineral Resource estimate was compiled by Snowden (the Mineral Resource estimate dated
August 2006 and detailed in Sub-Section 19.4 of this Technical Report) and the feasibility study
of surface and underground mining was completed by Snowden (the study dated November 2006
and discussed in Sub-Section of this Technical Report).
Figure 12.7 - A Drillhole Location Plan for Batavia’s 2006 Deflector Drilling Program
(taken from Batavia’s DoIR Annual Report for the period ending December 31, 2006)
• to increase the quality and availability of the geology, geophysics and remote sensing GIS
layers;
• to complete the single verified relational database of drilling results located in the MGA94
coordinate system; and
• to create an exploration model to guide drilling target generation studies.
To these ends, Batavia undertook a number of studies and programs, including: completion of
the verified Access database of the results of previous and historical exploration programs;
imaging, interpretation and reporting of the aeromagnetic-radiomagnetic survey carried out in
December 2006 (Sub-Section 12.5.3); and compiling final air photograph, Quickbird and
Landsat images of the Gullewa Project area.
No resource or exploration drilling for gold mineralization was completed during the year,
Batavia having changed the focus of its drilling exploration effort to the potential for iron
mineralization at the Rock Steady and Brandy Hill deposits in particular, the details of which are
not considered within the scope of this Technical Report (Sub-Section 6.1).
• gravity surveys employ a method that is non-ground disturbing and as such, it does not
require advance environmental or Aboriginal clearance (the securing of which can be time
consuming);
• once the survey is planned, the gravity crew can operate with minimal direct supervision and
the results can be e-mailed regularly for quality control checking, processing and analysis;
• the method maps density contrasts, so it could help differentiate and/or map-out non-
magnetic lithologies (e.g. meta-sediments and non-magnetic mafic units); and
• there is a potential for the direct detection of massive sulphides as gravity highs and zones of
clay-rich alteration as gravity lows.
Detailed gravity surveys over 400 metre by 80 metre grids are proposed for regions of the poorly
explored southern limb and older mafic/sedimentary sequences of the GGB, which are concealed
by sheetwash laterites, including the Gearless Well intrusive (trachyandesite). Follow-up
surveys on 200 metre by 40 metre grids are proposed for areas of special interest.
13 DRILLING
The Company has not carried out any drilling on the Gullewa Project area and no drilling on
behalf of the Company has been carried out on the Gullewa Project area. However, Batavia and
previous owners completed numerous drilling campaigns on the Gullewa Project area.
Comprehensive details of the various drilling programs completed on the Deflector deposit are
available, whereas only sketchy information concerning drilling on other deposits and targets can
be found - with the exception of the drilling programs completed by Batavia, as described in
Section 12. It is the details of the exploration drilling programs completed on the Deflector
deposit that are considered here, exclusive of the RAB holes drilled by SOG in the early 1990s.
Table 13.1 summarizes the drilling programs completed to date (May 2008).
Limiting the scope of this section to verifiable data for the Deflector deposit does not materially
affect the scope of this Technical Report, because:
• full details of the drilling programs on other deposits and targets are not available and it is
unclear at this stage which holes are still relevant in terms of the Mineral Resource estimates
(gold only) presented in Sub-Section 19.5 to 19.7, inclusive for the Michelangelo, King
Solomon/New Phoenix and Rock Steady deposits (which estimates have, in any event, been
uniformly re-classified, by SGA, into the Inferred category due to a lack of detail concerning
the drillhole database on which the estimates are based);
• it is the Deflector deposit that is the main focus of the Company’s short- and medium-term
Gullewa Project development plans; and
• it is the Deflector Mineral Resources detailed in Sub-Section 19.4 of this Technical Report
that prompted the Company to purchase the Gullewa Project from Batavia, under the terms
of the Definitive Agreement summarized in Sub-Section 6.1.
13.1 Summary
SOG drilled the first reconnaissance RAB holes across Deflector deposit in 1991. After
discovering mineralization and returning high-grade mineralized intersections in follow-up RC
drilling, SOG rapidly drilled the resource. By July 1993, SOG had drilled 149 RC, diamond and
RCDT holes (10,756.10 metres), following which an informal, in-house Mineral Resource
estimate was compiled. Subsequent to this SOG completed an additional 53 RC and diamond
drillholes (2,917 metres) until NRE fully acquired the project in 1994.
NRE and later GUL undertook an aggressive exploration and resource development campaign at
Deflector deposit and by June 1996, they had completed a total of 192 RC and diamond
drillholes (11,473.30 metres) for a total of 402 RC and diamond drill holes had been completed
for a combined total of 394 RC, diamond and RCDT holes (25,146.40 metres). After a number
of iterations of Mineral Resource estimates, in January 1997 GUL reported a combined Mineral
Resource, cut to 40g/t Au.
Table 13.1
Summary of Historic and Recent Surface Exploration Drilling Programs, Deflector Deposit
(data from Hayden [1997] and from Annual Reports to DoIR)
Drilling
Year From To Owner Type Hole Numbers No. Metres Area/Target Company
1991 Oct Oct SOG RC GWC 1-16 17 1,085.0 Deflector Drillcorp
1991 Dec Dec SOG RC GWC 17 1 60.0 Deflector Aquadrill
1991/2 Dec Feb SOG RC GWC 21- 40 20 1,350.0 Deflector Aquadrill
1992 Feb - SOG RC GWC 42- 58 17 1,293.0 Deflector Macro Drill
1992 Feb - SOG/GUL RCDT GWCD 41 1 120.0 Deflector Macro Drill
1992 Apr - SOG RC GWC 65-78 14 928.0 Deflector Robinson
1992 Apr Dec SOG RC GWC 80-114 35 2,375.0 Deflector Robinson
1992 Dec Dec SOG DDH GWD 18-20 3 311.9 Deflector Aquadrill
1993 Mar Apr SOG DDH GWD 59-64 6 664.2 Deflector Drillex
1993 Mar Jul SOG RC GWC 115-149 35 2,569.0 Deflector
1993 Sep - SOG RC GWC 150-151 2 97.0 Deflector Drillex
1993 Oct - SOG DDH GWD 153 1 191.0 West Lode J & S Drilling
1993/97 Oct - SOG/GUL DDH GWD 154-155 2 399.0 Deflector
1994 Dec - SOG RC GWC 152-199 48 2,230.0 Deflector Drillcorp
1995 Jan - GUL RC GWC 200-229 30 1,501.0 Deflector Drillcorp
1995 Feb Mar GUL RC GWC 230-275 46 2,476.0 Deflector Drillex
1995 May Oct GUL RC GWC 276-291 17 888.0 Deflector Mehs
1995 Jun Oct GUL RC GWC 292-311 20 481.0 Deflector Magnet
1996 Jan - NRE RC GWC 312 1 55.0 Deflector Dere Drilling
1996 Jan Mar NRE RC GWC 313-366 54 3,579.0 Deflector Drill Eng
1996 May - NRE RC GWC 367-385 19 1,416.0 Deflector Stanley
1996 Jun Jun NRE DDH GWD 386-390 5 1,077.3 West Lode Stanley
1997 Jun Jul GUL RC GLC 1-31 31 2,173.0 Deflector Macro Drill
1997 Jul - GUL RC GLC 33-39 7 496.0 Deflector Macro Drill
1997 Jul - GUL RC GLC 41-44 4 276.0 Deflector Macro Drill
1997 Jul - GUL RCDT GLCD 32,40,45,46,58 5 673.7 Deflector Macro Drill
1997 Sep - GUL DDH GLD 1-2 2 140.7 Deflector Macro Drill
1997 Oct - GUL RC GLC 47-57 11 692.0 Deflector Macro Drill
1999 Nov - GUL RC GLC140,142 3 168.0 Deflector Macro Drill
2002 Oct Nov KSM RC DCMRC 1-7 7 628.5 Central Lode G&K
2002 Oct Nov KSM RC DCONDH 12-14 3 75.0 Contact Lode G&K
2002 Oct Nov KSM RC DWMRC 1-5 5 346.0 West Lode G&K
2003 Mar - HLM RC HDRC 1-17 17 1,995.0 Deflector Grimwood Davies
2003 Jul - HLM RC HDRC 18-41 24 3,404.0 Deflector Connector
2003 Sep Dec BTV RC BDRC 42-82 41 6,348.5 Deflector Drillcorp
2003 Oct Dec BTV RCDT BDRCDT000-024 25 4,228.0 Deflector Drillcorp
2004 Feb Mar BTV RC BDRC062 & BDRC083-102 21 2,171.0 Deflector Drillcorp
2004 Feb Mar BTV RCDT BDRCDT025-027 3 393.8 Deflector Drillcorp
2004 Feb Mar BTV DDH BDD001-006 6 852.1 Deflector Mosslake Drilling
2005 Feb - BTV RC DCM01-04, DWM01-14 & 23 1,038.0 Deflector Orbit Drilling
BDRC 103-107
2005 Jul Oct BTV RC BDRC108-116 9 820.0 Deflector Orbit Drilling
2005 Jul Oct BTV RCDT BDRCD028-048 21 6,248.3 Deflector Wallis Drilling
2006 March July BTV RCDT BDRCD049-079 42 13,330.3 Deflector Wallis Drilling
(incl. BDD007-018) &
2006 March July BTV DDH BDD019-024 6 360.7 Deflector Westralian Drilling
2006 March July BTV DDH Re-entry - 491.8 Deflector Westralian Drilling
TOTAL 687 70,967.0
Legend: Owners SOG – Sons of Gwalia Limited, GUL – Gullewa Gold NL or Limited,
NRE – National Resources Exploration Linited, KSM – King Solomon Mines Limited,
HLM – Hallmark Consolidated Limited, BTV – Batavia Mining Limited
Hole Type RC – reverse circulation, RCDT – reverse circulation with diamond tail,
DDH – diamond drillhole
Following GUL’s January 1997 Mineral Resource estimate, the rate of drilling on the Deflector
deposit diminished greatly with a total of only 80 RC, RCDT and diamond drillholes (5,804.20
metres) completed to the end of 2002, prior to Hallmark, and subsequently Batavia, gaining
access to the deposit. Up to the end of 2003, Hallmark and Batavia had drilled a total of 107 RC
and RCDT drillholes (15,975.50 metres), culminating in the first, fully JORC Code compliant
Mineral Resource estimate dated January 2004 (Sub-Section 19.3.1). Between 2004 and 2006,
Batavia drilled a further 131 RC, RCDT and diamond drillholes (25,214.20 metres), thereby
bringing the total number of RC, RCDT and diamond holes drilled on the Deflector deposit to
710 for a total of 72,496.80 metres. Snowden’s final Mineral Resource estimate for the
Deflector deposit (dated August 2006 and detailed in Sub-Section 19.4 of this Technical Report)
was based on this drillhole database.
All the diamond hole tails in Batavia’s RCDT holes were drilled for NQ diameter core (47.6
millimetres). Where diamond holes drilled from surface, they were started using HQ (63.5
millimetre diameter core) and converted to NQ diameter at the base of the surface weathering.
All the 2005 metallurgical holes were drilled to recover HQ diameter core.
that potentially significantly affected the final position of the holes. These gyroscopic surveys
were processed after modeling, with one hole (BDD001) showing significant deviation’. The
same downhole survey method was employed in 2004 but in 2005, no downhole surveys were
taken during the first drilling program (in February) due to the shallow depth of the drilled holes
(less than 60 metres in each case).
For the second drilling program of 2005 (July to October), downhole dip surveys were carried
out by the drillers (Orbit Drilling [Pty] Ltd. of Perth, W.A.) in the RC holes, using a conventional
single shot camera, down hole survey tool (Gordon, 2005). Azimuth measurements were not
taken because the drillrig used steel rods. Single shot downhole surveys of both dip and azimuth
were taken by the diamond drillers (Wallis Drilling of Perth, W.A.), during drilling using an
electronic tool. On completion of the program, downhole surveys were completed in each hole
by Downhole Surveys Ltd. of Perth, W.A., using an electronic multi-shot (EMS) tool, which
company also took magnetic and gravity field readings (Gordon, 2005). These later surveys
were largely unsuccessful because many of the holes had caved-in and could not be surveyed in
their entirety and because the tool was strongly influenced by the presence of magnetic minerals
in the rock (Gordon, 2005).
Batavia geologists identified an error in the azimuth conversion from Magnetic North to mine
grid for some of the drillholes completed during the 2005 drilling campaign. A conversion factor
of 38.2 degrees has been applied instead of the correct factor of 40 degrees (a 1.8 degree shift in
azimuth relates to a horizontal shift of approximately six metres over a downhole length of 200
metres). A total of 30 holes were affected, the downhole surveys for which were corrected by
Batavia and the drillhole database was corrected accordingly.
In 2006, downhole surveys were taken at 30 metre intervals in both the RC and diamond drill
holes (Mattinson, 2007). The downhole surveys in the diamond drillholes were carried out by
the drillers (Westralian Diamond Drilling), using a conventional Eastman camera; the drillers of
the RC holes (Wallis Drilling) used a digital Reflex Ez-shot camera to take dip data only (the
surveys were taken inside the drill string). To gain azimuth data, the RCDT holes were re-
surveyed after the diamond tail was completed or, in some cases, at the end of the drilling
campaign.
available – they are presented in each of the Annual Reports to DoIR prepared by Batavia for the
periods ended December 31, 2003, 2004, 2005 and 2006. As earlier noted, Batavia did not carry
out any exploration or resource drilling in 2007.
Unless otherwise stated, the data presented in the following Table 13.2 (which is divided into
eight parts, due to its overall length) is for mineralized intersections above an average cut-off
grade of 1.0 g/t Au, which in each case may reasonably be construed as significant for the same
reasons as outlined for the adoption of a single grade cut-off applied to the Mineral Resource
estimates detailed in Section 19:
• consideration of the depth range of the mineralization at the Deflector deposit suggests that it
would have to be exploited using both underground and opencut mining methods;
• the mineralization is contained within a series of steeply dipping, narrow veins (Sub-Section
9.4.1), which constraint suggests that selective extraction dictated by the results of on-going
in-pit/in-stope grade control to define areas or zones within individual veins above a desired
minimum grade cut-off is, for all reasonable and practical purposes, not a viable option; and
• whole-vein sections would instead have to be taken, which process would be facilitated by
the sharp grade changes at the wall rock contacts (Sub-Section 11.1), as well as the visible
difference between the vein material (mainly variously oxidized quartz vein material) and
wallrocks (variously oxidized basalts).
It should also be noted that the true widths of the mineralised intersections are not known – the
stated intersection lengths are downhole lengths only.
Table 13.2
Summary of Significant Drillhole Intersections, Deflector Deposit, 2003 to 2007
(data from Batavia’s Annual Reports to DoIR for the periods ending December 31, 2003 to 2006)
Downhole Interval (m) Assay Grades
Drillhole From To Length Au (g/t) Ag (g/t) Cu (%)
RC Holes drilled by Hallmark in 2003
HDRC002 128 129 1 7.65 - -
HDRC003 112 113 1 36.50 - -
HDRC004 113 114 1 3.80 - -
and 126 130 4 3.84 - -
HDRC005 85 87 2 6.43 - -
HDRC006 91 92 1 1.52 - -
and 94 96 2 25.00 - -
including 94 95 1 48.00 - -
and 98 99 1 1.02 - -
and 103 106 3 8.04 - -
HDRC009 104 107 3 8.43 - -
including 106 107 1 15.5 - -
HDRC010 107 108 1 2.60 - -
and 92 99 7 8.52 - -
including 94 95 1 17.8 - -
and 95 96 1 24.9 - -
HDR011 118 120 2 20.25 - -
including 119 120 1 26.00 - -
HDR012 78 79 1 1.77 - -
HDR013 74 80 6 2.48 - -
• covered the entire intersections of mineralized material in the RC and diamond drillholes;
• were reasonable in terms of sampling intervals;
• were cut to the geological boundaries of the mineralization (i.e. the host rocks); and
• included intersection lengths of the bounding host rocks.
Procedures and standards were progressively improved to realize current industry standard
practices for logging and sampling RC holes and diamond drillcore, in part following
recommendations made by Geostats and Snowden, starting in 2004. If error has been introduced
by virtue of the drilling or sampling methods, the balance of available information suggests that
it would probably result in a slight under-estimation of the mineralization’s grades. The
influencing factors are discussed and described in Sub-Section 14.3.
14.1 Procedures
Deflector drillholes were logged by 13 different geologists with varying abilities and logging
styles. Many original geology logs are available, but many of the pre-1996 logs are barely
legible; other early logs were keyed directly into hand-held digital loggers so no original
documents exist.
• for all RC drilling, bulk samples for each metre were collected via a cyclone and splitter into
large (900 millimetre wide) plastic, labelled bags and arranged in rows of twenty next the
sample-relevant hole; and
• the entirety of each hole was sampled in four metre composites scooped from the bulk
samples, except where there was significant veining or sulphides, in which case single metre
samples were riffle split from the bulk samples, yielding one three kilogram samples.
In 2006 Snowden recommended that a riffle splitter should in future be used to create any RC
composites to ‘ensure that particles have an equal chance of being sampled’ (Graindorge,
2006b). Snowden noted that due to the degradation of very dense gold particles (and, to a lesser
extent sulphide, minerals), scooping does not give the optimal presentation of metal values. As
regards drillcore sampling, Graindorge (2006b) emphasized that the core either side of an
intersected lode should be routinely sampled ‘to ensure that the entire mineralised intersection
has been identified, especially in the deeper portions of the West Lode where several mineralised
intersections may occur. This will allow dilution grades to be more accurately estimated
(dilution had previously been assumed to be at zero grade in all cases)’. Since 2005 all diamond
drillholes, including extensions of RC holes (i.e. RCDT holes) were sampled in their entirety
with quarter core samples over samples lengths of up to 2.2 metres, yielding samples of up to
approximately 3.5 kilograms (the sample intervals were cut at geological boundaries). The
remaining three quarter core samples were stacked in pallets and left on site.
results due to the nugget effect of coarse gold. The second problem is that diamond drilling
flushes the core with water and is likely to wash out significant amounts of powdery chalcocite
from transition zone samples. Sawing the samples with a water cooled diamond blade will
aggravate this problem. Finally, it is very difficult to obtain full core recovery in the oxide and
transitional zones due to mixtures of hard quartz, soft clay, powdery copper minerals and
cavities’. It was for this reason that RC drilling was, and remains, the preferred method for
drilling the oxide and transitional zones of the Deflector deposit. The same issues as outlined do
not arise in primary/fresh mineralised material of the Deflector deposit, although Batavia has
noted that vuggy material is sometimes intersected and in such zones some washing-out of free
gold may occur.
14.3.2 RC Drilling
In 2004, Batavia reported that ‘Below about 195mRL (90 metres below the surface), RC samples
through the (mineralized) zone were returned wet, with high water flows from most samples.
These wet samples generally returned low sample recoveries due to the washing-out of fines’,
albeit that such samples formed (and still form) a small proportion of the overall dataset.
Ragless (2004) made the following key points:
• in dry samples the average recorded sample recovery through (mineralized) intercepts is
about 75 percent, compared to about 53 percent where wet samples were returned;
• a comparison of wet and dry samples from the mineralized zones and the collection of water
expelled at the cyclone of the drill rig suggest that the majority of sample loss is due to the
washing out of fine (pulverized) sample; and
• sample recoveries for dry samples are rarely recorded over 90 percent, which suggests that
sample recoveries recorded for dry Batavia holes have been under-estimated; consequently
• it is likely that the sample recoveries for wet samples have been correspondingly
underestimated.
Ragless (2004) also noted that ‘One particular feature of the (Deflector) samples returned from
RC drilling is that they are very powdery compared to normal RC drilling, which is apparently
due to the rock being pulverised by the RC hammer, rather than breaking into chips. This results
in slow penetration, particularly where wet samples are returned, and may contribute to lower
than expected sample recoveries’.
As a result, Batavia carried out a field experiment to determine if, and to what extent, wet RC
drilling affected the gold, silver and copper grades of the assay samples. Two samples of wet
and dry mineralized material were collected, re-split and analyzed to determine the grade of the
sample (the so-called headgrade). A hose was then placed into the bag and sample was agitated
and washed out - in both cases about 15 percent of the sample was washed out of the bag (the so
called overflow sample). The overflow samples were collected in a tray and the sample
remaining in the bag (the so-called washed sample) were both collected and analyzed to compare
sample grades. Table 14.1 summarizes the results.
Table 14.1
Summary of Field Experiment Results on Washing RC Samples to
Assess its Influence on Metal Grades
(data from Batavia’s unfinished 2004, internal Deflector scoping study report)
Assay Grades
Sample # Type Au (g/t) Ag (g/t) Cu (%)
One Head 4.35 15 1.76
Washed 6.30 8 1.08
Overflow 8.25 15 2.88
Two Head 5.50 24 3.05
Washed 8.80 19 2.63
Overflow 5.95 26 4.15
Batavia concluded that it is not possible to interpret the effect of water washing on gold as the
two samples returned contradictory results. This might, however, be due to small grains of gold
remaining in the washed portion of Sample Two (i.e. due to their relatively high density). If this
is the case, then the potential for under-estimating in-situ gold grades in RC samples exists,
much in the manner as is suggested by the results for both silver and copper.
Comparison of Au ppm2 and Au ppm3 values against Au ppm1 from the Deflector drill
hole database
100
80
Au ppm 2 and 3 60
AU PPM2
AU PPM3
40
20
0
0 20 40 60 80 100
Au ppm 1
Figure 14.1 – A Comparison of Primary Gold Assay Values (Au ppm1) and
Laboratory Duplicate Values (Au ppm2) in the 2003/2004 Deflector
Deposit Database, for Au ppm1 Values over 0.01 ppm
(from a 2004 internal Batavia report)
35
30
Resplit Duplicate Assay
25
20
15
10
0
0 5 10 15 20 25 30 35 40
Original Assay
15.1 Chain-of-Custody
No record concerning the chain-of-custody of RC samples, diamond drillcore or diamond
drillcore samples can be found for the period prior to Hallmark’s and subsequently Batavia’s
involvement in Gullewa Project in 2003.
Since Hallmark and subsequently Batavia were involved with Gullewa Project, RC sampling was
done in the field by Project geologists. The sample bags were tagged, sealed and numbered by
the responsible geologist and then transported to the core logging yard at the Mining Centre
where they were kept prior to their batch transport to Perth, W.A., either by Courier Australia or
by a member of Batavia’s management team. Sample splits of mineralized material were also
placed in numbered plastic trays, by the responsible geologist who then transported them to the
sample storage facility in the geology workshop located at the Mining Centre. A large number
of these sample trays remain (Figure 15.1), others were seen by SGA, during the April 2008 site
visit, to have been dumped in an irregular and mixed pile in the core storage area behind the CIL
plant.
In the case of diamond drillcore, it was washed at the drill site, laid into relevant core trays and
all drilling-relevant breaks were identified with appropriately marked wooden blocks that were
placed in the trays at the data-relevant points. The drill crew also annotated each tray with the
core-relevant hole number, tray number and start point. Filled core trays were transported, by
the drilling crews and at the end of each shift, to the core logging and sample preparation shed
behind the CIL plant at the Mining Centre, where the boxes were stacked ready for logging by
Project Geologists.
The core was orientated on six metre long rails and the bottom-of-hole line drawn (different
techniques having been used by the various different drilling contractors to mark the top of core).
Metre marks were then annotated and recovery and RQD were calculated for each marked core
run. The core was then placed back into its relevant tray which was then marked with depth
data. The core was logged and the data entered into Batavia’s electronic/Micromine database for
transmission the Batavia’s head office.
Drillcore sections defined by the logging geologist were sampled; the identified sections were
broken into individual samples of one metre or less. Once the sample intervals were established
they were marked on the core and sample sheets drawn up for the field assistant’s use. The field
assistants transferred the appropriate core trays to the cutting shed, completed bulk density
measurements (Sub-Section 15.4) and then cut the individual samples using a brick saw with a
diamond blade. The core was cut along the orientation line and the right hand side of the split
core was placed in numbered bags while the left hand side was returned to the core tray. The
bags were tagged and sealed and kept on site prior to their batch transport to Perth, either by
Courier Australia or by a member of Batavia’s management team.
The core trays were stacked in (apparently) informal stacks in an open area behind the CIL plant
at the Mining Centre. The trays remain there today (Figure 15.2), exposed to the elements and
without metal tags defining any drillcore relevant data. The drillcore does not appear to have
deteriorated, but the original markings are mostly faded and sometimes difficult to read. The
available core includes half cores through mineralized sections (the other halves having been
sent for assay).
Figure 15.2 – Some of the (apparently) Informal Core Tray Stacks Located
Behind the CIL Plant at Gullewa Mining Centre
(taken by SGA during the April 2008 site visit)
• 1991 – 277 RC composite (four metre intervals) samples were analysed by aqua regia digest
with an AAS finish for gold to a 0.01 ppm detection limit, copper was analysed by the
standard AAS technique to a two ppm detection limit;
• 1992 – all samples were submitted for gold and copper analysis (aqua regia/AAS) to Rapley
Wilkinson Laboratories. Composite samples assaying greater than about 0.2 g/t Au were
split and one metre samples were submitted to RWL for gold and silver fire assay and copper
analysis. Due to the erratic distribution of gold, repeat fire assays were carried out (and in
many cases duplicate splits submitted) on higher grade samples, and 15 screen fire assays
were performed. Inter-laboratory checks were carried out on 18 mineralized pulps.
• 1993 – four metre composite samples were sent to AMDEL Laboratories for ….gold and
copper assay… Gold as analysed by aqua regia digest and reported to a detection limit of
0.02 ppm Au. Composite samples assaying greater than 0.30 g/t Au were split and one metre
samples submitted to AMDEL for fire assay.
• 1994/5 – All samples were sent to AMDEL Laboratories… for gold, copper and silver
analysis…. Samples were pulverised using Mixermill pulverizers and representative splits
taken for analysis. Analytical techniques used for gold and copper were gold – aqua regia
digest, flame AAS (AA7) and aqua regia digest, graphite furnace AAS (AA9), copper – ICP-
OES on aqua regia digest (IC2) and AAS (OA4). The detection limits were one ppb (AA9)
and 0.02 ppm (AA7) for gold and one ppm (IC2) and 0.01% (OA4) for copper.
• 1996 – all Deflector drilling samples were assayed for gold and copper by Australian
Laboratory Services (“ALS”). Each entire sample was pulverised in a large, single stage
grinding bowl. Gold was determined by fire assay (PM209) using a 50 gram sample, lead
collection and AAS finish, the detection limit was 0.01 ppm Au. Copper was determined on
aqua regia solutions by flame AAS to a detection limit of five ppm Cu (G102). Samples
assaying more than one percent copper were re-assayed using mixed acid digestion,
volumetric dilution and flame AAS (A102). Various trace elements were determined by
AAS, ICP-OES and ICP-MS.
No record concerning assay methods used between 1997 and 1999 can be found. However,
Hayden (1996) notes that to investigate the possibility of analytical error, ‘a number of pulps
which had been fire assayed for gold by Ammdel in 1993 were submitted to ALS (by GUL,
company unknown) for gold analysis by aqua regia and AAS. The 163 selected samples
represented only one percent of the total Deflector samples, but ten percent of the high-grade
mineralized intercepts. The samples were spread throughout the length, depth, lodes and history
of the deposit. The selection was biased towards intersections with particularly high gold
content, where errors would be most damaging to any resource estimate’.
Figure 15.3 compares the two sets of results that at first glance appear to correlate reasonably
well – allowing for expected discrepancies due to imperfect analytical precision and the nugget
effect. Hayden (1996), however, states that statistical analysis reveals a distinct bias. ‘The mean
aqua regia result is 13.2 ppm, the mean fire assay is 9.8. Corresponding medians are 2.7 and
3.3. On average the aqua regia results are thus 34 percent higher (median 17 percent higher).
If one considers only the results below 40 ppm, the aqua regia and fire assay means and medians
are respectively 6.8, 5.6 and 2.5, 2.2. The aqua regia mean is 20 percent higher, the median is
twelve percent higher. Considering values below 20 ppm, the aqua regia and fire assay means
and medians are respectively 5.3, 4.0 and 2.2, 1.8. The aqua regia mean is 31 percent higher,
the median 22 percent higher. Plotting an appropriate best fit line to the points on Figure 14.3
(log Y = B log X + A) shows that above one ppm, aqua regia results are generally higher than
fire assay, below one ppm they are lower’. This suggests that the use of fire assay would tend to
report slightly conservative gold values.
Figure 15.3 – A Comparison of 1996 Fire Assay and Aqua Regia Assay
Results for Gold, Deflector Mineralized RC Assay Composites
(from Hayden’s 1996 report for Gullewa Gold NL)
It was because the results outlined that all subsequent assays on high-grade, gold mineralized
material from the Deflector deposit were by fire assay, which method continued to be used by
Hallmark and subsequently Batavia. This included assays carried out on behalf of KSM -
Coxhell & O’Ferrall (2003) note that in 2002, KSM submitted samples to Analabs (Perth) for 50
gram aqua regia analysis. Any gold assay result greater than 0.5 g/t Au was analyzed for copper.
Entire samples were split prior to the digestion and analysis and the results were e-mailed to the
site office where they were merged with the relevant sample numbers to thereby update the
drilling database. For Deflector samples, 50 gram sub-samples were collected from the
pulverized samples, which sub-samples were then assayed for gold, copper, silver, lead and zinc.
• all four metre composite samples were analyzed for gold only, using an aqua regia digest
with an AAS finish (SGS method P649), providing a lower detection limit of 0.01 ppm Au
and an upper detection limit of 100,000ppm Au;
• one metre composites (collected through mineralized zones) were analyzed for gold, silver
and copper;
• gold was analyzed by fire assay (SGS method F650) using a 50 gram charge and an AAS
finish, providing a lower detection limit of 0.01ppm Au and an upper detection limit of
100,000ppm Au;
• silver and copper were initially analyzed using an aqua regia digest and AAS finish (SGS
method A104), providing upper and lower detection limits of two ppm and 100 ppm
respectively for silver and 10 ppm and 50,0000 ppm, respectively, for copper;
• where silver values were returned above the upper detection limit, the sample was re-
analyzed using SGS method A105, which returned lower and upper detection limits of five
ppm and 500 ppm, respectively; and
• where copper values were returned above the upper detection limit, the sample was re-
analyzed using SGS method A119, which returned lower and upper detection limits of 0.1%
and 40 percent, respectively.
• samples preparation was by a fully automated system of crushing, grinding and splitting, an
automated quartz abrasive clean was run through the mills between samples that were
tracked using a bar-code system, with all processes undertaken in a robotically controlled
environment;
• samples were analyzed for gold to a detection limit of 0.01 ppm Au using Genalysis’ B/AAS
method (10 gram aqua regia digest solvent extraction and flame AAS), with up to three
repeats conducted on samples assaying more than 0.2 g/t Au, using Genalysis’ FA25/AAS
method (25 gram lead collection fire assay flame AAS) with a detection limit of 0.01 ppm
Au;
• silver was assayed to a detection limit of 0.1 ppm Ag using Genalysis’ B/AAS method (10
gram aqua regia digest with flame AAS finish) with an A/AAS repeat (four acid attack with
flame AAS finish) on samples returning assay values in excess of 1.0 ppm; and
• copper was assayed to a detection limit of 1.0 ppm Cu using Genalysis’ B/AAS method with
a repeat on samples reporting assay grades greater than 5,000 ppm Cu using the AX/AAS
method (as for A/AAS, but modified for high precision evaluation of base metals), which has
a detection limit of 0.01% Cu.
• the laboratories regularly inserted laboratory standards and duplicates into sample runs and
routinely re-analyzed results where they were returned out of range; and
• laboratory surveys conducted by Geostats during October 2003 and April 2004 had indicated
that SGS reported all analyses within tolerance and with a very low level of bias.
Early in 2004, Batavia retained Geostats to carry out a preliminary quality assessment on assays
for mineralized material from the Deflector deposit. The scope of work included comparisons of
rig-split data, laboratory second splits, laboratory pulp repeats and laboratory standards’
analyses. Conway-Mortimer & Hayes (2004) state in their project report that:
• the available quality control data was very limited and consisted mostly of data provided by
SGS, which cannot be considered independent as a result;
• the analysis of standards indicated that ‘an acceptable level of accuracy has been reported on
samples included in the Deflector project database (which is) true for both gold and copper
assays’;
• comparisons of existing paired data for gold analyses include many anomalous values that
are ‘likely to be caused by the presence of coarse gold, although some sample mix-ups are
apparent in the paired copper data that should transfer to the gold data’ (but these anomalies
decrease markedly ‘when laboratory pulp repeats are examined indicating that it is possible,
with good sample preparation, to achieve reasonable agreement between gold samples’);
• ‘the large difference between gold reported in original assays and gold reported in rig-splits,
second pulp splits and laboratory repeats all indicate’ the presence of coarse gold (which
checks by Geostats indicate is not preferentially developed);
• the presence of coarse gold is confirmed by screen fire analyses conducted during July 2004
– fourteen testes reported an average of 38.84 percent of the gold in the 1.68 percent of mass
recovered in the plus 75 micron fraction, the average grade of which samples reported to the
database was 35.39 g/t Au whereas 45.73 g/t Au is reported by screen fire analysis on the
same samples;
• the likely presence of a background level of disseminated or fine gold was also noted,
evidence for which was observed in the low-grade scatter plots that demonstrate good
agreement between assay pairs grading less than 2.0 ppm Au (if only coarse gold was present
in the deposit, these low-grade comparisons would show the largest discrepancies, whereas
good comparisons are evident in most low-grade assay pairs); and
• it is highly unlikely that the gold content of the Deflector deposit has been fully accounted
for in the RC sampling and assay methodologies employed.
In their June 2004 Mineral Resource estimate report to Batavia, Snowden provided a summary of
the total SG/bulk density database. In their August 2006 Mineral Resource estimate report to
Batavia, Snowden reviewed and analyzed the then-available 2,511 bulk density measurement
(286 were from mineralized material – Table 15.1). Graindorge (2006b) notes that
‘measurements prior to 2006 were primarily taken using immersion techniques on core samples
(both on-site and laboratory measurements), although the measurement of oxide samples and
some fresh samples is from pycnometer measurements on sample pulps. For the March 2006
drilling campaign, intervals of unbroken diamond core were marked up by Batavia geologists for
density determination prior to sampling. These density determination samples were cut at
specified interval marks and the length and dry mass of each cut sample measured. Using the
sample mass and core diameter, which was measured using Vernier calipers, the density was
calculated’.
Table 15.1
Summary of Snowden’s Length Weighted, Bulk Density Statistics for
Deflector Mineralized Material and Waste
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Parameter West Lode Central Lode Waste
Oxide Material
Number of samples 45 - 10
Minimum value 1.45 - 1.75
Median value 2.73 - 2.19
Maximum value 3.64 - 2.97
Mean density 2.67 - 2.43
Standard deviation 0.44 - 0.46
Transitional Material
Number of samples 8 2 16
Minimum value 2.70 2.83 2.50
Median value 2.88 2.93 2.83
Maximum value 3.16 3.03 3.23
Mean density 2.92 3.00 2.82
Standard deviation 0.16 0.15 0.19
Primary/Fresh Material
Number of samples 284 47 2,099
Minimum value 2.20 2.51 1.77
Median value 2.93 2.83 2.91
Maximum value 4.45 3.36 4.19
Mean density 2.97 2.84 2.89
Standard deviation 0.25 0.18 0.14
Graindorge (2006b) concluded that sealed (wax coated) immersion density measurements on a
range of oxide diamond core samples for both the West and Central Lodes should be carried out
to confirm the density of oxide material. SGA concurs with this view, albeit that RC is the
preferred and recommended drilling method for oxide and transitional material, as discussed and
described in Sub-Section 14.3.1.
16 DATA VERIFICATION
As part of a larger due diligence process, SGA reviewed the available database for the Deflector
deposit. The review should not be construed as an independent verification of the available data,
which process falls outside the scope of the investigations reported here. Data for the other
deposits of interest (Michelangelo, King Solomon/New Phoenix and Rock Steady) have at no
time been independently verified and they are currently (May 2008) not in a format that would
allow them to be independently verified. It is for these reasons that SGA uniformly re-classified
the estimated Mineral Resources for these deposits into the Inferred category (Sub-Sections 19.5
to 19.7, inclusive).
In 2004, Batavia commissioned Snowden to validate the database provided by Batavia for
purposes of Deflector Mineral Resource estimation. Snowden undertook this exercise in May
2004 and reported their findings in June 2004 (Snowden & Murphy, 2004). It is the results of
Snowden’s 2004 verification program that are presented here because data collected by Batavia
since May 2004 does not appear to have been independently validated. Snowden instead relied
on the integrity of the database provided by Batavia for purposes of the August 2006 Mineral
Resource estimate detailed in Sub-Section 19.4. In the opinion of SGA, this does not represent a
limitation of either the available data or Snowden’s August 2006 Mineral Resource estimate.
However, it is recommended in Section 22 of this Technical Report that full and independent
verifications of the drilling and assay databases for the Gullewa deposits of interest are
completed, as part of the process leading to updated Mineral Resource estimates that might in
future be compiled.
Table 16.1
Summary of Assay Results for RC Holes Twinned with Diamond Holes Drilled by Batavia
(data from a 2004, internal Batavia report)
Distance Au Cu
Hole # Type Location Depth Width
Apart (m) (g/t) (g/t)
BDRCD007 Diamond West Lode 172.9 - 176.0 3.1 34.56 3.61
2.0
HDRC035 RC 164.0 - 172.0 8.0 31.05 3.04
BDRCD008 Diamond West Lode 120.0 - 123.0 3.0 5.68 0.11
<0.5
HDRC024 RC 118.0 - 121.0 3.0 8.18 0.49
BDRCD009 Diamond West Lode 82.0 - 85.0 3.0 1.18 0.74
3.1
HDRC012 RC 78.0 - 83.0 5.0 1.81 0.89
BDRCD011 Diamond Central Lode 166.5 - 167.5 1.0 1.29 0.02
4.0
BDRC072 RC 153.0 - 160.0 7.0 15.21 1.44
BDRCD012 Diamond Central Lode 108.0 - 109.5 1.5 2.62 0.76
1.2
DCMRC007 RC 104.0 - 106.0 2.0 22.35 0.46
17 ADJACENT PROPERTIES
Western Australia is a well known and well-established gold mining area. Payable gold was first
found at East Kimberley in 1882. The Kimberley gold rush started in 1885, following the
publication of geological reports and maps by Hardman on gold occurrences in the Kimberley
District. Fraser’s Reef was discovered shortly after at Southern Cross, followed in 1892 by the
discovery at Coolgardie and the discovery of gold at Kalgoorlie in 1893. By 1900 all the
currently known goldfields were declared. Production reached an early peak in 1903 when W.A.
produced 64,229 kilograms of gold (compared with 119,375 kilograms for the whole of
Australia), but this could not be sustained and fell to a low ebb between 1920 and 1930, followed
by another decline during the Second World War (information sourced from
www.arizonaoutback.com/miningwagold.html).
In 1976, all restrictions on the marketing of gold in Australia were lifted. This action, together
with a steadily rising gold price, led to a resurgence of interest in W.A. gold. Gold production
grew rapidly as a result, leveling out at approximately 180,000 kilograms a year in the early
1990s. In 1997, Australia was the world’s third largest gold producer after South Africa and the
United States. Thereafter W.A. remained the premier gold mining State in Australia, producing
more than 75 percent of the country’s output.
With the exception of the Telfer deposits that are hosted in Proterozoic rocks, the geology of the
W.A. gold deposits is essentially the same, insofar as they are found either:
• in greenstone belts located within the Yilgarn craton described in Sub-Section 9.1.1, as vein-
hosted gold and gold-copper mineralization that may be classified as of the hydrothermal,
epigenetic type (Sub-Section 10.1); or
• as zones of secondary gold enrichment within the Tertiary cover, as described in Sub-Section
10.2 (the Boddington deposit is perhaps the largest and best known of this deposit type).
In terms of their size, the gold deposits of the Gullewa greenstone belt do not rival those that
have been found in the major W.A. goldfields such as Kalgoorlie, Kambalda and Meekathara,
which deposits have been exploited using both opencut and underground mining methods.
However, they are within the same geological context, as outlined above, and within an area
where many gold deposits have been found and exploited, as Figure 17.1 suggests.
Figure 17.1 also identifies the positions of significant iron deposits hosted in BIF, as well as the
position of the Golden Grove VMS base metal deposit noted in Sub-Section 8.4. The Mount
Mulgine wolgram-molybdenum deposit reflects the fact that gold, base metals and iron are not
the only minerals found in the greenstone belts of the Yilgarn craton.
• in 2002, the results of preliminary bottle roll tests, by Analabs of Perth, W.A., on three
composite samples collected from a program of shallow RC holes, suggested gold recoveries
would range from 55 to 85 percent and cyanide consumption would range from 1.5 to 2.3
kilograms per tonne;
• later in 2002 and into January 2003, Menzies found to their cost that mineralized material
from the West Lode in particular could not be efficiently processed in the existing CIL plant
(Sub-Section 8.3.1); and
• in 2004 Batavia considered acid heap leaching and ammonia cyanide leaching, with the
objective of establishing whether the existing CIL plant could be used without the need for
extensive modification and upgrade; but
• the results proved to be disappointing, so the option of gravity separation of gold followed by
conventional flotation to generate gold/copper concentrates only was pursued (IML’s 2005
and 2006 metallurgical testwork programs, on behalf of Batavia, in particular concentrated
on the production of marketable gold/copper flotation concentrate).
The results outlined are in marked contrast to the metallurgical performance of gold
mineralization from other Gullewa deposits. For example, Coxhell & O’Farrell (2003) reported
that ‘On receipt of the assays (for Rock Steady mineralized material), a review of the data was
completed and a composite sample from three drillholes was prepared (Table 18.1). The
composite was sent to (Lakefield OreTest [Pty] Ltd. of Malega, W.A., “OreTest”, ABN 35 060
739 835) OreTest’s Laboratories in Kewdale, Perth where a range of tests were completed’.
The tests indicated that:
• approximately 87 percent of the gold was leachable, of which 13 percent was shown to be
slow leaching;
• the residual gold was locked in sulphides (mainly pyrite) and fine, iron-rich oxides; and
• recoveries through the Gullewa CIL treatment plant (approximately 88 percent on average)
were in general in agreement with the recoveries anticipated by OreTest’s work.
Table 18.1
Summary of King Solomon Mines Ltd 2002 Metallurgical Composite
of Rock Steady Gold Vein Mineralized Material
(data from KSM’s Annual Report to DoIR for the period ended December 31, 2002)
Intersection Sample Average Gold
Drillhole Depth (m) Length (m) Grade (g/t)
RSRC008 24 to 42 18 5.35
RSRC009 20 to 31 11 10.53
RSRC009 36 to 49 13 3.50
RSRC012 8 to 35 27 4.84
Composite - 69 5.62
Table 18.2
Summary of Key Metallurgical Testwork Results, Independent
Metallurgical Laboratories (Pty) Ltd. in 2006
(data from IML’s December 2006 metallurgical testwork program report to Batavia)
Headgrade Recovery (%)
Sample Cu Au Gold Copper Concentrate
Type (%) (g/t) Gravity Flotation Total Flotation Grade (% Cu)
Oxide 2.5 5.6 40.0 37.8 77.8 58.5 21.4
Transitional 2.0 5.1 50.9 31.6 82.5 46.5 16.1
Primary 1.4 6.1 65.5 26.1 91.6 93.7 22.7
Table 18.3
Summary of Final Flotation Concentrate Assays, 2006 Metallurgical Testwork Program
(data from IML’s December 2006 metallurgical testwork program report to Batavia)
Mineralized Material Type
Element Units Oxide Transitional Primary
Copper % 18.5 16.1 24.4
Sulphur % 1.3 6.5 29.8
Iron % 11.4 12.9 25.6
Silver ppm 140 257 114
Gold ppm 37 30 36
Platinum ppb 37 39 10
Palladium ppb 52 64 26
Arsenic ppm 30 570 50
Antimony ppm <10 <10 <10
Mercury ppm 0.9 3.4 5.6
Nickel ppm 382 398 501
Cadmium ppm <2 <2 28
Zinc ppm 249 264 2,020
Lead ppm <20 <20 20
Magnesium ppm 12,000 21,500 16,000
Sodium ppm 1,840 4,900 1,560
LOI % 15.1 10.2 12.8
There is scope for improvement increased gold recovery from primary/fresh mineralized material
through cyanidation of the flotation cleaner tailing fraction. As Metplant states in their 2006
report: ‘These (improvements) relate to the flotation response of ‘whole ore’ samples when
compared to that of ‘gravity tailing’ samples. In most instances, the grades and recoveries of
whole ore tests were superior to those of gravity tailing tests. While the gravity tailing test
results have been used for grade and recovery predictions, there remains concerns that these
results could have been negatively influenced by test procedures. The whole ore flotation tests
used fresh ore while the gravity tailing flotation tests were conducted on samples that were
stored in slurry form following the gravity testwork. The prospect exists that extended storage of
oxide and transitional samples as slurried could lead to dissolution and re-precipitation that
would adversely affect flotation response. This situation would not occur during normal plant
operations’.
• Optimet in 1995, who completed gravity and flotation testwork on composited samples of
mineralized material from the West, Central and Contact Lodes (but predominantly the West
Lode), the results of which tests are summarized on Table 18.4; and
• Ammtec in 1999, who completed gravity and flotation assessments of six mineralogically
different zones of West Lode mineralization, the results of which tests are summarized on
Table 18.5.
Table 18.4
Summary of Key Metallurgical Testwork Results, Optimet Laboratories in 1995
(data from Continental Resource Management’s valuation report dated April 2003)
% Recovery Concentrate
Gravity Flotation1 Total %Cu
Sample Type Dominant Minerals Au Cu Au Cu Au Cu Gravity Flotation
Oxide Native copper, malachite 27 11 57 52 80 57 39 6
Upper Transition Native copper, pyrite, digenite, chalcocite 39 11 91 81 94 83 52 14
Lower Transition Pyrite, digenite 63 2 95 96 98 96 28 23
Note: 1 - The percent recovery figure given for flotation is the percent of metal recovered from the gravity tail.
Table 18.5
Summary of Key Metallurgical Testwork Results, Ammtec Ltd. in 1999
(data from Continental Resource Management’s valuation report dated April 2003)
% Recovery % Payable Concentrate
3
Sample Gravity Flotation1 Total2 Recovery %Cu
RL Dominant Minerals Au Cu Au Cu Au Cu Au Cu Gravity Flotation
275-270 Goethite 48 3 59 9 77 10 74 7 1 1
270-261 Malachite, cuprite 35 7 91 70 89 67 85 60 25 30
261-253 Malachite, chrysocolla 61 4 69 33 87 33 83 30 11 23
253-246 Goethite, chalcocite, native copper 70 10 70 90 91 92 88 83 40 43
246-240 Pyrite, chalcocite, digenite 80 11 85 93 97 94 93 85 23 29
240-227 Pyrite, chalcocite, chalcopyrite 55 10 93 96 97 97 93 91 15 20
Notes: 1 - The percent recovery figure given for flotation is the percent of metal recovered from the gravity tail
2 - The total recovery figures are taken from Coles (2000)
3 - The percent payable recovery figures are taken from Mining & Research Technology (2000)
Table 18.6
Summary of Diagnostic Analyses of the 2005, Oxide and Transitional
Metallurgical Testwork Composites
(data from IML’s 2005 metallurgical testwork program report to Batavia)
Mineralized Material Type
Oxide Transitional
West Lode Central West Lode Central High-Grade
Element North South Lode North South Lode Stockpile
Gold (g/t) 5.77 4.32 4.39 1.23 6.19 2.46 11.35
Total copper (%) 1.47 2.62 3.19 0.79 0.28 0.34 9.11
Acid soluble copper (%) 68.6 66.4 35.3 48.8 10.0 11.8 87.2
Cyanide copper soluble (%) 12.6 10.0 38.9 11.0 3.3 2.9 8.1
Residual copper (%) 18.9 23.6 25.8 40.2 86.7 85.3 4.7
Sulphur (%) 0.27 0.10 0.72 0.06 0.03 0.02 0.28
Table 18.7
Summary of Diagnostic Analyses of the 2005, Primary/Fresh
Metallurgical Testwork Composites
(data from IML’s 2005 metallurgical testwork program report to Batavia)
Element West Composite Central Composite
Total copper (%) 0.93 1.40
Gold (g/t) 10.0 / 10.4 8.86 / 7.58
Screen fire assay gold (g/t) 12.5 11.6
Sulphur (%) 10.30 3.83
Metplant note in their 2006 report that the high residual copper values in some of the samples
typically indicates the presence of chalcopyrite. However, the relatively low sulphur values
point to copper association with acid- and cyanide-resistant minerals. Native copper is also
known to be present in the mineral assemblage and it may account for the major portion of the
residual copper. The West Lode composite contained a greater proportion of acid and cyanide
soluble copper, thereby indicating a greater proportion of secondary copper minerals such as
covellite. The higher sulphur content of the West Lode sample also indicated a higher content of
pyrite.
During testwork, IML compared the gold content of calculated headgrades and assay headgrades.
These comparisons showed variations of up to 40 percent above gold assay headgrades, which
indicates the presence of coarse free gold.
Table 18.8
Summary of Gold and Copper Recovery Rates and Grades, 2005 Oxide and
Transitional Metallurgical Testwork Composites
(data from IML’s 2005 metallurgical testwork program report to Batavia)
Gravity Au Flotation Grade and Recovery Total Au
Recovery Cu grade Cu Recovery Au grade Au Recovery Recovery
Sample (%) (%) (%) (g/t) (%) (%)
Oxide, West Lode North 39.4 16.3 9.2 284 55.4 73.0
Oxide, West Load South 25.3 27.6 7.3 218 45.2 59.1
Trans., West Lode North 53.8 21.5 32.9 28 40.3 72.4
Trans., West Lode South 37.5 14.2 8.1 104 48.0 67.5
During execution of the testwork program, tests were conducted on a flotation reagent known as
Ausmelt AM2 (“AM2”), which is designed as a specific collector for oxidized base metals.
While the testwork was limited to bench-scale flotation tests, it demonstrated a considerable
increase in recovery of gold and copper while maintaining, or bettering, previously achieved
flotation concentrate copper grades. Table 18.9 summarizes the results, based on which the
series of flotation tests completed in 2006 included a specific test program to evaluate the effect
of AM2 (Sub-Section 18.4.7).
Table 18.9
Summary of AM2 Flotation Testwork Results for Gold and Copper Recovery Rates
and Grades, 2005 Oxide and Transitional Metallurgical Testwork Composites
(data from IML’s 2005 metallurgical testwork program report to Batavia)
Gravity Au Flotation Grade and Recovery Total Au
Test Recovery Cu grade Cu Recovery Au grade Au Recovery Recovery
Sample # (%) (%) (%) (g/t) (%) (%)
Oxide, West Lode North 46 39.4 20.3 49.8 77 73.7 84.1
Oxide, West Load South 42 25.3 34.6 43.5 75 66.3 74.9
Trans., West Lode North 45 53.8 21.4 61.6 38 74.1 88.0
Trans., West Lode South 44 37.5 22.4 19.1 73 50.0 68.7
Section 18.4.4). It was also apparent that the amount of gravity-recoverable gold varied between
samples, as evidenced by the disparity in gold recovery between the first and second West Lode
composite samples. This finding was examined further within the scope of IML’s 2006
metallurgical testwork program (Sub-Section 18.4.4).
Table 18.10
Summary of Gold Gravity Recovery Rates and Grades, 2005 Primary/Fresh
Metallurgical Testwork Composites
(data from IML’s 2005 metallurgical testwork program report to Batavia)
Weight Assay Distribution
Composite Product (%) (g/t) (%)
Central Lode Gravity concentrate 2.5 100.4 28.2
Gravity tail 97.5 6.6 71.8
West Lode Sample 1 Gravity concentrate 2.9 116.8 24.4
Gravity tail 97.1 10.5 75.6
West Lode Sample 2 Gravity concentrate 1.9 83.4 13.9
Gravity tail 98.1 10.9 86.1
IML also completed a series of flotation tests on the gravity tailings products from the West
Lode composite, the Central Lode composite and a 75:25 (respectively) of the two composites.
The program produced a marketable copper concentrate of 22% Cu using sodium cyanide
(NaCN) as a depressant in the flotation cleaner circuit. The cyanide effectively depressed the
pyrite from the cleaner concentrate, at the expense of some gold recovery. Leaching tests of
selected cleaner tailings products showed that approximately 70 percent of the gold contained in
the cleaner tailing was recoverable by cyanidation, albeit at quite high cyanide consumption rates
(up to 12 kilograms per tonne NaCN). Table 18.11 summarizes the gold and copper deportment
and recoveries to the various concentrate products. ‘Total gold recovery’ refers to the total of the
gold recovered in the gravity concentrate, the flotation concentrate and that extracted by
cyanidation of the cleaner tail product.
Table 18.11
Summary of Gold and Copper Performance, 2005 Primary/Fresh
Metallurgical Testwork Composites
(data from IML’s 2005 metallurgical testwork program report to Batavia)
Flotation Flotation Flotation Cleaner Total Au
Concentrate Concentrate Concentrate Cu Tails Recovery
Composite Au (g/t) Cu (%) Recovery (%) Au (g/t) (%)
West Lode 58.5 20 90 21.0 92.2
Central Lode 56.9 28 90 11.7 91.7
Blend 55.2 23 91 19.0 89.2
18.4.4 Mineralogy
IML carried out a mineralogical review during the course of their 2005 metallurgical testing
program. The following key points were made:
• coarse native copper occurs in the flotation tailings product (which mineral would normally
be expected to report to the gravity or flotation concentrates);
• discrete malachite occurs as the dominant copper mineral in the oxide flotation tailings
fraction (which material should be relatively simple to promote into the flotation
concentrate);
• digenite occurs as inclusions in goethite in the transitional and oxide tailings (which
composite material is difficult to recover using flotation methods); and
• pyrite containing exposed gold occurs in the primary/fresh sulphide cleaner tailings products
(which gold was demonstrated to be recoverable through cyanidation, although there may be
other techniques for recovering this gold deportment).
• composites were compiled from NQ diameter (47.6 millimetre) drillcore samples of oxide
and transitional mineralized material from the north and south portions of the West Lode and
from the Central Lode (selected by Batavia), to achieve the target assay grades for Pit Shell
31, as advised by Snowden (Table 18.12); and
• the primary/fresh samples were taken from NQ diameter (47.6 millimetre) drillcore (drilled
in 2005) from the West and Central Lodes that was combined with HQ diameter (63.5
millimetre) drillcore samples from Batavia’s 2006 diamond drilling program - the samples
were composited with zero grade material to achieve the target assay defined by Snowden’s
2006 Mineral Resource estimate (also Table 18.12).
Table 18.12
Summary of Samples and Composites, 2006 Metallurgical Testwork Program
(data from IML’s December 2006 metallurgical testwork program report to Batavia)
Assay Au Assay Cu Weight Used
Sample (g/t) (%) (%)
Oxide Samples
West Lode North 4.89 1.03 45
West Lode South 5.92 4.48 47
Central Lode 11.31 0.31 8
Total/Average 5.89 2.59 100
Target (Pit Shell 31) 5.54 2.01 100
Transitional Samples
West Lode North 10.16 4.37 43
West Lode South 2.93 1.61 43
Central Lode 2.29 0.38 14
Total/Average 5.94 2.62 100
Target (Pit Shell 31) 6.21 2.20 100
Primary/Fresh Samples
West Lode 4.2 1.9 23
Central Lode 8.6 1.4 63
Dilution 0 0 14
Total/Average 6.38 1.32 100
Target (Snowden 2006) 6.0 to 6.5 1.0 to 1.3 100
18.5.2 Crushing
Crushing tests were carried out as part of IML’s 2006 metallurgical testwork program. The
results (Table 18.13) reflect mineralized material types with average crushability, although the
variability in Crushing Work Indices of the oxide and transitional mineralized material was
unexpected (by IML).
Table 18.13
Summary of Crushing Indices, 2006 Metallurgical Testwork Program
(data from IML’s December 2006 metallurgical testwork program report to Batavia)
Mineralized Material Type
Properties Oxide Transitional Primary/Fresh
Unconfined Compressive Strength (MPa) N/A 37 46 to 109
Crushing Work Index (kWh/t) - Mean 13.2 11.0 8.6
- Maximum 33.3 31.8 13.7
- Minimum 8.4 4.1 3.8
Mean Specific Gravity 2.94 2.80 2.86
18.5.3 Grinding
Previous Grinding Index test results reported by IML noted that a Bond Ball Mill Index of 17.5
kilowatt hours per tonne for transitional mineralized material and 13.4 kilowatt hours per tonne
for primary/fresh mineralized material. IML’s 2006 series of tests resulted in the grinding and
abrasion characteristics summarized on Table 18.14. Metplant (2006) noted that the Grinding
Indices for oxide and transitional mineralized material are similar to oxide and transitional
material common to the eastern goldfields of W.A., but that primary/fresh Deflector mineralized
material is significantly tougher and more abrasive.
Table 18.14
Summary of Grinding Indices, 2006 Metallurgical Testwork Program
(data from IML’s December 2006 metallurgical testwork program report to Batavia)
Mineralized Material Type
Properties Oxide Transitional Primary/Fresh
Abrasion Index 0.09 0.10 0.43
Rod Mill Work Index (kWh/t) 19.7 18.7 27.1
Ball Mill Work Index (kWh/t) 14.7 15.3 20.4
Table 18.15
Summary of Gravity Testwork Gold Recoveries, 2006 Metallurgical Testwork Program
(data from IML’s December 2006 metallurgical testwork program report to Batavia)
Mineralized Material Type
Oxide Transitional Primary/Fresh
Fraction 40 kg run 100 kg run 40 kg run 100 kg run 40 kg run 100 kg run
Concentrate Au recovery (%) 42.2 42.2 42.7 46.6 81.0 59.9
Concentrate Au grade (g/t) 1,180 997 925 773 1,856 1,267
Gravity tail Au grade (g/t) 3.9 3.5 3.4 3.0 1.3 2.7
Calculated Au headgrade (g/t) 6.8 6.0 6.0 5.5 6.8 6.9
IML note in their December 2006 report that gold recovery from primary/fresh mineralized
material by gravity concentration was significantly higher than that achieved in the 2005
testwork program. However, metallurgical testwork completed by IML in 2004 reported gravity
gold recoveries of 77 and 67 percent. As each of these test programs was conducted on separate
samples, it may reasonably be concluded that gold within the Deflector deposit is irregularly
distributed. A similar result is reflected in the gold assay statistics developed by Snowden as
part of their Deflector Mineral Resource estimates described in Section 19.
Table 18.16
Summary of Batch Flotation Test Results, 2006 Metallurgical Testwork Program
(data from IML’s December 2006 metallurgical testwork program report to Batavia)
Reagent Addition Rate (g/t) Concentrate Details
Material Test Weight Cu Recovery (%)
Type # pH AM Xanthate Lime NaOH NaCN (%) (%) Au Cu
Oxide 35 9.3 1,200 50 - 500 - 5.2 19.4 59 52
46 8.3 900 50 - - - 4.0 24.2 52 45
Transitional 6 9.3 900 50 - 80 - 4.8 19.4 66 45
16 8.8 900 50 - - - 2.9 22.3 53 39
Primary/Fresh 20 10.0 - 50 4,000 - 25 6.1 21.8 71 93
29 11.0 - 50 3,450 - 25 5.7 21.8 68 91
43 7.5 - 40 1,950 - 25 5.2 22.1 73 86
The bulk flotation tests were carried out on ten kilogram samples of each composite type, with
each test being monitored for gold and copper content and recovery. As the purpose of these
tests was to produce bulk products suitable for product characterization, the recovery of the
valuable constituents was not optimized. The bulk flotation test procedure comprised a simple
open circuit producing a cleaner concentrate and final tailings product, with no recycle of
intermediate streams. Table 8.17 summarizes the results, exclusive of any gold recovery
achieved by prior gravity separation.
Table 18.17
Summary of Batch Flotation Test Results, 2006 Metallurgical Testwork Program
(data from IML’s December 2006 metallurgical testwork program report to Batavia)
Reagent Addition Rate (g/t) Concentrate Details
Weight Cu Recovery (%)
Material Type Test # pH AM Xanthate Lime NaCN (%) (%) Au Cu
Oxide 50 8.5 1,200 50 - - 6.7 21.4 63 59
48 8.5 1,160 50 - - 5.0 23.4 58 51
Transitional 27 8.6 900 50 - - 1.6 32.9 49 29
54 8.7 1,100 50 - - 5.3 16.1 64 47
Primary/Fresh 37 11.0 - 50 4,600 25 5.0 24.2 76 93
39 11.0 - 50 4,550 25 5.5 22.7 76 94
40 11.0 - 50 4,800 25 5.7 22.8 74 93
Table 18.18
Summary of Cyanide Leaching of Primary Cleaner Tailings Results,
2006 Metallurgical Testwork Program
(data from IML’s December 2006 metallurgical testwork program report to Batavia)
NaCN Leach
Leach Time Leach Headgrade Consumed Recovery (%)
Test # (hours) Au (g/t) Cu (%) kg/t Au Cu
29 24 5.3 0.51 5.3 82 0.6
38 24 4.9 0.27 2.9 64 0.4
Metplant (2006) noted that ‘the cleaner tailing fraction contained other sulphide minerals that
were gold deficient. A tabling test was then carried out on a sample of cleaner tailings from bulk
flotation test #40, to evaluate the possibility of reducing the quantity of material that would feed
a cyanidation circuit’. The results of this test (Table 18.19) show a useful gold upgrade for some
recovery loss. The nature of the gold occurrence shows some discrepancies between calculated
gold grades and assayed gold grades.
Table 18.19
Summary of Primary Cleaner Tailings Results, 2006 Metallurgical Testwork Program
(data from IML’s December 2006 metallurgical testwork program report to Batavia)
Gold Copper
Weight Grade Distribution Grade Distribution
Fraction (%) (%) (%) (%) (%)
Concentrate 70.6 7.9 85.5 0.29 56.9
Middlings 10.2 3.9 6.0 0.61 12.9
Tailings 19.2 2.9 8.5 0.76 30.2
Total & calculated head 100.0 6.5 100.0 0.48 100.0
Cleaner tail assay (head) - 4.2 - 0.39 -
Table 18.20
Summary of Concentrate Physical Characteristics, 2006 Metallurgical Testwork Program
(data from IML’s December 2006 metallurgical testwork program report to Batavia)
Settling Rate Filtration Rate TML
Product (m/hr) (kg/m2/hr) (% moisture)
Oxide Concentrate 5.3 85 23.3
Transitional Concentrate 1.9 - -
Primary Concentrate 5.7 178 10.8
• under JORC Code a Competent Person is defined as a person who is a Corporate Member
of The Australasian Institute of Mining and Metallurgy and/or the Australian Institute of
Geoscientists with a minimum of five years experience in the estimation, assessment and
evaluation of Mineral Resources and Ore Reserves which is relevant to the style of
mineralization under consideration; and
• under CIMM Code a Qualified Person means an individual who is an engineer or
geoscientist with at least five years of experience in mineral exploration, mine development
or operation or mineral project assessment, or any combination of these; has experience
relevant to the subject matter of the mineral project and the Technical Report; and is a
member or licensee in good standing of a professional association.
JORC Code and CIMM Code both recognize the definition and use of Mineral Resources and
Mineral Reserves. No material differences between either JORC 1999 and JORC 2004 or
CIMM 1999 and CIMM 2000 exist as regards the definition of Mineral Resources. The
following definitions apply:
• under JORC Code the term Identified Mineral Resources is used and otherwise referred to
as Mineral Resources, which means insitu mineralization that has been identified and
estimated through exploration and sampling and within which Ore Reserves may be defined
by the consideration and application of technical, financial, legal, environmental, social and
political factors –
Both codes also make use of Measured, Indicated and Inferred Mineral Resource categories to
represent the level of geological confidence, as well as Proven and Probable Mineral Reserve
categories. Comparisons of Mineral Reserve categories are not presented here for the reasons
described in Sub-Section 19.2. No material differences between either JORC 1999 and JORC
2004 or CIMM 1999 and CIMM 2000 exist as regards the definition of Mineral Resource
categories. The following definitions apply:
• under JORC Code the term Measured Mineral Resource means a Mineral Resource
intersected and tested by drillholes, underground openings or other sampling procedures at
locations that are spaced closely enough to confirm continuity and where geoscientific data
are reliably known –
o a Measured Mineral Resource estimate will be based on a substantial amount of reliable
data, interpretation and evaluation of which allows a clear determination to be made of
shapes, sizes, densities and grades,
o mineralization may be classified as a Measured Resource when the nature and amount of
data is such as to leave no reasonable doubt, in the opinion of the Competent Person
determining the Mineral Resource, that the tonnage and grade of the insitu mineralization
can be estimated to within close limits and that any variation from the estimate would be
such as not significantly to affect potential economic viability, and
o this degree of confidence necessarily requires a firm understanding of the geology and
controls of the mineralization;
• under CIMM Code the term Measured Mineral Resource means that part of a Mineral
Resource for which quantity, grade or quality, densities, shape and physical characteristics
are so well established that they can be estimated with confidence sufficient to allow the
appropriate application of technical and economic parameters, to support production
planning and evaluation of the economic viability of the deposit –
o an estimate is based on detailed an reliable exploration, sampling and testing information
gathered through appropriate techniques from locations such as outcrops, trenches, pits,
workings and drillholes that are spaced closely enough to confirm both geological and
grade continuity,
o mineralization or other natural material of economic interest may be classified as a
Measured Mineral Resource by the Qualified Person when the nature, quality and
distribution of data are such that the tonnage and grade of the mineralization can be
estimated to within close limits and that variation from the estimate would not
significantly affect potential economic viability, and
o the Measured category of Mineral Resource requires a high level of confidence in, and
understanding of, the geology and controls of the mineral deposit;
• under JORC Code the term Indicated Mineral Resource means a Mineral Resource
sampled by drillholes, underground openings or other sampling procedures at locations too
widely spaced to ensure continuity but close enough to give a reasonable indication of
continuity and where geoscientific data are known with a reasonable level of reliability –
o an Indicated Mineral Resource estimate will be based on more data, and therefore will be
more reliable, than an Inferred Mineral Resource estimate,
o mineralization may be classified as an Indicated Resource when the nature and amount of
data is such as to allow the Competent Person determining the Mineral Resource to
confidently interpret the geological framework and to assume continuity of
mineralization, and
o confidence in the estimate would be such as to allow the application of technical and
financial parameters and to enable an evaluation of economic viability;
• under CIMM Code the term Indicated Mineral Resource means that part of a Mineral
Resource for which the quantity, grade or quality, densities, shape and physical
characteristics are so well established that they can be estimated with confidence sufficient to
allow the appropriate application of technical and economic parameters to support mine
planning and evaluation of the economic viability of the deposit –
o an estimate is based on detailed an reliable exploration, sampling and testing information
gathered through appropriate techniques from locations such as outcrops, trenches, pits,
workings and drillholes that are spaced closely enough for geological and grade
continuity to be reasonably assumed,
• under JORC Code the term Inferred Mineral Resource means a Mineral Resource inferred
from geoscientific evidence, drillholes, underground openings or other sampling procedures
where the lack of data is such that continuity cannot be predicted with confidence and where
geoscientific data may not be known with a reasonable level of reliability –
o this category is intended to cover situations where mineralization has been identified and
some measurement and sampling completed, but where the data are insufficient to allow
the geological framework to be confidently interpreted and continuity of mineralization
to be predicted,
o it should not necessarily be assumed that all or part of an Inferred Resource will be
upgraded to Indicated or Measured Resources by continued exploration, and
o caution should be exercised if this category is considered in preliminary economic
studies;
• under CIMM Code the term Inferred Mineral Resource means that part of a Mineral
Resource for which the quantity, grade or quality can be estimated on the basis of geological
evidence and limited sampling and reasonably assumed, but not verified, geological and
grade continuity –
o an estimate is based on limited information and sampling gathered through appropriate
techniques from locations such as outcrops, trenches, pits, workings and drillholes,
o due to uncertainty that may be attached to Inferred Mineral Resources, it cannot be
assumed that all or any part of an Inferred Mineral Resource will be upgraded to an
Indicated or Measured Mineral Resource as a result of continued exploration,
o confidence in the estimate is sufficient to allow the meaningful application of technical
and economic parameters or to enable an evaluation of economic viability worthy of
public disclosure, and
o Inferred Mineral Resources must be excluded from estimates forming the basis of
feasibility or other economic studies.
• under JORC Code it is acknowledged that Mineral Resource estimates are not precise
calculations, being dependent on the interpretation of limited information on the location,
shape and continuity of the occurrence and on the available sampling results, but –
o reporting of tonnage/volume and grade figures should reflect the order of accuracy of the
estimate by rounding off to appropriately significant figures and, in the case of Inferred
Mineral Resources, by qualification with terms such as approximately,
o Mineral Resource reports must specify one or more of the categories of Measured,
Indicated and Inferred,
o reports should not contain Mineral Resource figures combined for two or more of the
categories unless figures for individual categories are also provided, and
o any public release of information in a report concerning a company's Mineral Resources
should state the pertinent data and assumptions on which the report is based and contain a
qualification drawing attention to any assessment criteria for which inadequate data are
available; and
• under CIMM Code it is acknowledged that the guidelines are not prescriptive and it may not
be necessary to comment on each item in the guidelines, although this should be considered,
and –
o it is essential to discuss any matters that might materially affect the reader’s
understanding of the estimates being reported,
o problems encountered in the collection of data or with the sufficiency of data must be
disclosed at all times, particularly when they affect directly the reliability of, or
confidence in, a statement of exploration information or an estimate of Mineral
Resources,
o Technical reports of Mineral Resources must specify one or more of the categories of
Measured, Indicated and Inferred, and
o Inferred Mineral Resources cannot be combined with other categories and must always
be reported separately, but Measured and Inferred Categories can be combined if their
individual details are provided.
Mineral Resource estimates cannot, therefore, be relied upon and they are not, therefore,
presented in this Technical Report.
• the 2004 Mineral Reserve estimate is no longer relevant - the 2004 study used by now long-
outdated assumptions, costs and metal prices and the results were, in any event, superceded
by the 2006 study; and
• the results of the 2006 study are considered, by SGA, to not be attainable and are not,
therefore, relevant – in the opinion of SGA the results are unduly pessimistic, especially as
regards pit slope angles (hence stripping ratios) and the applied unit costs and dilution rates
for openpit and underground mining, with the result that, in the opinion of SGA, the defined
Mineral Reserves do not appropriately reflect the true nature of the Mineral Reserves that
could be extracted from the Deflector deposit.
nearest 1,000 tonnes and they have uniformly been re-classified as Inferred Mineral Resources.
Re-classification is required because the geological databases on which the estimates were based
were not independently verified at the time estimates were prepared and the same databases are
not currently (May 2008) in a format that would allow them to be independently verified. One of
the recommendations made in Section 22 of this Technical Report relates to data compilation,
consolidation and verification, in part so that the Mineral Resource estimates for the
Michelangelo, King Solomon/New Phoenix and Rock Steady deposits can be re-visited, as
appropriate.
estimates by Mineral Resources category for a range of theoretical gold equivalent grade cut-offs
would not derive any additional benefit.
• prepared by M.P. Murphy, B.App.Sc., M.Sc., M.A.I.G. (R.P.Geo.), M.G.A.A., who was then
the Principal Resource Geologist for Snowden; and
• reviewed by D.V. Snowden, M.Sc., F.Aus.I.M.M. (C.P.), M.A.I.G., M.G.A.A., who was then
a Director and Principal Geostatistician of Snowden, as well as by S.P. Hackett, B.App.Sc.,
M.A.I.G., M.Aus.I.M.M., who was then a Consultant Resource Geologist for Snowden.
Messrs. Murphy, Snowden and Hackett were independent Competent Persons under the JORC
1999, hence independent Qualified Persons as defined under NI 43-101.
Table 19.1 summarizes Snowden’s estimate by Mineral Resource category, at a 1.0 gram per
tonne gold equivalent cut-off (“1.0 g/t AuEq”), where 1.0% Cu was equivalent to 2.0 g/t Au,
hence AuEq = the gold grade in grams per tonne plus twice the copper grade in percent (AuEq =
Au g/t + 2.0 x Cu%, silver grades not being considered). It is emphasized that a portion of the
Mineral Resource estimate summarized on Table 19.1 is in the Inferred category, which category
may be considered geologically speculative. There is no guarantee that Inferred Mineral
Resources will be upgraded to Mineral Reserve status.
Table 19.1
Summary of Snowden’s Undiluted, January 2004 Mineral Resource Estimate
for the Deflector Deposit, above a 1.0 g/t AuEq Grade Cut-Off (1.0% Cu = 2.0 g/t Au)
(CIMM 2005 compliant, data from Snowden’s March 08, 2004 Mineral Resource estimate report to Batavia)
Au Cu Ag AuEq AuEq
Category Tonnes (g/t) (%) (g/t) (g/t) (oz)
Measured 390,000 4.58 1.49 7.93 7.27 91,000
Indicated 768,000 4.14 1.21 9.07 6.32 156,000
Measured + Indicated 1,158,000 4.29 1.30 8.69 6.64 247,000
Inferred 241,000 3.92 0.42 4.51 4.68 36,000
Snowden allocated the Measured Mineral Resource category to those parts of the mineralized
lodes, which comprise the Deflector deposit, that were tested by 20 metre by 20 metre pierce
point spacings (or less) and were drilled in dry ground conditions. The Indicated category was
allocated to lode areas tested on a nominal 40 metre by 40 metre pierce point spacings, or less,
inclusive of all areas categorized as wet but excluding areas of Measured Mineral Resource. The
Inferred category was allocated to areas outside the zones not categorized as either Measured or
Indicated Mineral Resources. The differentiation of wet and dry intersections resulted from the
observation that RC drillholes sampled in wet conditions from the Deflector lodes may have
smeared grades and as such, they may return wider mineralized intersections than if they had
been sampled under dry conditions. The Mineral Resource estimate represents a three-
dimensional global geological resource that was completed using:
Messrs. Le Brun, Snowden and Murphy were independent Competent Persons under the JORC
1999, hence independent Qualified Persons as defined under NI 43-101.
Table 19.2
Summary of Snowden’s Undiluted, January 2004 Mineral Resource Estimate
for the Deflector Deposit, above a 1.0 g/t AuEq Grade Cut-Off (1.0% Cu = 1.8 g/t Au)
(CIMM 2005 compliant, data from Snowden’s March and June 2004 Mineral Resource estimate reports to Batavia)
Au Cu Ag AuEq AuEq
Category Tonnes (g/t) (%) (g/t) (g/t) (oz)
Snowden’s March 2004 Update
Measured 410,000 4.70 1.48 7.98 7.65 101,000
Indicated 740,000 4.70 1.22 9.28 7.14 170,000
Measured + Indicated 1,150,000 4.70 1.31 8.82 7.32 271,000
Inferred 265,000 4.81 0.43 4.90 5.66 48,000
Snowden’s June 2004 Update
Measured 589,000 3.75 1.18 6.64 6.11 116,000
Indicated 928,000 3.75 1.00 7.54 5.76 172,000
Measured + Indicated 1,517,000 3.75 1.07 7.19 5.90 288,000
Inferred 311,000 4.75 0.37 4.25 5.50 55,000
It is emphasized that a portion of the Mineral Resource estimates summarized on Table 19.2 is in
the Inferred category, which category may be considered geologically speculative. There is no
guarantee that Inferred Mineral Resources will be upgraded to Mineral Reserve status.
The March 2004 and May 2004 Mineral Resource updates summarized on Table 19.2 were
completed using the same methodologies, assumptions and classification criteria as are earlier
outlined for the initial, January 2004 estimate, except:
• the March 2004 update included the results of all Deflector resource drilling to the end of
2003 and the June 2004 resource update included the results of all Deflector resource drilling
to the end of March 2004 (which resulted in successive material changes to the wireframe
deposit outlines, as a consequence of increased drilling densities and closer understandings of
the mineralized veins’ geometries); and
• the March 2004 resource envelopes were interpreted using a 1.8 copper grade equivalence
(AuEq = Au g/t + 1.8 x Cu%) rather than a 2.0 copper grade equivalence (AuEq = Au g/t +
2.0 x Cu%) that was applied for purposes of the May 2004 estimate (silver grades were not
considered in either case).
The main material changes in the May 2004 models, compared with the March 2004 models,
was the additional of hangingwall structures close to, or splays off, the West Lode and the re-
modelling of the Contact Lode to incorporate assay intervals that had not previously been
modelled. The structural lineament crossing the Deflector area, from northwest to southeast (as
defined in Sub-Section 11.1) was also modeled, as a vertical feature truncating the mineralized
veins at their northern or southern extremities.
Table 19.3
Summary of Snowden’s Undiluted, November 2004 Mineral Resource Estimate
for the West and Central Lodes of the Deflector Deposit, above a
1.0 g/t AuEq Grade Cut-Off (1.0% Cu = 1.8 g/t Au)
(CIMM 2005 compliant, data from Snowden’s February 2005 Mineral Resource estimate report to Batavia)
Au Cu AuEq AuEq
Category Tonnes (g/t) (%) (g/t) (oz)
Measured 345,000 5.60 1.50 8.80 97,000
Indicated 520,000 6.50 1.50 9.40 158,000
Measured + Indicated 865,000 6.14 1.50 9.16 255,000
Inferred 274,000 6.50 0.60 7.70 68,000
It is emphasized that a portion of the Mineral Resource estimates summarized on Table 19.3 is in
the Inferred category, which category may be considered geologically speculative. There is no
guarantee that Inferred Mineral Resources will be upgraded to Mineral Reserve status. The same
methodologies, assumptions, classification criteria and copper equivalence as outlined for
Snowden’s May 2004 Mineral Resource estimate summarized on Table 19.2, except that:
• the November 2004 Mineral Resource estimate included the results of an additional 15
drillholes in a total database for 620 drillholes (562 RC holes [38,865.0 metres] and 64
diamond drillholes [9,256.20 metres]);
• parent block sizes of 2.5 metres East by 10 metres north by 10 metres vertical with a
maximum of 32 samples were used; and
• a bulk density value of 2.2 tonnes per cubic metre for oxide waste and a bulk density value of
2.6 tonnes per cubic metre for oxide mineralized material were applied (previously, a bulk
density value of 2.2 tonnes per cubic metre had been assumed for all oxide material).
The November 2004 update was requested because Batavia had identified discrete high-grade
mineralization domains within the broader mineralized envelopes interpreted in previous
resource models. No update of silver grades was requested.
The November 2004 Mineral Resource estimate contains lower total tonnage and higher average
gold and copper grades because the updated interpretation modeled discrete, high-grade domains
in the West and Central Lodes only. This resulted in a reduction in tonnes at the 1.0 g/t AuEq
Grade cut-off and an overall reduction of approximately 27,000 gold equivalent ounces when
compared with the May 2004 model. The high-grade gold interpretation was based on a nominal
threshold of 1.5 g/t Au and the high-grade copper interpretation was based on a nominal
threshold of 0.5% Cu – although many zones of lower grade mineralization were included for
reasons of geological continuity.
Mineral Resource estimates were prepared by J. Graindorge, BSc, M.Aus.I.M.M. (C.P.), who at
the time was the Senior Resource Geologist for Snowden. Both estimates were reviewed by I.
Glacken, F.Aus.I.M.M. (C.P.), C.Eng., who was the Group Manager Resources for Snowden.
Messrs. Graindorge and Glacken were independent Competent Persons under the JORC 2004,
hence independent Qualified Persons as defined under NI 43-101.
The two, 2006 Mineral Resource estimates are combined in this Technical Report because of the
considerable overlaps in data, interpretations, applied methodologies, assumptions and model
input parameters. Significant differences between the two estimates are highlighted, as
appropriate, in the following Sub-Sections 19.4.1 to 19.4.13. The combined January/August
2006 Mineral Resource estimate is termed the “2006 Mineral Resource estimate”, which is dated
August 2006. The results are summarized on Table 19.4, which results were based on a 1.0 g/t
AuEq grade cut-off and a 2.5 copper grade equivalence (AuEq = Au g/t + 2.5 x Cu%, silver
grades not being considered).
Table 19.4
Summary of Snowden’s Undiluted, August 2006 Mineral Resource Estimate
for the Deflector Deposit, above a 1.0 g/t AuEq Grade Cut-Off (1.0% Cu = 2.5 g/t Au)
(CIMM 2005 compliant, data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Au Ag Cu AuEq AuEq
Category Tonnes (g/t) (g/t) (%) (g/t) (oz)
Measured 535,000 3.87 8.03 1.18 6.81 117,000
Indicated 1,169,000 4.32 6.34 0.96 6.72 252,000
Measured + Indicated 1,704,000 4.18 6.87 1.03 6.75 369,000
Inferred 1,616,000 6.50 3.41 0.48 7.71 400,000
It is emphasized that a portion of the Mineral Resource estimates summarized on Table 19.4 is in
the Inferred category, which category may be considered geologically speculative. There is no
guarantee that Inferred Mineral Resources will be upgraded to Mineral Reserve status. The
Mineral Resource estimate is stated for a gold equivalent cut-off grade of 1.0 g/t AuEq only, for
the same reasons as earlier outlined for Snowden’s 2004 Mineral Resource estimates: selective
extraction dictated by the results of on-going in-pit/in-stope grade control to define areas or
zones within individual veins above a desired minimum gold equivalent grade cut-off is, for all
reasonable and practical purposes, not a viable option. Global resource estimates for a range of
gold equivalent cut-off grades were, however, compiled (Sub-Section 19.4.12).
For Snowden’s January 2006 Mineral Resource estimate, the West Lode (highlighted in GREEN
on Figure 19.2) was sub-dominated into a high gold-copper domain, a high copper/low gold
domain and a low gold copper domain. However, for purposes of the August 2006 update,
Snowden modeled the West Lode as a single domain, based on a nominal 1.0 g/t AuEq grade
cut-off - following consideration of the anticipated mining methods and due to the narrow nature
of the mineralized veins, especially at depth. Table 19.5 summarizes Snowden’s final domain
codes and lode numbers that are referred to in the subsequent text.
Table 19.5
Summary of Snowden’s Domains and Lode Identifier used in the
August 2006 Mineral Resource Estimate for the Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Domain Code Lode Number Model Description
11 1 August 2006 West Lode
14 1 August 2006 West Lode Splays
20 2 August 2006 Central Lode
30 3 January 2006 Contact Lodes
40 4 January 2006 Minor lodes, associated with Contact Lodes
50 5 January 2006 Minor southern lode
60 6 January 2006 Minor northern lode, north of fault
70 7 January 2006 Minor northern lode, north of fault
80 8 January 2006 Deep minor northern lode, north of fault
98 - August 2006 Alluvial cover (“sheetwash laterites”)
99 - August 2006 Waste
• 2.90 tonnes per cubic metre for all fresh and transitional, mineralized material comprising the
Central Lode (Domain 20/Lode 2) and minor lodes (Domains 30 to 80/Lodes 3 to 8,
inclusive);
• 2.75 tonnes per cubic metre for all mineralized oxide material (which recognizes the presence
of moderately dense former sulphide minerals);
• 2.90 tonnes per cubic metre for all fresh and transitional waste (Domain 99);
• 2.60 tonnes per cubic metre for all oxide waste (Domain 99); and
• 2.00 tonnes per cubic metre for sheetwash laterite material (Domain 98).
A total of 284 SG results are available for the West Lode transitional and fresh zones (Domains
11 and 14). Values range from 2.20 tonnes per cubic metre to 4.45 tonnes per cubic metre, with
an average of 2.97 tonnes per cubic metre. An average bulk density for transitional and fresh
mineralized material from the West Lode (including the splays) was, therefore, estimated by
Snowden using parent cell inverse distance weighting, raised to the power of two (Graindorge,
2006b). A minimum of 10 samples and a maximum of 20 samples were selected using a 100
metre spherical search radius. Samples were de-clustered to a 100 metre grid and weighted
accordingly. Blocks not estimated were assigned an average density of 2.90 tonnes per cubic
metre. Snowden thereby estimated the average density of the West Lode (Domains 11 and 14) to
be 2.92 tonnes per cubic metre.
Figure 19.3 - Log Probability Plot of Sample Lengths for the West and Central Lodes,
August 2006 Mineral Resource Estimate, Deflector Deposit
(from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Table 19.6
Summary Statistics by Sulphide Oxidation State, West Lode (including splays),
August 2006 Mineral Resource Estimate, Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Oxide Material Transitional Material Fresh Material
Statistic Au (g/t) Ag (g/t) Cu (%) Au (g/t) Ag (g/t) Cu (%) Au (g/t) Ag (g/t) Cu (%)
Count 919 633 778 256 144 234 931 738 721
Mean 5.57 13.61 1.92 4.05 10.90 1.87 6.28 8.21 1.42
Geometric Mean 0.76 0.48 0.65 0.89 2.79 0.61 0.98 1.01 0.18
Minimum 0.01 0.05 0.00 0.01 0.05 0.00 0.01 0.05 0.00
Maximum 598.0 339.0 34.40 143.0 107.0 18.50 277.0 121.0 27.90
Skewness 15.59 4.28 4.45 7.99 2.54 2.72 7.31 3.56 4.58
Standard Deviation 28.80 44.08 4.34 11.65 17.18 3.09 18.64 17.32 3.44
Variance 829.7 1,942.9 18.8 135.8 295.2 9.6 347.4 300.1 11.8
Coefficient of Variation 5.17 3.24 2.26 2.88 1.58 1.65 2.97 2.11 2.41
Table 19.7 provides a summary of Snowden’s statistics by oxidation state for the Central Lode.
The statistics show an increase in gold and silver grades from oxidised material to fresh material,
possibly due to leaching of gold and silver from the upper oxidized zone. Copper grades are
similar across all sulphide oxidation zones, although the highest grades typically occur in the
transitional zone, which Snowden suggests is possibly related fluctuations in the water table.
Summary statistics for the Contact Lode and minor lodes were not provided by Snowden within
the scope of their 2006 Mineral Resource estimate reports.
Table 19.7
Summary Statistics by Sulphide Oxidation State, Central Lode,
August 2006 Mineral Resource Estimate, Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Oxide Material Transitional Material Fresh Material
Statistic Au (g/t) Ag (g/t) Cu (%) Au (g/t) Ag (g/t) Cu (%) Au (g/t) Ag (g/t) Cu (%)
Count 371 174 268 79 42 75 206 169 184
Mean 4.69 3.39 0.30 6.85 7.09 1.29 12.50 9.53 0.84
Geometric Mean 0.90 0.33 0.19 1.00 0.43 0.30 1.60 1.37 0.21
Minimum 0.01 0.05 0.00 0.01 0.05 0.03 0.01 0.05 0.00
Maximum 91.5 172.0 3.12 113.0 160.0 19.20 1,051.0 119.0 10.92
Skewness 4.76 8.45 4.70 4.01 5.27 3.94 13.43 3.46 3.57
Standard Deviation 10.83 18.27 0.35 18.05 25.57 3.12 74.01 17.93 1.44
Variance 117.3 333.6 0.12 325.9 653.9 9.7 5,476.8 321.5 2.06
Coefficient of Variation 2.31 5.39 1.16 2.63 3.61 2.42 5.92 1.88 1.72
Table 19.8
Summary Statistics for Gold, West and Central Lodes, August 2006
Mineral Resource Estimate, Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Central Lode West Lode
Statistic (Domain 20) Domain 11 Domain 14
# Samples 659 1,807 299
Minimum 0.01 0.01 0.01
Maximum 1,051.0 598.00 144.91
Mean 7.48 5.83 4.90
Standard Deviation 42.82 24.10 15.60
Coefficient of Variation 5.72 4.14 3.19
Variance 1,833.69 580.8 243.47
Skewness 22.18 15.12 6.74
Geometric Mean 1.11 0.87 0.86
Percentiles - 10% 0.08 0.06 0.09
- 20% 0.22 0.17 0.22
- 30% 0.43 0.33 0.45
- 40% 0.69 0.61 0.62
- 50% 1.13 1.02 0.91
- 60% 2.04 1.55 1.22
- 70% 3.41 2.65 1.81
- 80% 6.65 5.02 3.50
- 90% 16.17 12.60 11.45
- 95% 27.90 23.50 21.08
- 97.5% 49.80 36.03 42.41
- 99% 81.32 73.80 130.33
Table 19.9
Summary Statistics for Silver, West and Central Lodes, August 2006
Mineral Resource Estimate, Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Central Lode West Lode
Statistic (Domain 20) Domain 11 Domain 14
# Samples 385 1,268 247
Minimum 0.05 0.05 0.05
Maximum 172.00 339.0 35.92
Mean 6.49 12.29 2.65
Standard Deviation 19.31 34.14 5.59
Coefficient of Variation 2.98 2.78 2.11
Variance 372.66 1,165.65 31.25
Skewness 5.83 4.96 3.60
Geometric Mean 0.63 0.92 0.44
Percentiles - 10% 0.05 0.05 0.05
- 20% 0.05 0.05 0.05
- 30% 0.05 0.05 0.03
- 40% 0.30 0.50 0.15
- 50% 0.80 1.10 0.40
- 60% 1.40 2.90 0.80
- 70% 2.52 4.60 1.72
- 80% 5.00 9.20 3.22
- 90% 14.00 30.00 7.86
- 95% 31.00 68.80 14.05
- 97.5% 53.50 115.00 18.19
- 99% 119.00 189.00 34.00
Table 19.10
Summary Statistics for Copper, West and Central Lodes, August 2006
Mineral Resource Estimate, Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Statistic Central Lode West Lode
(Domain 20) Domain 11 Domain 14
# Samples 527 1,473 260
Minimum 0.00 0.00 0.00
Maximum 19.20 34.40 22.10
Mean 0.63 1.89 0.64
Standard Deviation 1.52 4.06 1.91
Coefficient of Variation 2.42 2.14 3.00
Variance 2.30 16.44 3.64
Skewness 6.90 4.23 7.76
Geometric Mean 0.21 0.49 0.09
Percentiles - 10% 0.03 0.06 0.01
- 20% 0.08 0.16 0.01
- 30% 0.14 0.25 0.03
- 40% 0.18 0.37 0.07
- 50% 0.23 0.52 0.16
- 60% 0.29 0.75 0.26
- 70% 0.38 1.13 0.41
- 80% 0.58 2.07 0.68
- 90% 1.43 4.71 1.48
- 95% 2.44 9.47 2.63
- 97.5% 4.02 15.30 4.22
- 99% 7.67 22.95 12.63
Table 19.11
Correlation Matrix, Domains 11 & 14, West Lode, August 2006
Mineral Resource Estimate, Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Parameter Gold Silver Copper Density
Gold 1.00 - - -
Silver 0.36 1.00 - -
Copper 0.35 0.77 1.00 -
Density 0.22 0.31 0.29 1.00
Snowden found that the Central Lode shows similar correlations to the West Lode, with a
moderate correlation between silver and copper, poor correlation between gold and silver and
poor correlation between gold and copper (Table 19.12). Similarly, density in the Central Lode
shows poor correlation with gold, silver and copper, although slightly higher values are reported
for the West Lode. It should, however, be noted that the analysis was based on 49 samples only
for the Central Lode. The results of bi-variate analysis for the Central Lode and minor lodes
were not provided by Snowden within the scope of their 2006 Mineral Resource estimate reports.
Table 19.12
Correlation Matrix, Domain 20 (Central Lode), August 2006
Mineral Resource Estimate, Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Parameter Gold Silver Copper Density
Gold 1.00 - - -
Silver 0.27 1.00 - -
Copper 0.04 0.67 1.00 -
Density 0.21 0.56 0.45 1.00
19.4.8 Top-Cuts
Snowden carried out top-cut analyses for gold and copper in each of the defined lodes, as part of
their 2006 Mineral Resource estimates for the Deflector deposit. Silver top-cuts were considered
for the West and Central Lodes only, due to a lack of any significant silver grades in the Central
Lode and minor lodes. Top-cutting was applied to reduce the local influence of extreme data
values during ordinary kriging, as well as to reduce the coefficients of variation. Log probability
plots were used to identify likely top-cut grades. The effect of the applied top-cut was then
evaluated on the basis of sample population disintegration using a ranked data set. Tables 19.13,
19.14 and 19.15 summarize the results for gold, silver and copper, respectively.
Table 19.13
Summary of Top Cut Analysis Results for Gold, August 2006
Mineral Resource Estimate, Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Coefficient
Applied Top- Samples above Mean Grade (g/t) of Variance
Lode Domain Cut Grade (g/t) Top-Cut Grade Raw Top-Cut Raw Top-Cut
West 11 80 14 5.83 4.80 4.1 2.3
14 60 4 4.90 4.10 3.2 2.4
Central 20 60 12 7.48 5.59 5.7 2.0
Contact 30 30 1 3.42 3.26 2.0 1.8
Other 40 - - 2.93 - 1.5 -
50 - - 2.78 - 1.6 -
60 30 1 5.95 4.40 2.5 1.5
70 - - 2.45 - 1.7 -
80 - - 1.69 - 0.8 -
Waste 98 0.6 3 0.03 0.03 2.8 1.8
99 1.0 102 0.08 0.06 5.0 2.1
Table 19.14
Summary of Top Cut Analysis Results for Silver, August 2006
Mineral Resource Estimate, Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Coefficient
Applied Top- Samples above Mean Grade (g/t) of Variance
Lode Domain Cut Grade (g/t) Top-Cut Grade Raw Top-Cut Raw Top-Cut
West 11 200 11 12.29 11.78 2.8 2.6
14 - - 2.65 - 2.1 -
Central 20 70 7 6.49 5.46 3.0 2.3
Waste 98 - - 0.08 - 1.5 -
99 1.0 140 0.17 0.13 3.6 1.5
Table 19.15
Summary of Top Cut Analysis Results for Copper, August 2006
Mineral Resource Estimate, Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Coefficient of
Applied Top- Samples above Mean Grade (%) Variance
Lode Domain Cut Grade (5) Top-Cut Grade Raw Top-Cut Raw Top-Cut
West 11 - - 1.89 - 2.1 -
14 6.0 3 0.64 0.52 3.0 2.0
Central 20 5.0 10 0.63 0.54 2.4 1.7
Contact 30 4.0 - 0.41 0.33 3.5 2.0
Other 40 - - 0.26 - 1.5 -
50 - - 0.05 - 1.5 -
60 - - 0.12 - 1.1 -
70 - - 0.07 - 1.7 -
80 - - 0.62 - N/A -
Waste 98 0.1 5 0.01 0.01 5.2 1.7
99 0.4 71 0.03 0.03 4.6 1.9
For the January 2006 Mineral Resource model, top cut values of 60.0 g/t Au and 24.0% Cu were
applied to the West Lode. This was, however, reviewed for purposes of the August 2006 model,
due to the additional sampling resulting from the March to July 2006 drilling program, the
change in domaining as earlier outlined (Sub-Section 19.4.1) and the addition of silver. The top-
cut value for the West Lode was increased to 80.0 g/t Au and a top-cut copper value was found
not to be required. As most of the additional drillhole data was concentrated on the West Lode,
no changes to the top-cut values for the Central Lode were required.
19.4.9 Variography
Snowden calculated variograms for gold, silver and copper grades, as an input to ordinary
kriging, as appropriate for the reported assay grades (Central Lode and the minor lodes do not
contain any significant silver grades). Supervisor software was used to calculate variogram fans
to determine the directions of maximum grade continuity. A horizontal variogram fan was
analyzed to determine the strike direction. Once the dip angle was determined, a variogram fan
in the dip plane was generated to determine the plunge direction (i.e. the direction of maximum
grade continuity). Maximum grade continuity is defined by the major axis, the semi-major axis
is perpendicular to the major axis and both the major and semi-major axes lie in the dip plane.
The minor axis is perpendicular to both the major axis and the semi-major axis. Nugget effects
were interpreted from the true downhole variograms for each domain, using a lag spacing of one
metre.
Variograms, standardized to a sill of one, were interpreted by Snowden for Domains 11, 14, 20,
30 and 40 only, using up to two nested spherical structures. A normal scores transformation was
applied to the data for the variography, due to highly skewed data distributions. Variogram
models were subsequently back-transformed for use in grade estimation. All the other minor
lodes (Domains 50 to 80, inclusive) did not have enough samples to generate a reasonable
variogram. For some of the poorly structured variograms, a log transformation was applied to
determine the maximum range. The results are summarized on Table 19.16.
Table 19.16
Summary of Back-Transformed, Variogram Model Parameters, August 2006
Mineral Resource Estimate, Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Orientation Nugget Structure 1 Structure 2
Lode Domain Direction Plunge Trend Effect Sill Range Sill Range
Results for Gold
West 11 Omni-directional 0.25 0.67 2.5 0.08 16.0
14 Omni-directional 0.45 0.55 5.0 - -
Central 20 1 -25° 195° 0.61 0.26 13.0 0.13 57.0
2 -65° 015° 0.61 0.26 4.0 0.13 30.0
3 00° 105° 0.61 0.26 4.0 0.13 8.0
Contact 30 1 00° 180° 0.30 0.70 60 - -
2 -65° 090° 0.30 0.70 20 - -
3 35° 090° 0.30 0.70 3 - -
Minor 40 1 00° 185° 0.40 0.60 40 - -
2 -65° 095° 0.40 0.60 10 - -
3 35° 095° 0.40 0.60 3.5 - -
Results for Silver
West 11 Omni-directional 0.40 0.60 6.5 - -
14 Omni-directional 0.46 0.54 12.0 - -
Central 20 Omni-directional 0.72 0.28 50.0 - -
Results for Copper
West 11 Omni-directional 0.17 0.46 3.0 0.37 8.5
14 Omni-directional 0.30 0.70 15.0 - -
Central 20 1 -25° 195° 0.19 0.57 10.0 0.24 90.0
2 -65° 015° 0.19 0.57 10.0 0.24 50.0
3 00° 105° 0.19 0.57 4.0 0.24 6.0
Contact 30 1 00° 180° 0.10 0.90 55 - -
2 -60° 090° 0.10 0.90 37 - -
3 30° 090° 0.10 0.90 3 - -
Minor 40 1 00° 185° 0.30 0.70 40 - -
2 -65° 095° 0.30 0.70 17 - -
3 25° 095° 0.30 0.70 2 - -
Table 19.17
Summary of Block Model Parameters, August 2006
Mineral Resource Estimate, Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Parameter Easting (X) Northing (Y) Elevation (Z)
Origin 9,600 18,780 -170
Block Size (m) 2.5 20 10
Minimum sub-cell (m) 0.5 4.0 2.5
Number of Blocks 200 56 46
Cell Discretization 2 8 4
Table 19.18
Summary of Back-Transformed, Variogram Model Parameters, All Metals,
August 2006 Mineral Resource Estimate, Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Datamine Initial Search Search
Rotation Distance (m) Distance Factor Number of Samples
1st Pass 2nd Pass 3rd Pass
Domain Z X Z Dir 1 Dir 2 Dir 3 2nd Pass 3rd Pass min max min max min max
11 0 0 0 40 40 40 x1 x2 12 42 5 42 2 42
14 95 100 0 40 40 10 x1 x2 12 42 5 42 2 42
20 105 90 -25 60 30 30 x1 x2 12 42 5 42 2 42
30 90 65 0 65 25 5 x1 x3 10 42 2 42 2 42
40 95 65 0 45 20 10 x1 x3 10 42 2 42 2 42
50 100 90 0 65 30 10 x1 x3 10 42 2 42 2 42
60 80 90 0 65 30 10 x1 x3 10 42 2 42 2 42
70 107 100 0 65 40 10 x1 x3 10 42 2 42 2 42
98 0 0 0 40 30 40 x1 x2 12 42 5 42 2 42
99 95 0 0 40 40 20 x1 x2 12 42 5 42 2 42
Grade interpolation for all domains was by ordinary block kriging into the parent cells. The
West Lode was modeled as a single domain, based on a nominal 1.0 g/t AuEq cut-off. Oxide,
transitional and fresh zones were estimated separately. Samples 20 metres either side of the
weathering surfaces were allowed to be used for each estimate (e.g. when estimating the oxide
zone, samples from the oxide zone were allowed to be used, along with samples 20 metres below
the weathering interface with the underlying transitional zone). Search ellipses for each domain
were rotated as defined by the variogram directions, with search distances reflected by the
maximum range of the variograms. Domains 50 to 80 (minor lodes 5 to 8) borrowed variogram
parameters from the Contact Lode, with the rotation of the search ellipse defined by the average
strike and dip of the lode. Domain 80 (minor lode 8), which is based on two samples only, was
assigned the mean gold and copper grades of the composites as there were too few samples to
estimate the grade by kriging.
Due to the very short variogram ranges for the West Lode, a spherical search of 40 metres was
used by Snowden to ensure that enough samples were selected for the block estimate. The
search ellipse for the Central Lode was orientated to reflect the continuity analysis, with ranges
reflecting the variograms. Blocks not estimated were assigned mean grades based on the
respective domain. Approximately one percent of the blocks were assigned a mean grade (i.e. 99
percent of the blocks within the lodes were estimated).
Table 19.19
Summary of Mean Input Composite Grades with Block Model Grades,
August 2006 Resource Estimate, Deflector Deposit
(data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Mean Grades (g/t Au, g/t Ag, % Cu)
Element Domain Naïve Top Cut Declustered Declustered Block
Composite Composite Naïve Composite Top-Cut Composite Model
Gold 11 5.81 4.77 5.08 4.48 4.26
14 4.90 4.10 4.15 3.46 5.32
20 7.48 5.53 8.39 5.28 4.90
30 3.52 3.26 - - 3.45
40 2.93 - - - 2.67
50 2.78 - - - 2.07
60 5.95 4.40 - - 4.72
70 2.45 - - - 2.15
80 1.69 - - - 1.69
Silver 11 12.42 11.90 8.98 8.70 8.66
14 2.65 - 2.89 - 3.11
20 6.60 5.52 7.34 6.32 6.21
Copper 11 1.91 - 1.53 - 1.30
14 0.64 0.52 0.58 0.51 0.55
20 0.62 0.54 0.64 0.57 0.60
30 0.43 0.33 - - 0.31
40 0.26 - - - 0.27
50 0.05 - - - 0.05
60 0.12 - - - 0.18
70 0.07 - - - 0.05
80 0.62 - - - 0.62
The mean block grades should be compared to the mean composite grades on Table 19.19. To
ensure that comparisons would not biased by the deeper, less well supported regions of the
model, only the Measured and Indicated portions of the block model were used for Domains 11
and 20, with the composite data restricted to samples above 0 mRL for Domain 11 and 100 mRL
for Domain 20. As Domain 14 is relatively poorly supported, all samples and blocks were
included in the comparison. Input sample data was declustered to a 100 metre grid and mean
block grades were weighted according to block volume.
It may be seen from the presented results that most domains show a good correlation to the input
data, with a typical difference of less than eight percent. However, Domain 11 of the West Lode
does not appear to validate as well with respect to copper grades. Snowden suggest that this is
likely caused by a strong decrease in copper grades with increasing depth, along with the short
ranges observed in the variography.
Snowden also prepared moving window plots of the average sample composite grades (top-cut
and declustered) and block grades, by northing and elevation, to ensure that sample grade trends
were preserved during estimation. Gold, silver and copper validation plots for Domains 11 and
20 (six figures) are presented in Appendix A to this Technical Report. Snowden concluded that
the block model validation was satisfactory as a result and SGA concurs with this view.
Table 19.20
Summary of Undiluted, Global Mineral Resource Estimates at Different Gold Equivalent
Cut-Offs, August 2006 Resource Estimate, Deflector Deposit (1.0% Cu = 2.5 g/t Au)
(CIMM 2005 compliant, data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
AuEq Grade Tonnes Gold Silver Copper AuEq
Cut-Off (‘000) (g/t) (g/t) (%) (g/t)
0.0 3,555 4.98 4.87 0.72 6.77
1.0 3,320 5.31 5.18 0.76 7.22
2.0 3,014 5.73 5.63 0.83 7.80
3.0 2,668 6.25 6.17 0.89 8.48
4.0 2,234 6.99 6.92 0.98 9.45
5.0 1,875 7.71 7.51 1.07 10.40
6.0 1,597 8.39 8.09 1.15 11.25
7.0 1,327 9.14 8.74 1.23 12.23
8.0 1,085 10.02 9.18 1.31 13.30
9.0 920 10.75 9.66 1.37 14.17
10.0 763 11.62 9.92 1.40 15.12
11.0 630 12.57 10.03 1.42 16.10
12.0 476 13.86 10.77 1.49 17.59
13.0 375 15.27 10.77 1.48 18.96
14.0 324 16.23 10.70 1.43 19.81
15.0 259 17.45 10.90 1.48 21.15
16.0 227 18.31 10.68 1.45 21.95
17.0 197 19.29 10.40 1.41 22.82
18.0 175 19.98 10.27 1.39 23.46
19.0 152 20.81 10.02 1.36 24.21
20.0 134 21.67 9.20 1.27 24.85
For the same reasons as described for their 2004 Mineral Resource estimates, Snowden
considered only the undiluted global resource estimate at a gold equivalent grade cut-off of 1.0
g/t AuEq, for a 2.5 copper grade equivalence (AuEq = Au g/t + 2.5 x Cu%, silver grades not
being considered): selective extraction dictated by the results of on-going in-pit/in-stope grade
control to define areas or zones within individual veins above a desired minimum gold
equivalent grade cut-off is, for all reasonable and practical purposes, not a viable option. Table
19.21 summarizes this result and compares it with the same result (using the same copper grade
equivalence) defined as part of Snowden’s January 2006 Mineral Resource estimate for the
Deflector deposit.
Table 19.21
Summary of Undiluted, Global Mineral Resource Estimates at a 1.0 g/t AuEq Grade Cut-Off,
August 2006 Resource Estimate, Deflector Deposit (1.0% Cu = 2.5 g/t Au)
(CIMM 2005 compliant, data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Tonnes Gold Silver Copper AuEq
Lode (‘000) (g/t) (g/t) (%) (g/t)
January 2006 Global Mineral Resource Estimate
West 1,180 7.90 - 1.92 12.70
West Splays 260 4.30 - 1.17 7.22
Central 680 5.45 - 0.81 7.47
Contact 210 3.63 - 0.33 4.45
4 70 2.70 - 0.27 3.38
5 50 2.25 - 0.05 2.39
6 120 4.77 - 0.18 5.23
7 30 3.13 - 0.07 3.31
8 50 1.69 - 0.62 3.24
Total 2,650 6.04 - 1.23 9.12
August 2006 Global Mineral Resource Estimate
West 1,508 5.67 7.21 1.08 8.37
West Splays 553 5.78 3.34 0.59 7.26
Central 746 5.51 6.03 0.59 6.98
Contact 210 3.63 - 0.33 4.46
4 62 2.75 - 0.27 3.43
5 49 2.25 - 0.05 2.39
6 115 4.77 - 0.18 5.23
7 32 3.13 - 0.07 3.31
8 45 1.69 - 0.62 3.24
Total 3,320 5.31 5.18 0.76 7.22
It may be seen from the results summarized on Table 19.21 that the August 2006 Mineral
Resource estimate has higher tonnes but a significantly reduced grade. This was primarily due to
a decrease in copper grades at depth in the West Lode, along with the elimination of West Lode
internal domaining (Sub-Section 19.4.1). As earlier outlined (Sub-Section 19.4.1), the March to
July 2006 drilling campaign (the results of which were included in the August 2006 Mineral
Resource update) was primarily targeted at the West Lode to infill the upper portions of the
mineralized vein and to increase the downdip extension of the lode. Prior to this, the deeper
portions of the West Lode had been largely defined by a few, sparse and very high-grade
intersections. Small adjustments were also made to the tonnages for the minor lodes, following
Snowden’s review of their January 2006 Mineral Resource model.
• the Measured Mineral Resource category was allocated to those parts of the Deflector
deposit/lodes that were tested by 20 metre by 20 metre pierce point spacings (or less), drilled
in dry ground conditions;
• the Indicated category was allocated to lode areas tested on a nominal 40 metre by 40 metre
pierce point spacings, or less, inclusive of all areas categorized as wet but excluding areas of
Measured Mineral Resource;
• the Inferred category was allocated to areas outside the zones not categorized as either
Measured or Indicated Mineral Resources.
The Contact Lode and Lode 4 were classified based on the estimation search pass where the
Measured Mineral Resource category was allocated to those areas that were primarily estimated
by the first search pass and the Indicated Mineral Resource category was allocated to those areas
estimated by the second search pass. All remaining area of the Contact Lode and Lode 4 were
designated as Inferred Mineral Resources. Lodes 5 to 8, inclusive, were classified as Inferred
Mineral Resources due to the lack of assay composites and uncertainties concerning their
geometries.
Figure 19.13 provides a perspective view of the total classified Mineral Resource. Figure 19.14
depicts Snowden’s Mineral Resource classification scheme for the West Lode and Figure 19.15
depicts the classification scheme for the Central Lode. Table 19.22 summarizes the estimated
Mineral Resources by category, above 1.0 g/t AuEq when 1.0% Cu = 2.5 g/t Au (AuEq = Au g/t
+ 2.5 x Cu%).
Figure 19.14 - Snowden’s Resource Classification Scheme for the West Lode,
August 2006 Mineral Resource Estimate, Deflector Deposit
(from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Figure 19.15 - Snowden’s Resource Classification Scheme for the Central Lode,
August 2006 Mineral Resource Estimate, Deflector Deposit
(from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Table 19.22
Summary of Undiluted, Mineral Resource Estimates by Category, above a 1.0 g/t AuEq Grade
Cut-Off, August 2006 Mineral Resource Estimate, Deflector Deposit (1.0% Cu = 2.5 g/t Au)
(CIMM 2005 compliant, data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Lode Tonnes (‘000) Gold (g/t) Silver (g/t) Copper (%) AuEq (g/t)
Measured Mineral Resources
West 340 3.65 11.84 1.62 7.70
West Splays - - - - -
Central 97 5.37 2.76 0.40 6.37
Contact 98 3.16 - 0.41 4.18
4 - - - - -
Total 535 3.87 8.03 1.18 6.81
Indicated Mineral Resources
West 808 4.60 7.32 1.17 7.51
West Splays 60 1.25 1.96 0.45 2.37
Central 164 4.71 8.44 0.74 6.56
Contact 89 3.83 - 0.23 4.39
4 48 2.99 - 0.31 3.76
Total 1,169 4.32 6.34 0.96 6.72
Measured + Indicated Mineral Resources
West 1,148 4.32 8.66 1.30 7.57
West Splays 60 1.25 1.96 0.45 2.37
Central 261 4.96 6.33 0.61 6.49
Contact 187 3.48 - 0.32 4.28
4 48 2.99 - 0.31 3.76
Total 1,704 4.18 6.87 1.03 6.75
Inferred Mineral Resources
West 360 9.99 2.59 0.38 10.93
West Splays 493 6.33 3.51 0.61 7.85
Central 485 5.81 5.88 0.57 7.24
Contact 23 4.82 - 0.44 5.93
4 14 1.92 - 0.16 2.32
5 49 2.25 - 0.05 2.39
6 115 4.77 - 0.18 5.23
7 32 3.13 - 0.07 3.31
8 45 1.69 - 0.62 3.24
Total 1,616 6.50 3.41 0.48 7.70
To facilitate the assessment of material types, Snowden also reported their August 2006 Mineral
Resource estimates by oxidation category, above 1.0 g/t AuEq when 1.0% Cu = 2.5 g/t Au.
Table 19.23 summarizes the results. It is emphasized that a portion of the Mineral Resource
estimates summarized on Tables 19.22 and 19.23 are in the Inferred category, which category
may be considered geologically speculative. There is no guarantee that Inferred Mineral
Resources will be upgraded to Mineral Reserve status.
Table 19.23
Summary of Undiluted Mineral Resource Estimates by Mineral Resource Category and
Oxidation Category, above a 1.0 g/t AuEq Grade Cut-Off, August 2006 Mineral
Resource Estimate, Deflector Deposit (1.0% Cu =2.5 g/t Au)
(CIMM compliant, data from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Resource Category Tonnes (‘000) Gold (g/t) Silver (g/t) Copper (%) AuEq (g/t)
Oxide Material
Measured 284 3.56 10.10 1.41 7.08
Indicated 109 2.29 1.24 0.34 3.13
Measured + Indicated 393 3.21 7.64 1.11 5.98
Inferred 32 0.88 0.37 0.22 1.43
Transitional Material
Measured 185 4.04 6.65 1.02 6.59
Indicated 120 3.10 6.23 0.89 5.33
Measured + Indicated 305 3.67 6.48 0.97 6.09
Inferred 117 3.35 0.73 0.13 3.68
Fresh/Unoxidized Material
Measured 66 4.77 2.97 0.62 6.31
Indicated 940 4.71 6.94 1.04 7.32
Measured + Indicated 1,006 4.71 6.68 1.01 7.25
Inferred 1,467 6.87 3.69 0.52 8.16
Overall Totals
Measured 535 3.87 8.03 1.18 6.81
Indicated 1,169 4.32 6.34 0.96 6.72
Measured + Indicated 1,704 4.18 6.87 1.03 6.75
Inferred 1,616 6.50 3.41 0.48 7.70
Table 19.24
Summary of Geostat’s Undiluted, May 31, 2004 Mineral Resource Estimate
for the Michelangelo Deposit, above a 0.5 g/t Au Grade Cut-Off
(CIMM 2005 compliant, data from Geostat’s May 2004 Mineral Resource estimate report to Batavia)
Laterite Lodes Primary Lodes Total Deposit
Category Tonnes Au Tonnes Au Tonnes Au Au
(‘000) (g/t) (‘000) (g/t) (‘000) (g/t) (oz)
19.5.1 Database
Batavia supplied Geostat with comma-delimited files comprising drillhole collar, assay and
survey data covering the Michelangelo deposit. The drillholes comprise a mixture of types,
including RC, RAB and grade control holes, with a total of 1,922 holes totalling 9,841metres.
The number of drillholes comprising each drill-type is unknown.
Geostat removed from the Mineral Resource database several duplicate drillholes and a number
of grade-control holes centred on three metre spacings, because they were deemed ‘impractical
as regards to the scale of the deposit and other drill spacings’ (Muller, 2004a).
Drillhole depths vary from two to 294 metres, with an average depth of 28 metres. Drillhole
spacings are variable: in the central area they average ten metres along strike and ten metres
across strike; whereas across other areas they can be up to 40 metres along strike and 20 metres
across strike. Most of the drillholes are vertical; the orientations of the inclined holes vary
between 090 degrees and 270 degrees and the dips average minus 60 degrees.
Geostat did not validate the database because ‘this was considered to have been completed by
Batavia prior to receiving the data’ and ‘It was not within the scope of the brief to assess data
quality and integrity.’ (Muller, 2004a). SGA did not attempt to validate the database as it is not
currently (May 2007) in a format that allows for independent verification. No information was
provided to Geostat regarding different analytical procedures and all the assays were processed
as one dataset.
• seven laterite grade envelopes (“Laterite Lodes” or collectively the “Laterite Deposit”),
inclusive of five main Laterite Lodes (numbered 110 to 150, in increments of ten) a minor
Laterite Lode (numbered 500) and a surface Laterite Lode (numbered 400); and
• 38 primary grade envelopes (“Primary Lodes”, numbered 200 to 390 and 600 to 780, in
increments of ten, or collectively the “Primary Deposit”).
Geostat did not use the available lithology data to assist in envelope delineation because ‘the
drillholes had been logged by various geologists over the drilling history of the deposit, with
different sets of lithology codes used’ (Muller, 2004a). The surface topography and the existing
openpit excavations from previous mining activity were used to constrain the model. An average
density of 1.8 tonnes per cubic metre was used for all the Laterite Lodes and an average density
of 2.3 tonnes per cubic metre was used for all the Primary Lodes.
The Laterite Deposit comprises a flat, sub-horizontal laterite horizon with two small,
discontinuous sub-horizons in addition to the main horizon (Figure 19.16). The gold
distributions within these sub-horizons suggest that they are re-mobilized or transported
components of the original insitu laterite deposit.
In the central area, the Primary Deposit comprises a closely-spaced stack of shallow-dipping
lodes that strike predominantly 120 degrees and dip at minus 30 degrees towards the west
(Figure 19.17). The geological setting of these Primary Lodes is complex, with many lodes
appearing to merge together or to terminate abruptly. A strong structural influence is evident,
with wireframe geometry transforming from flat, gently-dipping lodes into irregular shapes with
large variations between drillhole sections - despite their five metre spacings. A plunge of minus
30 degrees towards 245 degrees was detected for the high-grade lodes within the central area
(Figure 19.18). Several lodes appear to plunge below existing drillholes to the west, which
‘could indicate potential for extension of the primary resource at depth’ (Muller, 2004a). Other
Primary Lodes comprise local, shallow-dipping mineralized veins oriented 090 to 100 degrees
and dipping at minus 30 degrees towards the south.
Figure 19.17 - A Three-Dimensional Perspective View, Looking South, of the Primary Lodes
in the Central Area of the Michelangelo Deposit, May 2004 Mineral Resource Estimate
(colour-coding system unknown)
(from Geostat’s May 2004, Michelangelo Mineral Resource estimate report to Batavia)
Figure 19.18 - A Three-Dimensional Perspective View, Looking North, of Primary Lode 240,
(Showing a Southwest Plunge) in the Central Area of the Michelangelo Deposit,
May 2004 Mineral Resource Estimate
(from Geostat’s May 2004, Michelangelo Mineral Resource estimate report to Batavia)
Table 19.25
Summary of Geostat’s Uncut and Cut Composite Statistics for the Seven Mineralized
Laterites, May 2004 Mineral Resource Estimate for the Michelangelo Deposit,
above a 0.5 g/t Au Grade Cut-Off
(data from Geostat’s May 2004 Mineral Resource estimate report to Batavia)
Main Laterite Lodes Minor Laterite Surface Laterite
Statistic/Wireframe
110 120 130 140 150 500 400
Number 302 2173 1476 329 119 224 294
Minimum 0.16 0.03 0.01 0.04 0.17 0.06 0.18
Maximum 9.65 45.80 59.00 36.60 3.43 8.60 2.67
Mean 1.05 1.50 1.49 1.23 0.79 1.42 0.66
Median 0.85 1.16 0.92 0.89 0.63 0.99 0.60
Standard Deviation 0.85 1.92 2.53 2.11 0.56 1.37 0.29
Variance 0.73 3.69 6.42 4.45 0.31 1.87 0.08
Coefficient of Variation 0.81 1.29 1.70 1.72 0.71 0.96 0.44
97.5 Percentile 2.71 4.17 5.80 3.21 2.83 5.43 1.31
Top-cut 3.50 6.50 13.00 4.00 3.00 6.60 2.00
Cut Mean 1.02 1.43 1.42 1.12 0.78 1.41 0.66
The distribution of the Laterite and Primary Deposits’ composites suggests the presence of a
lognormal distribution for all lodes. Some of the smaller lodes show a small element of
population mixing. However, the overall distribution suggests an approach towards a lognormal
distribution, with the mixing likely caused by low data levels and sparse drilling at depth.
The location statistics for the Laterite Deposit’s composites reveal a relatively low-grade gold
population, with mean grades ranging from 0.66 g/t Au to 1.50 g/t Au. This is in contrast to the
Primary Deposit, for which the highest average composite lode grade reaches 4.53 g/t Au. The
Laterite Deposit contains a maximum grade of 59.0 g/t Au, whereas the Primary Deposit is
relatively enriched in high-grade gold values that reach a maximum of 150.0 g/t Au. In view of
this, composite data within the Mineral Resource database was assessed by Geostat for the need
to top-cut the gold assay data, prior to grade estimation.
Table 19.26
Summary of Geostat’s Uncut and Cut Composite Gold Statistics for the 38 Primary Lodes, May
2004 Mineral Resource Estimate for Michelangelo Deposit, above a 0.5 g/t Au Grade Cut-Off
(data from Geostat’s May 2004 Mineral Resource estimate report to Batavia)
Primary Lode
Statistic 200 210 220 230 240 250 260 270 280 290 300 310 320
Number 567 247 430 117 740 95 190 181 58 91 26 19 21
Minimum 0.02 0.02 0.02 0.07 0.03 0.19 0.13 0.02 0.07 0.18 0.3 0.47 0.05
Maximum 30.8 49.3 150 3.84 44 33.55 21.1 25.3 25.3 29.9 4.35 5.68 5.75
Mean 2.23 1.84 2.26 0.87 3.34 1.69 1.52 2.16 2.30 4.53 0.94 1.31 1.12
Median 1.12 0.89 0.93 0.70 1.57 0.85 0.80 1.05 0.77 2.15 0.58 0.81 1.05
Std Dev 3.89 3.82 10.36 0.70 5.09 3.66 3.07 3.40 4.72 5.82 1.03 1.28 1.15
Variance 15.12 14.62 107.30 0.49 25.89 13.42 9.41 11.57 22.30 33.84 1.06 1.63 1.33
Coeff. Variance 1.74 2.08 4.59 0.81 1.53 2.17 2.02 1.57 2.06 1.28 1.10 0.98 1.03
97.5 Percentile 14.80 9.50 8.16 2.66 15.90 8.36 8.65 9.56 19.41 15.90 4.35 4.59 3.44
Top-Cut 9.00 10.00 10.00 3.00 18.00 6.00 5.00 10.00 4.00 14.00 2.00 3.50 2.00
Primary Lode
Statistic 330 340 350 360 370 380 390 600 610 620 630 640 650
Number 61 62 56 50 301 50 18 11 9 8 6 22 13
Minimum 0.26 0.25 0.03 0.52 0.04 0.38 0.5 0.53 0.55 0.51 0.44 0.07 0.14
Maximum 14 8.69 27.2 7.8 52.7 35.3 2.85 2.38 2.9 1.41 4.95 4.99 3.53
Mean 1.64 2.40 1.92 1.86 3.40 2.41 1.37 1.13 0.98 0.72 2.88 0.88 0.91
Median 1.16 1.53 0.81 1.13 1.22 0.75 1.25 0.87 0.75 0.58 3.05 0.63 0.54
Std Dev 1.96 1.93 3.76 1.88 6.60 6.81 0.67 0.52 0.75 0.30 1.79 1.00 0.94
Variance 3.82 3.71 14.15 3.53 43.56 46.35 0.45 0.28 0.56 0.09 3.21 1.00 0.88
Coeff. Variance 1.20 0.80 1.96 1.01 1.94 2.82 0.49 0.46 0.76 0.42 0.62 1.13 1.04
97.5 Percentile 5.22 7.49 5.19 7.34 20.30 27.13 2.85 2.11 2.52 1.30 4.89 3.05 3.12
Top-Cut 3.00 7.50 3.50 5.00 18.00 3.00 2.00 - - - 3.50 3.50 3.50
Primary Lode
Statistic 660 670 680 690 700 710 720 730 740 750 770 780
Number 23 7 21 25 4 12 4 7 6 7 8 18
Minimum 0.02 0.35 0.14 0.18 0.45 0.03 0.55 0.84 0.25 0.08 0.8 0.36
Maximum 7.53 2.35 3.9 1.63 1.85 5.18 1.04 2.63 2.24 3.03 7.55 2.62
Mean 1.19 0.91 0.98 0.82 0.84 1.27 0.78 1.32 1.02 1.20 2.85 1.48
Median 0.78 0.66 0.60 0.88 0.52 0.57 0.68 0.97 0.51 0.55 1.52 1.55
Std Dev 1.56 0.66 0.89 0.41 0.68 1.44 0.21 0.68 0.76 1.11 2.35 0.73
Variance 2.43 0.43 0.78 0.16 0.46 2.07 0.04 0.46 0.58 1.22 5.53 0.53
Coeff. Variance 1.31 0.72 0.91 0.50 0.81 1.13 0.27 0.51 0.75 0.92 0.83 0.49
97.5 Percentile 5.24 2.10 3.01 1.47 1.72 4.29 1.02 2.50 2.12 2.89 6.99 2.52
Top-Cut 2.50 - 2.50 - - 2.00 - 2.50 - 2.50 - -
19.5.4 Top-Cuts
Top-cutting was found to be necessary to reduce the impact of extreme values on estimation of
gold grades. The determination of a high-grade cut was made on the basis of probability plots
and ranked data values, with the general criterion for the top-cuts being a marked change, a kink,
or pronounced disintegration at the higher end of the probability distribution, or a clear break
within ranked composite data. Top-cut values were determined individually for each lode, with
top-cuts for the Laterite Lodes varying from 2.0 g/t Au to 13.0 g/t Au (also Table 19.26) and top-
cuts for the Primary Lodes varying from 2.0 g/t Au to 18.0 g/t Au (also Table 19.26).
19.5.5 Variography
Variography analysis using lognormal variograms was performed, by Geostat, on the composite
data to provide variography parameters for the Michelangelo Mineral Resource model.
Composites for individual Laterite Lodes were analyzed. Insufficient data was available for
Lodes 150 and 500 to enable individual analysis so Geostat assumed parameters for these lodes,
based on the results of other Laterite Lodes. The Primary Lodes were combined into two main
groups to boost data levels for variography analysis (West Zone and Central Zone). The
variography parameters obtained were applied to Primary Lodes’ composites within the lodes at
other locations that had insufficient data for variography analysis.
Interpretation of variogram fans in the horizontal plane for all Laterite Lodes revealed various
strikes between from 070 degrees and 140 degrees (Table 19.27). Sub-horizontal dips were
found to apply to all the laterite lodes, with the plunge set parallel to the strike orientation.
Primary composites for West and Central Zones show a horizontal strike of between 110 degrees
and 120 degrees, with a dip of minus 30 degrees towards 200 degrees and 210 degrees,
respectively. A plunge of minus 30 degrees towards 245 degrees was interpreted by Geostat for
West Zone composites, verifying the visual trend of the wireframes.
Table 19.27
Summary of Variogram Model Parameters, May 2004 Mineral
Resource Estimate, Michelangelo Deposit
(data from Geostat’s May 2004 Mineral Resource estimate report to Batavia)
Lode Orientation Nugget Structure 1 Structure 2
Type Lode # Strike Dip Plunge Effect Sill 1 Range 1 (m) Sill 2 Range 2 (m)
Laterite 110 140° 10°/050° - 0.12 0.32 76 x 86 x 1 0.56 158 x 92 x 3
120 070° horizontal - 0.20 0.38 18 x 29 x 2.5 0.42 46 x 44 x 5
130 070° horizontal - 0.23 0.21 35 x 47 x 2.5 0.56 43 x 50 x 4.5
140 110° horizontal - 0.13 0.57 50 x 74 x 2 0.30 68 x 78 x 3
400 140° 10°/220° - 0.08 0.46 26 x 50 x 4.5 0.46 70 x 72 x 5
Primary West 120° -30°/210° 30°/245° 0.08 0.44 24 x 26 x 3 0.48 30 x 28 x 7
Central 110° -30°/200° - 0.07 0.50 7 x 29 x 3 0.42 20 x 30 x 7
Note: the ranges are expressed as strike by down-dip by down-hole
Geostat modeled variograms with two spherical structures for all lodes (also Table 19.27). A
low nugget effect, representing eight to 23 percent of the total variability, was found for both the
Laterite Lodes’ and Primary Lodes’ composites. This suggests that the sampling methods
applied to the Michelangelo deposit were reasonable and that no significant error was introduced
through drilling and sampling. However, Geostat found that the quality of downhole variograms
was compromised by the thin nature of the laterite horizons and the irregular shapes of the
primary lodes, together with the variable drillhole orientations.
Across strike variograms also suffer from a lack of data continuity, with an erratic structure and
few lags required to reach the sill. Maximum ranges obtained in the variography suggest an
almost isotropic distribution in the along strike and across strike directions for most domains.
Laterite Lodes demonstrate along strike and across strike maximum continuity up to 70 metres,
whereas Primary Lodes show a lower maximum spatial continuity of up to 30 metres in both
directions. Downhole ranges vary from three to five metres for Laterite Lodes, whereas Primary
Lodes show downhole continuity ranges of seven metres. Horizontal, normal and downhole gold
variography plots for Laterite Lodes 110, 120, 130, 140 and 400 (15 figures), as well as for the
Primary West and Central Zones (24 figures) are presented in Appendix B to this Technical
Report.
Table 19.28
Summary of Block Origins and Models’ Extents, May 2004 Mineral
Resource Estimate, Michelangelo Deposit
(data from Geostat’s May 2004 Mineral Resource estimate report to Batavia)
Extent of Number of Blocks
Model Limits Model Model 1 Model 2
15,780 to 16,380 North 600 metres 120 120
38,080 to 39,210 East 1,130 metres 226 113
180 to 320 m RL 140 metres 70 70
A percent model method was used by Geostat, which calculates the percent of a block as
belonging to a particular lode for use in volume/tonnage estimation. The narrow, thin nature of
the Laterite Lodes and the multiple, stacked nature of the Primary Lodes made this method ‘ideal
as it eliminates the possibility of over-estimation of tonnage while maintaining the same grade
interpolation as that for the standard block modelling method’ (Muller, 2004a). The solid
wireframes were used to limit the blocks available for grade interpolation.
Ordinary kriging, using parameters derived from the log variograms, was used by Geostat to
estimate gold grades. The skewed nature of the data distribution made the use of this technique
ideal, whereas other techniques (such as inverse distance interpolation) assume a normal
distribution that can lead to errors if the data is not cut appropriately. Inverse distance
techniques also do not utilize the information obtained from the variogram in interpolation of
blocks, thereby the spatial correlation between composites is not taken into account.
Geostat treated each lode as a separate hard boundary, restricting the gold grade interpolation to
drillhole data located within each lode. Exceptions to this were Laterite Lodes 120 and 130 that
were considered part of the same mineralogical domain. A soft boundary was set, with blocks in
Laterite Lodes 120 and 130 able to utilize composites in the other lode if located within the
search ellipse. A minimum of two composites and a maximum of 30 composites were used to
interpolate each block grade for all lodes. A discretization array of two (north) by two (east) by
two (RL) was used to refine the kriging weights for each model block.
A search ellipse is used to select the samples to estimate a particular block and is generally less
than, or equal to, the maximum range parameters modelled in the variography. Search ellipses
for lodes in areas of sparse drilling density were expanded relative to those in closer-spaced
areas, to obtain sufficient numbers of composites for representative interpolation. Search ellipses
for Laterite Lodes averaged 50 by 30 by five metres, whereas the search ellipses for Primary
Lodes in close-spaced areas averaged 30 by 20 by seven metres and in sparse areas averaged 80
by 40 by seven metres. Table 19.29 summarizes the search ellipses employed for each
mineralized lode.
Table 19.29
Summary of Search Ellipse Dimensions, May 2004 Mineral
Resource Estimate, Michelangelo Deposit
(data from Geostat’s May 2004 Mineral Resource estimate report to Batavia)
Search Ellipse (m)
Lode Type Lode #
Along strike Across strike Across-lode
Laterite 110 100 60 5
120 and 130 50 30 5
140 and 150 70 40 5
400 and 500 50 30 5
200 to 390 30 20 7
Primary
600 to 650 100 40 7
660 to 780 80 40 7
A second interpolation pass was conducted for all lodes, with the search extents doubled in an
attempt to fill any remaining unfilled blocks. Only those blocks left unfilled were interpolated
by this second pass; the grades estimated from the first interpolation pass were left unchanged.
Search ellipse orientations are usually based on strike and dip directions determined from fan
contours and variograms during variography analysis of the dataset. However, since the
variography is based on combined lode datasets and set directional increments, with the resulting
interpretations not always reflecting local variations in geometry, some fine-tuning of the search
ellipse orientations is often required to best fit the actual geometry of the individual lodes. Table
19.30 lists the strike and dip orientations employed for each lode and interpolation domain.
Table 19.30
Summary of Search Ellipse Orientations, May 2004 Mineral
Resource Estimate, Michelangelo Deposit
(data from Geostat’s May 2004 Mineral Resource estimate report to Batavia)
Lode Type Lode # Portion Strike Dip Plunge
Laterite 110 - 130° -2°/220° -
120 - 070° -2°/020° -
130 - 070° -5°/020° -
140 - 130° -3°/220° -
150 - 070° -2°/160° -
400 - 120° -3/°210° -
500 - 070° -3°/340° -
Primary 200 to 270 West 110° -30°/200° -30°/245°
200 to 270 Central 120° -30°/210° -
200 East 090° -35°/180° -
210 to 270 East 090° -35°/180° -
280 and 310 - 090° -30°/180° -
290, 300, 330, 350, 380 - 120° -30°/210° -
320, 390 and 600 to 650 - 080° -30°/170° -
340, 370, 700 and 710 - 120° -30°/210° -30°/245°
360 - 130° -30°/220° -
660, 680, 690 and 720 to 770 - 090° -30°/180° -
670 - 070° -30°/160° -
780 - 110° -30°/200° -
Table 19.31
Summary of Statistical Validation Results of Lode Interpolated
Gold Grades, May 2004 Mineral Resource Estimate, Michelangelo Deposit
(data and sub-text from Geostat’s May 2004 Mineral Resource estimate report to Batavia)
Lode Number of Block Mean Grade Cut Mean
Lode # Difference Comments
Type Composites Volume (m3) (g/t Au) Grade (g/t Au)
Laterite 110 302 194,489 1.02 1.02 0.2% -
120 2,173 159,577 1.37 1.43 -4.3% -
130 1,476 131,750 1.35 1.42 -4.9% -
140 329 83,973 1.07 1.12 -4.5% -
150 119 67,142 0.74 0.78 -5.6% -
400 294 33,754 0.65 0.66 -1.1% -
500 224 36,518 1.27 1.41 -10.0% Note 1
Primary 200 567 22,231 1.96 1.85 6.2% -
210 247 17,276 1.53 1.63 -5.7% -
220 430 17,300 1.47 1.54 -4.2% -
230 117 10,880 0.80 0.85 -6.2% -
240 740 17,149 3.00 3.11 -3.3% -
250 95 6,179 1.36 1.31 3.7% -
260 190 8,740 1.34 1.13 18.5% Note 2
270 181 15,124 1.83 1.93 -5.1% -
280 58 5,994 1.43 1.42 0.6% -
290 91 2,630 3.98 4.10 -3.0% -
300 26 1,120 0.74 0.76 -1.5% -
310 19 4,746 1.22 1.19 2.3% -
320 21 982 0.95 0.94 1.2% -
330 61 2,038 1.53 1.33 14.8% Note 3
340 62 3,899 2.32 2.38 -2.5% -
350 56 2,427 1.60 1.68 -5.1% -
360 50 8,586 2.57 2.88 -11.0% Note 4
370 301 1,774 1.11 1.12 -1.2% -
380 50 1,377 1.34 1.28 4.6% -
390 18 9,138 1.09 1.13 -3.5% -
600 11 5,021 0.95 0.98 -2.7% -
610 9 6,415 0.76 0.72 5.7% -
620 8 5,789 3.08 2.47 24.7% Note 5
630 6 16,350 0.82 0.82 0.5% -
640 22 4,515 0.94 0.91 3.3% -
650 13 12,162 0.94 0.92 1.4% -
660 23 2,517 0.88 0.91 -3.5% -
670 7 12,006 1.04 0.91 13.7% Note 6
680 21 16,587 0.82 0.79 3.4% -
690 25 2,696 0.76 0.84 -9.6% Note 7
700 4 2,398 1.09 0.99 9.8% Note 8
710 12 933 0.79 0.77 2.3% -
720 4 1,515 1.36 1.30 4.6% -
730 7 1,530 1.16 1.02 14.0% Note 9
740 6 1,761 1.12 1.12 -0.8% -
750 7 5,081 2.71 2.85 -5.0% -
770 8 3,327 1.32 1.48 -10.6% Note 10
780 18 7,231 1.54 1.32 16.6% Note 11
Figures 19.19 to 19.21, inclusive, illustrate the grade/easting relationship for Laterite Lodes 120,
130 and Primary Lodes 200 to 390, respectively. Both input composite data and model grade
data were averaged within five metre easting increments for each lode and plotted together with
the number of composites to assess the reliability of the block model. Other lodes were either
too small or too scattered to enable local graphical trends with respect to easting and northing.
No of Composites
100
1.5
Au Grade
80
1
60
40
0.5
20
0 0
38560 38600 38640 38680 38720 38760 38800 38840 38880 38920 38960 39000
Easting
100
1.5
Au Grade
80
1
60
40
0.5
20
0 0
38480 38520 38560 38600 38640 38680 38720 38760 38800
Easting
No of Composites
250
Au Grade
1.5 200
150
1
100
0.5
50
0 0
38560 38580 38600 38620 38640 38660 38680 38700 38720 38740 38760
Easting
Comparison of model grades with composite grades for Laterite Lodes 120 and 130 (Figures
19.19 and 19.20) illustrate a close reconciliation, with model grades reproducing the fluctuations
in composite grades. A slight under-estimation of composite grades is illustrated by the model in
small local areas, such as from 38760mE to 38800mE. However, these are relatively minor, with
the model showing an overall robust reproduction of composite grades. Primary Lode model
grades and composite grades (Figure 19.21) exhibit very similar trends to that of Laterite Lodes,
with model trends following those of composites closely. Despite the fluctuating composite
grades, the block model achieves a reasonable correlation with composite grades.
Figures 19.22 and 19.23 illustrate the grade/northing relationship averaged within ten metre
northing increments for both input composite data and model grade data, together with the
number of composites for all lodes. Both Laterite Lodes and Primary Lodes show a good
correlation between model and input composite grades by northing, with the block model
reproducing composite grade trends. The primary lodes reveal a slight smoothing of composite
grades by the block model to the south, which was attributed to ‘the variable geometry of lodes
and edge-effects created by the low composite numbers within each lode in this area’ (Muller,
2004a).
250
2
No of Composites
200
Au Grade
1.5
150
1
100
0.5
50
0 0
15880 15900 15920 15940 15960 15980 16000 16020 16040 16060 16080
Northing
140
No of Composites
1.5 120
Au Grade
100
1 80
60
0.5 40
20
0 0
16040 16060 16080 16100 16120 16140 16160 16180 16200 16220
Northing
Primary Lodes for a range of gold grade cut-offs (Geostat undertook the analysis to test the
sensitivity of the model to the cut-off grade applied). The cut-off grades are bracketed next to
points representing the tonnage and average grade applicable at these cut-off grades. Geostat
also determined a grade-tonnage relationship for all the lodes combined (Figure 19.25).
(2.5g/t)
(3.0g/t)
(2.0g/t)
3
(2.5g/t) (1.5g/t)
(2.0g/t)
(1.0g/t)
2
(1.5g/t) (0.5g/t)
(0g/t)
(1.0g/t)
1
(0.5g/t) (0g/t)
0
0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 1,000,000 1,100,000
Tonnage
Figure 19.24 - Grade-Tonnage Curves for Laterite and Primary Lodes at Different
Gold Grade Cut-Offs, May 2004 Mineral Resource Estimate, Michelangelo Deposit
(from Geostat’s May 2004 Mineral Resource estimate report to Batavia)
(5.0g/t)
6
(4.5g/t)
(4.0g/t)
5
(3.5g/t)
Au Grade
(3.0g/t)
4
(2.5g/t)
3 (2.0g/t)
(1.5g/t)
2
(1.0g/t)
(0.5g/t)
(0g/t)
1
0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000
Tonnage
• Laterite Lodes 120 and 130 were classified as Indicated (there is good/a high drilling density,
good spatial continuity and a close reconciliation between composite and model grades so
Geostat’s confidence in this area was high);
• the Inferred category was applied to all other Laterite Lodes (that are located in areas of
wider drill-spacing, hence blocks within these lodes were interpolated by fewer composites
so the Inferred category is appropriate in this case); and
• the Inferred category was applied to all Primary Lodes (despite them covering areas where
drilling density is five by five metres, the geometry of the lodes changes significantly from
section to section which, combined with a poor geological understanding of the controls on
mineralization, suggests that the Inferred category is appropriate in this case).
No other grade cut-offs were considered by Geostat during the classification process, for the
same reasons as described for Snowden’s 2006 and 2006 Mineral Resource estimates for the
Deflector deposit: the nature of the Michelangelo deposit (complex, narrow to thin veins)
precludes, for all reasonable and practical purposes, selective extraction of thinner portions of
individual veins during extraction (it may reasonably be assumed that the resources could be
exploited using opencut methods). SGA concurs with this approach, but recommends that the
resources are re-classified as Inferred, for the reasons earlier outlined (Sub-Section 19.2.2).
The results for a 0.5 g/t Au grade cut-off are summarized on Table 19.32, which repeats Table
19.24. It is emphasized that the stated Mineral Resources estimate is wholly in the Inferred
category, which category may be considered geologically speculative. There is no guarantee that
Inferred Mineral Resources will be upgraded to Mineral Reserve status.
Table 19.32
Summary of Geostat’s Undiluted, May 31, 2004 Mineral Resource Estimate
for the Michelangelo Deposit, above a 0.5 g/t Au Grade Cut-Off
(CIMM 2005 compliant, data from Geostat’s May 2004 Mineral Resource estimate report to Batavia)
Laterite Lodes Primary Lodes Total Deposit
Category Tonnes Au Tonnes Au Tonnes Au Au
(‘000) (g/t) (‘000) (g/t) (‘000) (g/t) (oz)
Table 19.33
Summary of Geostat’s Undiluted, June 04, 2004 Inferred Mineral Resource Estimate
for the King Solomon/New Phoenix Deposit, above a 1.0 g/t Au Grade Cut-Off
(CIMM 2005 compliant, data from Geostat’s July 2004 Mineral Resource estimate report to Batavia)
Tonnes Au
Vein # Vein Name (‘000) (g/t)
100 New Phoenix 18,000 11.24
200 Christmas Gift 6,000 13.95
300 King Solomon 42,000 6.81
500 - 3,000 5.47
600 - 6,000 5.95
700 - 11,000 1.77
Total - 86,000 7.48
19.6.1 Database
Batavia supplied Geostat with comma-delimited files comprising drillhole collar, assay and
survey data covering the King Solomon/New Phoenix deposit. The drillholes comprise a
mixture of types, including RC and RAB holes, with a total of 1,922 holes totalling 31,914
metres. The number of drillholes comprising each drill-type is unknown.
Geostat removed from the Mineral Resource database several duplicate drillholes and a number
of grade-control holes centred on three metre spacings, because they were deemed ‘impractical
as regards to the scale of the deposit and other drill spacings’ (Muller, 2004b). Three RC
drillholes were also excluded from the database (RSRC052, RGC057 and RSGC114) because a
low level of confidence was by Geostat placed in the assay results.
The reported (by Batavia) drillhole depths vary from one to 260 metres, with an average depth of
36 metres. Drillhole spacings are variable, with an average spacing of ten metres along strike
and five metres across strike in the central area and drillhole spacings of up to 80 metres along
strike and 50 metres across strike occurring throughout the deposit. Most of the drillholes are
orientated at minus 60 degrees to the south; other drillhole orientations include minus 60 degrees
to the north. Some of the holes are vertical.
Geostat did not validate the database because ‘this was considered to have been completed by
Batavia prior to receiving the data’ and ‘It was not within the scope of the brief to assess data
quality and integrity’ (Muller, 2004b). SGA did not attempt to validate the database as it is not
currently (May 2007) in a format that allows for independent verification. No information was
provided to Geostat regarding different analytical procedures and all the assays were processed
as one dataset. Muller (2004b) also states that ‘It was also not within the scope of the brief to
analyze for potential bias introduced by different drilling and sampling techniques over the
drilling history of the deposit’. However, a large number of drillholes were found to contain
missing assay data, which Geostat presumed would be ‘located in the Batavia information
database and will be retrieved at a future stage’ (Muller, 2004b). Apparently, this has not been
the case.
Portions of the New Phoenix and King Solomon Veins were previously mined, but the exact
geometries of the mined-out portions were and are not known. To overcome this, Geostat’s
wireframe model was constrained by an upper limit of 230mRL for Veins 100 (New Phoenix)
and 300 (King Solomon). All other Mineralized Veins were reported in their entirety and an
average density of 2.7 tonnes per cubic metre was in each case assumed.
A limit of 230mRL was selected by Geostat as it was considered to best represent the average
final known depth to which the underground workings had extended. As such, Geostats Mineral
Resource estimate for the King Solomon/New Phoenix deposit may reasonably be construed to
reflect the remaining Mineral Resources only.
Statistics were run for all constrained, uncut and cut composite data by Mineralized Vein. Table
19.34 provides a summary of the results. Only gold assay statistics were considered because
gold is the only metal of interest. No other mineralization indicators were used as data was
extracted from within the wireframes.
Table 19.34
Summary of Geostat’s Cut and Uncut Composite Gold Statistics for the 13 Mineralized Veins,
June 2004 Mineral Resource Estimate for the King Solomon/New Phoenix Deposit,
above a 1.0 g/t Au Grade Cut-Off
(data from Geostat’s June 2004 Mineral Resource estimate report to Batavia)
Uncut Statistics by Mineralized Lode
Statistic 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300
Number 93 16 29 12 14 29 13 23 4 8 8 48 61
Minimum 0.03 0.77 0.56 0.25 0.59 0.31 0.58 0.04 0.55 0.99 2.77 0.26 0.38
Maximum 132 101.65 20.32 7.68 22.46 39 10.51 43.4 6.508 17.7 16.1 39.25 8.4
Mean 12.44 14.11 8.24 1.80 6.81 6.93 2.37 4.01 3.76 6.29 7.59 3.79 1.58
Median 3.07 1.85 6.62 1.27 3.47 2.91 0.97 0.79 3.22 0.99 5.75 0.88 0.63
Std Dev 23.39 25.49 5.78 2.05 6.67 8.95 2.86 9.07 2.53 6.42 5.41 9.24 2.19
Variance 547.15 649.88 33.42 4.22 44.44 80.08 8.17 82.23 6.39 41.19 29.26 85.45 4.80
Coeff. Variance 1.88 1.81 0.70 1.14 0.98 1.29 1.21 2.26 0.67 1.02 0.71 2.44 1.38
97.5 Percentile 87.42 73.14 17.33 6.19 20.13 26.97 8.85 25.46 6.33 16.37 16.10 38.28 8.40
Top-Cut 50 25 15 3 10 20 5 15 5 10 10 10 5
Cut Mean 9.93 8.66 8.02 1.41 5.14 6.14 1.91 2.77 3.38 5.06 6.07 1.98 1.30
Location statistics of composites reveal cut mean grades ranging from 1.30 g/t Au for Vein 1300
to 9.93 g/t Au for the New Phoenix Vein (100). However, the low data levels (at 93, Vein 100
has the highest number of composites) compromised mean grades for each vein, with high-grade
outliers exerting a large influence on the average composite grade for each vein, despite the
application of a top-cut to these grades.
The overall distribution of composites suggests the presence of a lognormal distribution for all
veins; however the low composite numbers have compromised the interpretation of the gold
distribution within some veins. More data is required to confirm these population trends.
19.6.4 Top-Cuts
Top-cutting was found to be necessary to reduce the impact of extreme values on estimation of
gold grades. The determination of a high-grade cut was made on the basis of probability plots
and ranked data values, with the general criterion for the top-cuts being a marked change, a kink,
or pronounced disintegration at the higher end of the probability distribution, or a clear break
within ranked composite data.
Top-cuts were determined individually for each Mineralized Vein, with top-cuts varying from
3.0 g/t Au for Vein 400 to 50.0 g/t Au for the New Phoenix Vein (100). The results of the top-
cut process are summarized on Table 19.34 above.
Table 19.35
Summary of Block Origins and Model Extents, June 2004 Mineral
Resource Estimate, King Solomon/New Phoenix Deposit
(data from Geostat’s June 2004 Mineral Resource estimate report to Batavia)
Extent of Blocks
Model Limits Model (m) Number Size (m)
9,860 to 10,124 North 264 132 2.0
11,210 to 11,670 East 460 46 10.0
115 to 315 m RL 200 40 5.0
A percent model method was used by Geostat, which calculates the percent of a block as
belonging to a particular vein for use in volume/tonnage estimation. The narrow, thin nature of
the Mineralized Veins made this method ‘ideal as it eliminates the possibility of over-estimation
of tonnage while maintaining the same grade interpolation as that for the standard block
modelling method’ (Muller, 2004b). The solid wireframes were used to limit the blocks
available for grade interpolation.
Not all the Mineralized Veins were considered for interpolation, as the paucity of composite
data, large drill spacing and lack of geometry controls in some of the Mineralized Veins would
compromise the reliability of any attempted interpolation. Hence, Mineralized Veins 100, 200,
300, 500, 600 and 700, which all contained higher data levels and more robust controls on their
wireframe geometry, combined with higher confidence in their grade continuity, were considered
for interpolation. All other veins were reported using sectional polygonal methods.
ellipses). Table 19.36 also summarizes the search ellipse orientations. Mineralized Vein 100
(New Phoenix) was sub-divided into two interpolation domains using an easting boundary of
11,280E, to account for the change in plunge from west to east.
Table 19.36
Summary of Search Ellipse Orientations and Dimensions, June 2004 Mineral
Resource Estimate, King Solomon/New Phoenix Deposit
(data from Geostat’s June 2004 Mineral Resource estimate report to Batavia)
Dimensions (m) Orientations
Vein #
Along strike Across strike Across Vein Strike Dip Plunge
100E 40 25 5 100 -60°/010° -60°E
100W 40 25 5 090 -60°/000° -30°E
200 60 40 10 115 -65°/025° -10°E
300 50 30 6 093 -80°/003° -20°E
500 50 30 6 100 -60°/010° -20°E
600 40 25 5 060 -30°/330° -1°0E
700 60 40 10 095 -85°/005° -10°E
A second interpolation pass was conducted for all veins, with the search extents expanded in an
attempt to fill any remaining, unfilled blocks. Only those blocks unfilled were interpolated by
this second pass; the grades estimated from the first interpolation pass were left unchanged.
Table 19.37
Summary of Statistical Validation Results of Vein-Interpolated
Gold Grades, June 2004 Mineral Resource Estimate, King Solomon/New Phoenix Deposit
(data from Geostat’s June 2004 Mineral Resource estimate report to Batavia)
Number of Block Mean Grade Cut Mean
Vein # Difference
Composites Volume (m3) (g/t Au) Grade (g/t Au)
100 93 15,077 10.13 9.93 2.0
200 16 8,116 10.56 8.66 21.9
300 29 18,377 6.82 8.02 -15.0
500 14 1,082 5.47 5.14 6.4
600 29 2,165 5.94 6.14 -3.3
700 13 4,551 1.77 1.91 -7.2
It may be seen from the results summarized on Table 19.37 that a reasonable reconciliation exists
between average input composite grades and mean block grades for Mineralized Veins 100, 500,
600 and 700. Geostat found that Mineralized Vein 200 contains a large proportion of high-grade
blocks towards its south-east corner, which accounts for its high model grade compared to its
average composite grade (for example, one 22.35g/t Au composite has no other composites in
the same area to constrain its influence on grade interpolation, thus creating an edge effect of
elevated grades in this section of the Mineralized Vein). Figure 19.29 illustrates the composites
within Mineralized Vein 200, as well as their location. The low number of composites (total =
16) for this Mineralized Vein, as well as their irregular locations, also contribute to the contrast
between average composite grades and model grades.
Mineralized Vein 300 (Figure 19.30), has more composites than Mineralized Vein 200, but a
large number of them are within one high-grade drillhole intercept in the south-east corner.
Other composites near the edge of the wireframe are low-grade, the resulting edge effect
produced low block grades relative to that of the mean composite grade. The low number of
composites and their irregular locations within this lode was considered by Geostat to have an
undue influence on the interpolated grades - the adjacent blocks are relatively uninformed, with
no data present down-dip or on adjacent sections to constrain these grades. More drilling data is
needed to boost composite levels, provide a more regular data distribution and ultimately
produce model grades more consistent with average composite grades.
Figures 19.31 to 19.33 illustrate the grade/depth relationship for Mineralized Veins 100, 200 and
300. Both the input composite data and model grade data were averaged within five metre depth
increments and were then plotted together with the number of composites to assess the reliability
of the block model. The other veins were considered too small to enable representative
graphical trends with respect to depth for both composite and model grades.
9 12
Au Grade
6 8
3 4
0 0
295 285 275 265 255 245 235 225 215 205 195 185 175 165 155 145 135 125
Depth RL
Figure 19.31 - Gold Grade versus Depth Validation Plot, Mineralized Vein 100,
June 2004 Mineral Resource Estimate, King Solomon/New Phoenix Deposit
(from Geostat’s June 2004 Mineral Resource estimate report to Batavia)
No of Composites
4 20
Au Grade
3 15
`
2 10
1 5
0 0
305 295 285 275 265 255 245 235 225 215 205 195 185
Depth RL
Figure 19.32 - Gold Grade versus Depth Validation Plot, Mineralized Vein 200,
June 2004 Mineral Resource Estimate, King Solomon/New Phoenix Deposit
(from Geostat’s June 2004 Mineral Resource estimate report to Batavia)
5 10
Au Grade
4 8
3 6
2 4
1 2
0 0
250 240 230 220 210 200 190 180 170 160 150 140 130 120
Depth RL
Figure 19.33 - Gold Grade versus Depth Validation Plot, Mineralized Vein 300,
June 2004 Mineral Resource Estimate, King Solomon/New Phoenix Deposit
(from Geostat’s June 2004 Mineral Resource estimate report to Batavia)
Comparisons of the results presented as Figures 19.31 to 19.33, inclusive, reveal a reasonable
reconciliation, with model grades reproducing the broad trends of composite grades. A slight
smoothing of composite grades by the block model is evident, which Geostat attributed to the
low data levels and resulting edge-effects within each lode.
The overestimation of grades by the model for Mineralized Vein 200 is evident from 215mRL to
185mRL where the model grade trend increases and then tapers off (Figure 19.32). Only one
(high-grade) composite is present at 210mRL, which has had a large influence on interpolation
of blocks at the bottom of the vein. In contrast, Mineralized Vein 300 displays low-grade
composites at both upper levels and lower levels of its mineralized mass (Figure 19.33). This
resulted in low-grade blocks near the edges of the Mineralized Vein and an overall slight under-
estimation of the limited composite grades present.
Table 19.38
Summary of Geostat’s Undiluted, June 04, 2004 Global Mineral Resource Estimate
for the King Solomon/New Phoenix Deposit, above a 1.0 g/t Au Grade Cut-Off
(exclusive of the material highlighted in BLUE, JORC 1999 and CIMM 2000 compliant,
data from Geostat’s July 2004 Mineral Resource estimate report to Batavia)
Tonnes Au
Vein # Name (‘000) (g/t)
100 New Phoenix 18,000 11.24
200 Christmas Gift 6,000 13.95
300 King Solomon 42,000 6.81
500 - 3,000 5.47
600 - 6,000 5.95
700 - 11,000 1.77
Sub-total - 86,000 7.48
400 28,000 1.41
800 - 40,000 2.77
900 - 10,000 3.38
1000 - 11,000 5.06
1100 - 32,000 6.07
1200 - 34,000 1.98
1300 - 127,000 1.30
Sub-total - 282,000 2.36
Total - 368,000 3.41
The reader should be aware that the stated potential tonnages and potential average grades of the
excluded material (highlighted in BLUE on Table 19.38) are conceptual in nature and they
cannot be relied upon. There has been insufficient exploration to define a Mineral Resource and
it is uncertain if further exploration will result in the material being delineated as a Mineral
Resource.
Figure 19.34 summarizes the grade-tonnage relationships for the remaining Mineralized Veins
for a range of gold grade cut-offs (Geostat undertook the analysis to test the sensitivity of the
model to the cut-off grade applied). The cut-off grades are bracketed next to points representing
the tonnage and average grade applicable at these cut-off grades.
30
(20g/t)
25
(18g/t)
(16g/t)
(14g/t)
20
Au Grade
(12g/t)
(10g/t)
15
(8g/t)
(6g/t)
10 (4g/t)
(2g/t)
(0g/t)
5
0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000
Tonnage
Figure 19.34 - A Combined Grade-Tonnage Curve for Mineralized Veins 100 to 300
and 500 to 700, at Different Gold Grade Cut-Offs, June 2004 Mineral
Resource Estimate, King Solomon/New Phoenix Deposit
(from Geostat’s June 2004 Mineral Resource estimate report to Batavia)
Table 19.39
Summary of Geostat’s Undiluted, June 04, 2004 Inferred Mineral Resource Estimate
for the King Solomon/New Phoenix Deposit, above a 1.0 g/t Au Grade Cut-Off
(CIMM 2005 compliant, data from Geostat’s July 2004 Mineral Resource estimate report to Batavia)
Tonnes Au
Vein # Name (‘000) (g/t)
100 New Phoenix 18,000 11.24
200 Christmas Gift 6,000 13.95
300 King Solomon 42,000 6.81
500 - 3,000 5.47
600 - 6,000 5.95
700 - 11,000 1.77
Total - 86,000 7.48
It is emphasized that the King Solomon/New Phoenix Mineral Resource estimate is wholly in the
Inferred category, which category may be considered geologically speculative. There is no
guarantee that Inferred Mineral Resources will be upgraded to Mineral Reserve status.
No other grade cut-offs were considered by Geostat during the classification process, for the
same reasons as described for Snowden’s 2006 and 2006 Mineral Resource estimates for the
Deflector deposit: the nature of the King Solomon/New Phoenix deposit (complex, narrow to
thin veins) precludes, for all reasonable and practical purposes, selective extraction of thinner
portions of individual veins during extraction (it may reasonably be assumed that the resources
could be exploited using underground stoping methods). SGA concurs with this approach.
Table 19.40
Summary of Geostat’s Undiluted, July 20, 2004 Global Mineral Resource Estimate
for the Rock Steady Deposit, above a 1.0 g/t Au Grade Cut-Off (Primary Veins)
(CIMM 2005 compliant, data from Geostat’s July 2004 Mineral Resource estimate report to Batavia)
Category Tonnes (‘000) Au (g/t) Au (oz)
Inferred 38 3.60 5,600
19.7.1 Database
Batavia supplied Geostat with comma-delimited files comprising drillhole collar, assay and
survey data covering the Rock Steady deposit. The drillholes comprise a mixture of types,
including RC, RAB and grade control holes, with a total of 799 holes totalling 28,810 metres.
The number of drillholes comprising each drill-type is unknown.
Geostat removed from the Mineral Resource database several duplicate drillholes and a number
of grade-control holes centred on three metre spacings, because they were deemed ‘impractical
as regards to the scale of the deposit and other drill spacings’ (Muller, 2004c). Three RC
drillholes were also excluded from the database (RSRC052, RGC057 and RSGC114) because a
low level of confidence was by Geostat placed in the assay results.
The reported (by Batavia) drillhole depths vary from four to 302 metres, with an average depth
of 36 metres. Drillhole spacings are variable, with an average spacing of five metres along strike
and five metres across strike in the modelled area and drillhole spacings of up to 80 metres along
strike and 40 metres across strike occurring at the margins of the deposit. Most of the drillholes
are vertical; the orientations of the inclined holes vary between 000 degrees and 180 degrees and
the dips average minus 60 degrees.
Geostat did not validate the database because ‘this was considered to have been completed by
Batavia prior to receiving the data’ and ‘It was not within the scope of the brief to assess data
quality and integrity.’ (Muller, 2004c). SGA did not attempt to validate the database as it is not
currently (May 2007) in a format that allows for independent verification. No information was
provided to Geostat regarding different analytical procedures and all the assays were processed
as one dataset.
In their July 2004 Mineral Resource estimate report (Muller, 2004c), Geostat provide details of
their Mineral Resource estimates for each of the defined mineralized zones reflected on Figure
19.35. However, the Mineralized Laterite (Zone 100) and the minor Primary Vein (Zone 300)
have already been mined in the Rock Steady openpit. As such, their details are not presented in
the following Sub-Sections 19.6.3 to 19.6.9.
It should also be noted that specific gravity records from previous mining activities at Rock
Steady were not available to Geostat at the time of July 2004 Mineral Resource estimate.
Geostat therefore assumed an average density of 2.7 tonnes per cubic metre for the Primary
Lodes, using data for nearby deposits as a guide.
Statistics were run within the Rock Steady Mineral Resource database for all constrained uncut
and cut composite data. Table 19.41 provides a summary of the results. Only gold assay
statistics were considered because gold is the only metal of interest. No other mineralization
indicators were used as data was extracted from within the wireframes.
Table 19.41
Summary of Geostat’s Uncut and Cut Composite Gold Statistics for the Primary Veins, above a
1.0 g/t Au Grade Cut-Off, July 2004 Mineral Resource Estimate, Rock Steady Deposit
(data from Geostat’s July 2004 Mineral Resource estimate report to Batavia)
Primary Veins
Statistic/Wireframe
200 400
Number 356 56
Minimum 0.27 0.05
Maximum 23.4 11
Mean 4.04 3.12
Median 2.85 2.30
Standard Deviation 3.53 2.38
Variance 12.43 5.68
Coefficient of Variation 0.87 0.76
97.5 Percentile 12.14 9.68
Top-cut 15 10
Number Cut 6 2
Cut Mean 3.95 3.04
Cut Coefficient of Variation 0.81 0.76
Location statistics of composites reveal the highest average cut composite grade of 4.13 g/t Au.
A lognormal distribution is suggested by Primary Veins’ composites. Interpretation of the
smaller Primary Vein 400 was hampered by the low data levels. However, the overall
distribution suggests a tendency towards a lognormal distribution. In view of this, composite
data within the valid Rock Steady Mineral Resource database was assessed by Geostat for the
need to top-cut the gold assay data, prior to grade estimation.
19.7.4 Top-Cuts
Top-cutting was found to be necessary to reduce the impact of extreme values on estimation of
gold grades. The determination of a high-grade cut was made on the basis of probability plots
and ranked data values, with the general criterion for the top-cuts being a marked change, a kink,
or pronounced disintegration at the higher end of the probability distribution, or a clear break
within ranked composite data.
Top-cut values were determined individually for both of the remaining Primary Veins, with top-
cuts of 10.0 g/t Au being applied to Primary Vein 400 and a top-cut of 15.0 g/t Au being applied
to Primary Vein 200. The results of the top-cut process are summarized on Table 19.41 above.
19.7.5 Variography
Variography analysis using lognormal variograms was performed, by Geostat, on the composite
data to provide variography parameters for the Rock Steady Mineral Resource model.
Composites for the main Primary Vein were analyzed - insufficient data was available for
Primary Vein 400 to enable separate analysis so the parameters were assumed, based on the
results for the main Primary Vein.
The dataset for Primary Vein 200 was difficult to analyze, due to the presence of the anticlinal
fold and different limb orientations. As the western limb had more data than the eastern limb,
Geostat focused the variography on the western limb that displays a strike orientation of 040
degrees. A dip of minus 30 degrees towards 310 degrees was interpreted, with a plunge of
minus 30 degrees towards 030 degrees, thereby verifying the visual trend of this fold limb.
Table 19.42
Summary of Variogram Model Parameters, July 2004 Mineral
Resource Estimate, Rock Steady Deposit
(data from Geostat’s July 2004 Mineral Resource estimate report to Batavia)
Orientation Nugget Structure 1 Structure 2
Vein # Strike Dip Plunge Effect Sill 1 Range 1 (m) Sill 2 Range 2 (m)
200 040° -30°/310° 30°/030° 0.27 0.14 9 x 13 x 3 0.59 24 x 21 x 6.5
Note: the ranges are expressed as strike by down-dip by down-hole
Geostat modelled variograms with two spherical structures for Primary Vein 200 (also Table
19.42). A low nugget effect, representing 12 to 27 percent of the total variability, was found.
This suggests that the sampling methods applied to the Rock Steady deposit were reasonable and
that no significant error was introduced through drilling and sampling. However, Geostat found
that the quality of downhole variograms was compromised by the thin nature of the mineralized
horizons, as well as their relatively small sizes. The maximum ranges obtained in the
variography suggest an almost isotropic distribution in the along strike and across strike
directions, with maximum spatial continuity in these orientations of up to 24 metres. The down-
hole ranges display a continuity of up to 6.5 metres. Horizontal, normal and downhole gold
variography plots for Primary Veins 10 and 200 (six figures) are presented in Appendix C to this
Technical Report.
Table 19.43
Summary of Block Origins and Model Extents, July 2004 Mineral
Resource Estimate, Rock Steady Deposit
(data from Geostat’s July 2004 Mineral Resource Estimate report to Batavia)
Extent of Blocks
Model Limits Model (m) Number Size (m)
15,730 to 15,840 North 110 44 2.5
37,220 to 37,310 East 90 36 2.5
234 to 316 m RL 82 41 2.0
A percent model method was used by Geostat, which calculates the percent of a block as
belonging to a particular lode for use in volume/tonnage estimation. The complex shape of the
Primary Veins made this method ‘ideal as it eliminates the possibility of over-estimation of
tonnage while maintaining the same grade interpolation as that for the standard block modelling
method’ (Muller, 2004b). The solid wireframes were used to limit the blocks available for grade
interpolation.
Ordinary kriging, using parameters derived from the log variograms, was used by Geostat to
estimate gold grades. The skewed nature of the data distribution made the use of this technique
ideal, whereas other techniques (such as inverse distance interpolation) assume a normal
distribution that can lead to errors if the data is not cut appropriately. Inverse distance
techniques also do not utilize the information obtained from the variogram in interpolation of
blocks, thereby the spatial correlation between composites is not taken into account.
Geostat treated mineralized body as a separate hard boundary, restricting the gold grade
interpolation to drillhole data located within each mineralized body. A minimum of two
composites and a maximum of 20 composites were used to interpolate each block grade. A
discretization array of two (north) by two (east) by two (RL) was used to refine the kriging
weights for each model block. A search ellipse of 15 by ten by five metres was used.
A second interpolation pass was carried out, with the search extents doubled in an attempt to fill
any remaining, unfilled blocks. Only those blocks left unfilled were interpolated by this second
pass, the grades estimated from the first interpolation pass were left unchanged.
Search ellipse orientations are usually based on strike and dip directions determined from fan
contours and variograms during variography analysis of the dataset. However, since the
variography was based on combined lode datasets and set directional increments, with the
resulting interpretations not always reflecting local variations in geometry, some fine-tuning of
the search ellipse orientations was required to best fit the actual geometry of the Primary Veins.
Table 19.44 lists the strike and dip orientations employed. For purposes of interpolation and to
account for the differing orientations of the fold limbs, Primary Vein 200 was divided into two
sub-domains. An easting of 37280mE was used as a nominal boundary separating the two sub-
domains, identified as 200E and 200W on Table 19.44.
Table 19.44
Summary of Search Ellipse Orientations, July 2004 Mineral
Resource Estimate, Rock Steady Deposit
(data from Geostat’s May 2004 Mineral Resource estimate report to Batavia)
Vein # Strike Dip Plunge
200E 140° -50°/040° -25°/330°
200W 045° -40°/315° -30°/030°
400 080° -40°/350° -75°/020°
Table 19.45
Summary of Statistical Validation Results of Vein Interpolated
Gold Grades, July 2004 Mineral Resource Estimate, Rock Steady Deposit
(data from Geostat’s July 2004 Mineral Resource Estimate report to Batavia)
Number of Block Mean Grade Cut Mean
Vein # Difference
Composites Volume (m3) (g/t Au) Grade (g/t Au)
200 356 15,016 3.96 3.95 0.2%
400 56 3,989 3.14 3.04 3.4%
Figures 19.36 and 19.37 illustrate the grade/depth relationship averaged within 2.5 metres depth
increments for both input composite data and model grade data, together with the number of
composites for the Primary Veins 200 and 400, respectively. Primary Vein 200 shows an
excellent correlation between model and input composite grades by depth, with the block model
reproducing composite grade trends closely. Primary Vein 400 reveals a slight smoothing of
composite grades by the block model, which Geostat attributed to the low composite numbers
within the lode, particularly at 245mRL where only one composite is available for comparison
with block model grades.
35 5
28 4
No of Composites
Au Grade
21 3
14 2
7 1
0 0
300 297.5 295 292.5 290 287.5 285 282.5 280 277.5 275 272.5 270 267.5 265 262.5 260 257.5 255
Depth RL
Figure 19.36 - Gold Grade versus Depth Validation Plot, Primary Vein 200,
July 2004 Mineral Resource Estimate, Rock Steady Deposit
(from Geostat’s July 2004 Mineral Resource Estimate report to Batavia)
10 5
No of Composites
8 4
Au Grade
6 3
4 2
2 1
0 0
270 267.5 265 262.5 260 257.5 255 252.5 250 247.5 245 242.5 240 237.5 235
Depth RL
Figure 19.37 - Gold Grade versus Depth Validation Plot, Primary Vein 400,
July 2004 Mineral Resource Estimate, Rock Steady Deposit
(from Geostat’s July 2004 Mineral Resource Estimate report to Batavia)
Au) was estimated by Geostat to have already been mined, based on the pit geometries used to
constrain the model. If this amount is deducted, a global Mineral Resource for the Rock Steady
deposit of 38,000 tonnes at an average grade of 3.60 g/t Au remains (Table 19.46).
Table 19.46
Summary of Geostat’s Undiluted, July 20, 2004 Global Mineral Resource Estimate
for the Rock Steady Deposit, above a 1.0 g/t Au Grade Cut-Off (Primary Veins)
(JORC 1999 compliant, data from Geostat’s July 2004 Mineral Resource estimate report to Batavia)
Zone Vein # Tonnes (‘000) Au (g/t) Au (oz)
Primary Veins 200 27 3.78 4,500
400 11 3.14 1,100
Total - 38 3.60 5,600
Figure 19.38 summarizes the grade-tonnage relationships for the remaining Primary Veins for a
range of gold grade cut-offs (Geostat undertook the analysis to test the sensitivity of the model to
the cut-off grade applied). The cut-off grades are bracketed next to points representing the
tonnage and average grade applicable at these cut-off grades.
(7.0g/t)
7.5
(6.5g/t)
7
(6.0g/t)
6.5
(5.5g/t)
6 (5.0g/t)
Au Grade
(4.5g/t)
5.5
(4.0g/t)
5
(3.5g/t)
(3.0g/t)
4.5
(2.5g/t)
4 (2.0g/t)
(1.5g/t)
(0g/t)
3.5
3
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
Tonnage
Figure 19.38 - A Grade-Tonnage Curve for the Remaining Primary Vein Mineral Resources
at Different Gold Grade Cut-Offs, July 2004 Mineral Resource Estimate, Rock Steady Deposit
(from Geostat’s July 2004 Mineral Resource estimate report to Batavia)
• the application of an assumed specific gravity (Sub-Section 19.7.2) forced the Inferred
classification; however
• when access is available to specific gravity records and the application of a representative
specific gravity value is thereby enabled, it is possible that Primary Vein 200 could be re-
classified as Indicated (there is a high drilling density and good spatial continuity for Primary
Vein 200, as well as close reconciliation between composite and model grades); but
• Primary Vein 400 is likely to remain classified as Inferred due to its small size and the
limited number of composites within the mineralized body.
No other grade cut-offs were considered by Geostat during the classification process, for the
same reasons as described for Snowden’s 2006 and 2006 Mineral Resource estimates for the
Deflector deposit: the nature of the Rock Steady deposit (complex, narrow to thin veins)
precludes, for all reasonable and practical purposes, selective extraction of thinner portions of
individual veins during extraction (it may reasonably be assumed that the resources could be
exploited using opencut methods). SGA concurs with this approach. It is emphasized that the
Inferred category may be considered geologically speculative. There is no guarantee that
Inferred Mineral Resources will be upgraded to Mineral Reserve status.
• the title information presented in this Technical Report is based on a title opinion by M & M
Walter Consulting of Suite 1, 159 York Street, Subiaco, W.A., 6008, on behalf of the
Company and as part of the due diligence process ahead of signing the Definitive Agreement
earlier outlined (Sub-Section 6.1);
• following a review of current W.A. Mining Law and related matters (Sub-Sections 6.4 and
6.5), Gullewa Project, through Batavia thence to the Company once the terms of the
Definitive Agreement are met, appears to be fully compliant in terms of corporate structure,
concession maintenance, surface rights and reporting requirements;
• following a review of current Australian environmental regulations (Sub-Section 6.6),
Gullewa Project, through Batavia thence to the Company once the terms of the Definitive
Agreement are met, appears to be fully compliant in terms of permitting requirements;
• to the best of SGA’s knowledge, no exceptional taxes currently apply (May 2008) to the
Gullewa Project;
• to the best of SGA’s knowledge there currently exists (May 2008) no reported Government
restrictions or constraints on the exporting and/or sale of concentrates or metals that do not
contain radioactive material; and
• Gullewa Project is currently (May 2008) held on a care-and-maintenance basis, no
exploration activities are taking place and as such, socio-economic issues do not currently
exist as regards Gullewa Project, although the project through Batavia and thence to the
Company, once the terms of the Definitive Agreement are met, appears to be fully compliant
as regards Native Title and Aboriginal heritage issues.
It is emphasized that SGA’s findings are based on reviews of readily available data sources only.
Future changes to Australian law (mining, taxation, environmental, human resources and related
issues) and/or government or local attitudes to foreign investment cannot be, and have not been,
considered, predicted or evaluated within the scope of this Technical Report.
SGA is not qualified to assess political risk, although the reader should be aware that uncertainty
exists, to a greater or lesser extent, as regards political and economic matters in every country in
the world, going forward. The Gullewa Project is one of three material Properties the Company
will hold, once the terms of the Definitive Agreement are met, two of which properties are
located in Western Australia.
• as is normally the case for opencut mining operations, the amount of the mineral resources
that can be extracted will be affected by the impact of stripping ratios, hence the pit slope
angles and configurations, and the grade of the Mineral Resources will be affected by in-pit
dilution (it may reasonably be anticipated that the extent of these impacts will be examined
and estimated as part of Project feasibility studies, going forward - exceptional stripping
ratios and dilution rates are not anticipated);
• as is normally the case in underground mining operations, the amount of the Mineral
Resources that can be extracted will be affected by the impact of losses to pillars and other
mining remnants, and the grade of the Mineral Resources will be affected by run-of-mine
dilution (it may reasonably be anticipated that the extent of these impacts will be examined
and estimated as part of Project feasibility studies, going forward - exceptional losses to
pillar and other remnants and exceptional dilution rates are not anticipated);
• it may reasonably be anticipated that the prevailing ground conditions, and their impact on
slope and stoping layout and support design, will be assessed as part of Project feasibility
studies, going forward; and
• the results of the metallurgical programs that have thus far been completed on Deflector
mineralized material (Section 18) show that conventional flotation methods can be used, that
encouraging metallurgical recovery rates for each of the target metals (gold, silver and
copper, which are not listed in order of economic significance) can be expected (i.e. it may
reasonably be construed that the Deflector Mineral Resources will not be materially affected
by metallurgical issues).
The availability of mining equipment and trained personnel may affect exploitation of the
Mineral Resources in the short-term, not least due to the current mineral industries boom (April
2008 and likely extending to at least 2009) that has inevitably caused protracted lead times in
equipment supply and a general shortage of qualified mining personnel.
• Type A material that was usually sent straight to the processing plant (average grade greater
than 2.0 g/t Au and less than 0.7% Cu);
• Type B material that was targeted for dilution with Rock Steady mineralized material
(average grade greater than 2.0 g/t Au and 0.7 to 1.2% Cu);
• Type C material that was being routinely stockpiled until the metallurgical problems alluded
to in Sub-Section 8.3 could be resolved (average grade greater than 2.0 g/t Au and 1.2 to
8.0% Cu); and
• DSO type material, mined immediately prior to the suspension of operations in January 2003,
that was intended for direct shipping to overseas copper smelters (probably in China -
average grade greater than 10.0 g/t Au and greater than 8.0% Cu).
Figure 20.1 - One of the Mineralized Material Dumps at Deflector West Openpit
(with Brent Bulter, President and CEO of the Company)
(taken by SGA during the April 2008 site visit)
Figure 20.2 - A General Location Plan of the Available Mineralized Material Dumps
(from an internal Batavia memorandum dated November 2006)
Batavia surveyed, sampled and assayed each of the identified the stockpiles to estimate the
amount and average grade of the available mineralized material. Table 20.1 summarizes the
results to which the following comments apply:
• the reader should be aware that the stated tonnages and average grades of the stockpiled
mineralized material are conceptual in nature and cannot be relied upon, additional work is
required before a formal Mineral Resource estimate could be compiled to CIMM 2005
standards;
• two stockpiles exist on the run-of-mine material pad (termed ROM-A and ROM-B) that
comprise mixed DSO plus Type C material and Type B material, respectively;
• crushed DSO material occurs in two piles on a pad to the north of the Camp-Plant access
road, which Batavia estimated had a combined volume of 563 cubic metres and an average
bulk density of 2.1 tonnes per cubic metre;
• a KSM memorandum confirms that 1,200 tonnes of DSO material was crushed from a grade
control input of 1,270 tonnes, belt sampling of the crushed material confirmed Batavia’s
grade estimates but silver assays were not carried out (based on consideration of typical
Deflector West transitional-type material there could be approximately 1,000 Troy ounces of
silver in the DSO stockpiles);
• the re-sort mineralized material pad at the Deflector West site contains numerous Type A and
Type B stockpiles, as well as a larger, elongated Type C stockpile, identified on Figure 20.3,
for which numbered survey stakes still exist;
• onsite observations made during SGA’s site visit confirm that the Type A and Type B
stockpiles at the Deflector re-sort pad contain approximately 40 tonnes of mineralized
material each, but the volume of the Type C stockpile at the Deflector West re-sort pad is
very difficult to assess (in which regard SGA concurs with Batavia’s stated view [per
Batavia’s internal memorandum dated November 2006] that approximately 2,250 tonnes of
mineralized material probably exist);
• the Deflector Waste Dump (Figure 20.4) appears to have been used as a re-sort pad for
marginal mineralized material, records are incomplete and it is believed that there are no
original tonnage or grade estimates for the stockpiles although assays for 12 of the 36
stockpiles were documented by Menzies/KSM (Coxhell & O’Ferrall, 2003);
• to obtain an estimate of the average grade for the Waste Dump stockpiles, Batavia sampled
and labelled the 24 stockpiles that lacked assays data and submitted the samples to Genalysis
Laboratory Services Pty Ltd. of Perth, W.A. (“Genalysis”), for analysis; and
• the overall averages for Menzies’s/KSM’s and Genalysis’ assay results for the Waste Dump
stockpiles summarized on Table 20.1.
Immediately prior to the suspension of operations in January 2003, Menzies is reported to have
mined a small, additional tonnage of high-grade copper and gold mineralization from the
Deflector West openpit, which material was intended for direct shipping to overseas copper
smelters (probably in China). It was reported (Coxhell & O’Ferrall, 2003) that approximately
1,200 tonnes of this material was transported to Gullewa Mining Centre where it was crushed
and stockpiled awaiting transport to the port at Geraldton, W.A., for shipment overseas. A
further 800 tonnes of high-grade mineralized material is also reported to have been stockpiled at
Deflector West. Formal, JORC and/or CIMM Code estimates of this mineralized material are
not available, but Menzies reported at the time that the average grade was 11.0 g/t Au and 8.9%
Cu (unverified).
Table 20.1
Summary of Batavia’s Mineralized Material Dump Tonnage and Grade Estimates
(from Batavia’s internal stockpile memorandum dated November 2006)
Average Grades Contained Metal
Stockpile Material Type Tonnes Au Ag Cu Au Ag Cu
(g/t) (g/t) (%) (oz) (oz) (t)
ROM-A Oxide + Transitional 1,290 10.6 23.7 3.8 440 983 49
ROM-B Oxide + Transitional 491 15.2 1.9 1.4 240 30 7
DSO Transitional 1,200 11.9 N/A 8.8 459 - 106
Re-Sort A+B Transitional 1,800 3.7 N/A 3.1 214 - 56
Re-Sort C Transitional 2,250 9.9 N/A 2.7 716 - 61
Waste Dump Oxide + Transitional 1,330 3.2 N/A 1.2 136 - 16
Totals - 8,361 8.21 - 3.52 2,206 - 294
openpit mining had progressed to benches below the planned portal sites. No production of
mineralized material was planned from underground until the opencut operation was complete.
The plan yielded a mine life of approximately six years from the start of the opencut operation
and up to the time the Measured and Indicated Resources were fully depleted underground. The
depleted Mineral Reserve totaled 1.35 million tonnes at an average grade of 3.88 g/t Au, 1.02%
Cu and 7.57 g/t Ag (Table 20.2).
Table 20.2
Summary of Snowden’s Production Schedule, 2006 Feasibility Study
(data from Snowden’s November 2006 feasibility report to Batavia)
Production Year Total or
Parameter 1 2 3 4 5 6 Average
Openpit
Waste BCM (‘000) 1,867 1,569 1,234 - - - 4,669
Waste tonnes (‘000) 5,414 4,549 3,578 - - - 13,541
Plant feed tonnes (‘000) 173 232 187 - - - 592
Au (g/t) 3.86 3.98 3.80 - - - 3.89
Ag (g/t) 10.51 9.83 10.87 - - - 10.36
Cu (%) 1.42 1.50 1.58 - - - 1.50
Underground
Plant feed tonnes (‘000) - - 77 233 230 213 753
Au (g/t) - - 3.01 4.07 3.98 3.88 3.88
Ag (g/t) - - 0.41 0.61 0.76 0.89 0.71
Cu (%) - - 4.49 5.11 4.80 5.97 5.20
Combined
Plant feed tonnes (‘000) 173 232 264 233 230 213 1,345
Au (g/t) 3.86 3.98 3.57 4.07 3.98 3.88 3.88
Ag (g/t) 1.42 1.50 1.07 0.61 0.76 0.89 1.02
Cu (%) 10.51 9.83 9.55 5.11 4.80 5.97 7.57
The results of all the metallurgical test programs that had been completed were reviewed by
Metplant to facilitate the definition of a suitable treatment method (Sub-Section 18.1). The
proposed (by Metplant) flowsheet included existing crushing and grinding equipment together
with upgraded secondary crushing and new gravity concentration, flotation, dewatering and plant
ancillary equipment. It was expected that the plant would separately treat oxide, transitional and
primary/fresh material. The design allowed for gold contained within the plant feed to be
recovered using both gravity and flotation methods. Silver and copper were to be recovered by
flotation only. Table 20.3 summarizes the expected average annual plant feed grades, recoveries
and concentrate grades.
Table 20.3
Summary of Expected Gullewa Plant Performance, 2006 Feasibility Study
(data from Snowden’s November 2006 feasibility report to Batavia)
Plant Feed Grade Recovery (%) Concentrate
Material Gold Copper Grade
Type Au (g/t) Cu (%) Gravity Flotation Total Flotation (Cu %)
Oxide 5.6 2.5 40 38 78 59 21.4
Transitional 5.1 2.0 51 32 82 50 16.1
Primary 6.1 1.4 65 26 91 94 22.7
The pre-production capital cost for the process plant, infrastructure (including a camp upgrade)
and underground mining equipment (both fixed and mobile equipment) was estimated at A$26.3
million and A$10.6 million, respectively. The total capital cost estimate, including underground
equipment, waste removal and underground development was estimated at A$91.9 million
(Table 20.4).
Table 20.4
Summary of Capital Cost Estimates, 2006 Feasibility Study, in Australian Dollars
(data from Snowden’s November 2006 feasibility report to Batavia)
Cost Centre Capital Estimate
(‘000 A$)
Mill and Camp Upgrade 26,323
Underground Plant and Equipment 10,621
Inventory First Fill 1,000
Openpit Waste Removal 42,704
Underground Development 11,276
Total 91,923
For purposes of its project analysis, Snowden assumed the cost of openpit waste removal and
underground development to be operating costs, at average unit costs of A$35.0 per tonne milled
(A$80 per tonne for mineralized material mined by opencut and A$77 per tonne for mineralized
material mined underground). The other operating cost estimates were:
In their report, Snowden state in Australian dollars the average metal prices they assumed in
analysis, but no Australian dollar to United States dollar exchange rate. For purposes of this
Technical Report, estimates of Snowden’s metal prices in United States dollars were made,
based on historic metal prices sourced from www.kitco.com and an average historic exchange
rate sourced from www.x-rates.com). The following details apply:
• an average gold price of A$861 per Troy ounce (US$662 at an average November 2006
exchange rate of US$1.00 = A$1.30 - the average gold price in November 2006 was
approximately US$630 per Troy ounce);
• an average silver price of A$16.90 per Troy ounce (US$13.00 at an average November 2006
exchange rate of US$1.00 = A$1.30 - the average silver price in November 2006 was
approximately US$13.00 per Troy ounce); and
• an average copper price of A$10,000 per tonne (US$3.49 per pound at an average November
2006 exchange rate of US$1.00 = A$1.30 - the average silver price in November 2006 was
approximately US$3.50 per pound).
• according to information available to SGA, current (mid-May 2008) metal price forecasts
suggest average prices for gold, silver and copper of US$900 per Troy ounce, US$16.00 per
Troy ounce and US$3.75 per pound in 2008, respectively, with gold reducing to US$850 per
Troy ounce in 2009; but
• while the Deflector project would benefit in US$ terms from the price moves since
November 2006, this benefit is offset by the change in the dollar exchange rate that at the
time of writing (mid-May, 2008) had fallen to an approximate average of US$1.00 = A$1.05.
Notwithstanding the above and in the opinion of SGA, the Deflector project could and should
realize a profit, or at least, in the opinion of SGA, Snowden’s project model in some respects
appears to be unduly pessimistic and in other respects unattainable. For example, Snowden’s
model excludes final in-pit pushouts and includes:
• higher than expected unit operating costs due to generously sized workforces that preliminary
and provisional analysis suggests could sustain a production rate of 400,000 tonnes per
annum, or even 450,000 tonnes per annum (Snowden’s model assumes a production rate of
230,000 to 260,000 tonnes per annum);
• higher than expected capital costs for processing plant, mining equipment and machinery that
in each case were costed for new, rather than for second-hand items (the latter may
reasonably be construed to be more usual for an operation such as the Deflector project);
• an over-size openpit that was optimized –
o without the addition of capital costs (the addition of capital within optimization
procedures may reasonably be construed as more usual for an operation such as the
Deflector project),
o without consideration of the possible impacts on the underground operation (underground
mining appears to have been planned as an addition to the openpit operation to thereby
extract the remaining Measured and Indicated Mineral Resources below the openpit floor,
without a cost-benefit analysis of openpit versus underground mining, which might
reasonably be construed to be more usual for operations such the Deflector project – Sub-
Section 20.2.3);
o with what may reasonably be construed as conservative pit slope angles (Sub-Section
20.2.4) that resulted in an overall stripping ratio of 22.1 for the openpit optimization
parameters assumed by Snowden (hence a capital cost for openpit waste mining of
A$42.7 million, which may reasonably be construed as excessive for an operation such as
the Deflector project where narrow and steeply dipping veins are to be extracted); and
• higher than expected opencut and underground dilution rates for both openpit and
underground mining (Sub-Sections 20.2.5 and 20.3.6).
• unnecessary capital expenditure for waste stripping (A$42.7 million) to access mineralized
material that could otherwise have been mined underground at the same unit operating cost,
but without the capital cost required of/for opencut waste stripping; and
• the minimum theoretical amount of mineralized material available to justify the capital cost
of underground mine development required to access the defined Mineral Resource (A$11.3
million).
Preliminary and provisional analysis, assuming Snowden’s unit costs, suggests that the better
option might be to limit an opencut operation to the extraction of oxide and transitional
mineralized material only, while maximizing the opportunity for underground mining. This
might achieve a better balance of capital cost expenditures and at the same time facilitate bulk
production mining by precluding the opportunity for in-pit mixing of oxide/transitional
mineralized material with primary/fresh mineralized material that otherwise might impact
recoveries in the planned flotation circuit. Depending on the derived production schedule, it
would also reduce the need for, hence cost of, surface stockpiling of mined mineralized material
prior to batch-processing.
Whatever the case, in the opinion of SGA, Snowden’s planned openpit and underground mining
operations should be revised. In this regard, the unit costs of mining would need to be more
closely defined and different underground development options would need to be considered. A
cost benefit analysis of selectively extracting minor mineralized zones and the Contact Lode
would also be required.
• Figure 20.5 is a view of the thickly developed laterite cover forming part of a Michelangelo
openpit wall, Figure 20.6 is a view of the weathered material forming the pit walls of the
Monarch openpit and Figure 20.7 is a view of the oxide material and laterite cover forming a
pit wall in the Deflector West openpit; and
• Figure 20.8 shows what may reasonably be construed, based on observations made by SGA
of the available drillcore, to be typical of the generally massive to widely jointed nature of
the fresh/unoxidized host rocks at the Deflector deposit.
Table 20.5
Summary of Snowden’s Designed Bench Geometries,
2006 Feasibility Study, Deflector Deposit
(data from Snowden’s November 2006 feasibility report to Batavia)
Bench Slope Bench Berm
Material Angles Height (m) Width (m)
Oxide footwall 50° 10° 6.0
Oxide hangingwall (above 270 mRL) 50° to 55° 10° 5.0
Oxide hangingwall (below 270 mRL) 50° 20° 6.0
Transitional 60° 20° 6.0
Fresh 75° 20° 6.0
Figure 20.5 – A View of the Thickly Developed Laterite Cover forming Part
of an Excavated Slope of the Michelangelo Openpit
(taken by SGA during the April 2007 site visit)
Given the information outlined, it seems reasonable to suggest that if industry standard, in-pit
slope control measures were used, Snowden’s bench slope angles could probably be steepened
by approximately five degrees, that the bench heights could probably be safely increased by
approximately five metres and that the berm widths could probably be reduced to a uniform five
metres. These changes would result in a reduction in the openpit stripping ratio, hence a cash
benefit to the overall project.
Whatever the case, in the opinion of SGA, Snowden’s pit slope geometries should be revised to
reflect more fully what has already been achieved in the existing Gullewa openpits. In this
regard, it should be noted that to optimize the Deflector openpit, Snowden reduced the designed,
overall pit slope angles to accommodate 10 metre to 17 metre wide service ramps developed on a
1:10 grade. Snowden’s pit optimization model also assumed a single wide berm (average 15
metres) to allow for drilling and access for underground ventilation raises. The resultant overall,
inter-ramp pit angles are summarized on Table 20.6. It is these angles that were used optimize
the openpit to thereby yield an overall average stripping ratio of 22.1 to one.
Table 20.6
Summary of Inter-Ramp Pit Angles, Designed and Optimized
Deflector Openpit, 2006 Feasibility Study
(data from Snowden’s November 2006 feasibility report to Batavia)
Recommended Angles for Pit
Rock Type Angles Optimization
Oxide footwall 35° 32°
Oxide hangingwall 40° 37°
Transitional 49° 42°
Fresh 60.5° 53°
Inter-ramp angles are defined as the angle running through the toes of each bench wall before
consideration of pit ramps. Snowden adjusted these angles to overall pit angles from the toe of
the pit wall to the crest of the pitwall for use in pit optimization studies. Figure 20.9 summarizes
the construction of pit angles for application in the computer-based models used by Snowden for
purposes of pit optimization.
Figure 20.9 – A Summary of the Construction of Pit Slope Angles for the
Software used by Snowden for Purposes of Deflector Pit Optimization
(from Snowden’s November 2006 feasibility report to Batavia)
poor in-stope drilling direction control and mucking backfill from previously mined stopes was
anticipated and assessed. SGA concurs with Snowden’s opinion that given the quality of the
host rockmass, it is reasonable to assume average in-stope dilution due to blasting damage equal
to 0.15 metres of overbreak at zero grade along stope walls.
Stope stability analysis by Snowden suggests that free spans of up to 90 metres can be achieved
in fresh/unoxidized ground (which reflects the generally good to very good ground conditions).
Despite this, Snowden recommended in their 2006 feasibility study report that, in preference to
leaving sill pillars, uncemented rockfill should be used to stabilize the rockmass so that
temporary sill pillars can be removed on a systematic basis. Snowden thereby expected
unplanned dilution from re-excavating placed rockfill from working floors in partially filled
stopes, as well as from mining stopes against waste backfilled stopes. Snowden suggest that ‘the
experience of the loader operator is a major factor, ensuring they do not dig down when filling
their bucket’ (Earl & van Olden, 2006). Snowden assessed this source of unplanned dilution to
average four percent.
Snowden also anticipated dilution from stopes being mined up against backfilled stopes, with a
0.5 metre thick skin of zero grade waste along strike being taken. Snowden estimated this source
of dilution to be negligible at around 0.4 percent. For sill pillars, Snowden assessed that nil
grade dilution at 25 percent could occur if a stope broke through an upper, rock-filled level when
sill pillars were mined. Snowden also assessed that dilution at between 20 to 25 percent would
occur if a stope broke into the previously mined openpit. Adding these dilution sources together
yields the dilution rates summarized on Table 20.7 for the West Lode and 20.8 for the Central
Lode (i.e. the two lodes scheduled for underground extraction in Snowden’s model). For the
model outlined, Snowden also estimated in-stope recovery rates of mineralized material of
between 95 and 98 percent (two exceptions apply in the planned West Lode stopes)
Table 20.7
Summary of Snowden’s Estimated In-Stope Dilution Rates,
West Lode, Deflector Underground
(data from Snowden’s November 2006 feasibility report to Batavia)
Level Northing
18,900 19,000 19,100 19,200 19,300 19,400 Average
1220 13% 11% - - - - 12%
1200 10% 8% - - - - 9%
1180 10% 11% - - - - 10%
1160 10% 14% - - 10% 12% 12%
1140 14% 19% 16% 13% 11% 15% 15%
1120 15% 17% 12% 9% 16% 14% 14%
1100 15% 16% 14% 25% 15% 13% 16%
1080 - 12% 10% 12% 14% 8% 11%
1060 - - 11% 13% 9% - 11%
1040 - - 8% 11% - - 9%
Average - - - - - - 13%
Table 20.8
Summary of Snowden’s Estimated In-Stope Dilution Rates,
Central Lode, Deflector Underground
(data from Snowden’s November 2006 feasibility report to Batavia)
Level Northing
19,000 19,100 19,200 19,300 Average
1220 16% 14% 18% 16% 16%
1200 17% 18% 18% 19% 18%
1180 19% 19% 19% 19% 19%
1160 15% 15% 15% 13% 15%
Average - - - - 17%
In the opinion of SGA, the overall dilution and recovery rates estimated by Snowden are in some
respects unduly pessimistic and in other respects unattainable. For example, assuming dilution
due to breakthrough into either the previously mined-out openpit or a previously mined-out and
rockfilled upper level denies the absolute (legal) necessity of close survey control in
underground operations. Mining law requires regular surveys and a crown pillar beneath the
openpit would have to be left and maintained to control bulk rockmass behaviour and to preclude
the inflow of surface water that might fairly rapidly accumulate in a completed openpit (although
this could be controlled by means of on-going, in-pit pumping).
The use of rockfill may also reasonably be questioned, insofar as uncemented rockfill is unlikely
to fully maintain bulk rockmass stability over very large spans. Stope stability analysis (by
Snowden) suggests that stopes with strike lengths of 90 metres could in theory be achieved
between successive pillar lines, hence stopes with strike lengths of 70 metres could be realized in
the production environment. This, combined with the general quality of the host rockmass and
the inherent strength of fresh vein material in particular means that only a few percent of the
available Mineral Resources would be lost if systematic pillars were left between efficiently
designed, managed and mined stopes. In this case:
• rockfill would not be required so unplanned, in-stope dilution could and should be limited to
blast damage in the stope walls; and
• in-stope recovery rates could and should equal or exceed 95 percent in efficiently mined
stopes.
If the option of rockfilling was employed there would inevitably been a need to routinely lift up
to half a metre of placed rockfill along each working, in-stope floor, prior to the next cycle of
rockfill to thereby create a new working floor in the recommended (by Snowden) overhand
stopes. This practical constraint is imposed by virtue of the potential for the loss of valuable
fines in the placed rockfill, the amount of which varies with the coarseness and/or degree of
compaction of the material comprising the working floor. If routine lifting was not employed,
in-stope recovery rates of mineralized material could, in some circumstances, fall below 85
percent.
Whatever the case, in the opinion of SGA, the dilution rates assumed by Snowden in their 2006
feasibility study may reasonably and justifiably be reduced through re-engineering stoping
strategies and re-assessing model assumptions - a sustainable average maximum dilution rate of
approximately ten percent could and should be realized, reducing to approximately five percent
if sill pillars were left. In this regard, it may reasonably be construed as usual, within the scope
of a feasibility study, to undertake a cost benefit analysis of options, inclusive of practical mining
considerations.
of CIMM 2005. A cost benefit analysis of processing the estimated material could then be
compiled, inclusive of excavation and transport costs to the Gullewa processing plant.
21.4 Exploration
Exploration activity across the Gullewa Project area has for the most part been constrained by
the sometimes thickly developed Tertiary sheetwash laterite and/or Quaternary alluvial cover.
Various exploration methods have been tried to overcome this constraint and each method has
met with a degree success. However, in the opinion of SGA, the Gullewa Project area remains
under-explored, not least because it is only recently that targeting has been employed as an
exploration tool, based in part on an understanding of the structural controls on vein-type gold
and gold-copper mineralization found across the Gullewa Project area.
The cover constraint does not, however, uniformly apply: early/historical underground mining
activity was centred on outcropping expressions of mineralized quartz-sulphide veins along an
east-northeast/south-southwest trending (notional) corridor, in the northern portion of the
Gullewa Project area, where, broadly speaking, little or no sheetwash laterite or alluvial cover
exists. Early exploration activity along this notional corridor did not yield any significant results,
but the results of recent aeromagnetic surveys have highlighted the possibility of sub-surface
mineralization in re-fold areas. In this regard, the structural geology of the King Solomon/New
Phoenix deposit warrants close analysis as do the results of the aeromagnetic surveys to date. A
review of the flight-line spacings of the aeromagnetic surveys is also warranted, not least as the
closest spacing that has thus far been employed was 100 metres during the 2006 survey by
Batavia (Sub-Section 12.5.3). Experience elsewhere suggests that in order to illuminate the
structural geology to the level required, flight-line spacings of 50 metres might be needed.
The preceding point is made for the reasons outlined in Sub-Section 10.3 - preliminary and
provisional analysis suggests that the structural controls on the location of gold and gold-copper,
vein-type mineralization might be more complex than have thus far been identified. Various key
structural features suggest this, including:
• different structural contexts (e.g. relative compression and relative tension features with
broadly similar but nevertheless different trends, with the relative tension trend being less
well defined and to an extent masked by the dominant relative compression trend that has
thus far been identified as an important structural control on the local development of gold
mineralization);
• different attitudes of the encountered mineralized veins (e.g. from flat-dipping at the Golden
Stream deposit to steeply dipping veins at the Deflector deposit, which two deposits have
long been associated with the same structural feature, as described in Sub-Section 10.3); and
• the hot-spot nature of the mineralization exploited at the Monarch and Rock Steady openpits
in particular (where the influencing roles of BIF coinciding with a significant structural trend
to create dilational zones, that were preferentially mineralized, might have been under-
interpreted).
The influence of the narrow, usually steeply dipping nature of the thinly developed (one to five
metre thick) mineralized veins on the potential for exploration success also requires
consideration, not least because the geophysical signatures of such mineralized bodies are most
often small. The resolution of any planned geophysical survey should, therefore, reflect this
constraint. The planned gravity survey (Sub-Section 12.7) will to an extent help to overcome
this constraint. However, in the opinion of SGA, exploration targeting is the best way forward,
based on the results of refined aeromagnetic surveys designed to illuminate the complexities of
the structural environment in the bedrocks below the sometimes thickly developed sheetwash
laterite/alluvial cover.
What is clear is the poor correlation between the gold geochemistry of the covering Tertiary
laterites and Quaternary alluvials and the presence or lack of insitu, gold vein-type
mineralization in the Archaean bedrocks. This does not, however, suggest that the large database
of laterite geochemistry results should be ignored (e.g. that compiled as a result of the extensive
RAB drilling programs carried out in the 1990s, mainly by SOG). The data first needs to be
consolidated and compiled into a user-friendly digital database, following which geochemistry
anomaly maps should be prepared, taking into account the possibility of variations with
increasing depth of cover below surface. Areas of potential interest as regards zones of
secondary gold enrichment within the Tertiary laterite cover, of the type outlined in Sub-Section
10.2 and found at both Michelangelo and King Solomon/New Phoenix deposits, might then be
identified. In this regard, reviews of the viability of excavating, transporting and processing
what amounts to low-grade gold mineralization would be of benefit.
To the extent possible, the surface of the Archaean bedrocks should also be contoured, if only to
facilitate interpretation of the sub-surface geology. In this regard, the subtle topographic highs
evident at the Golden Stream deposit and at King Solomon mine are emphasized.
22 RECOMMENDATIONS
It is with the comments and conclusions of earlier sections in mind that the following
recommendations are made. The recommendations are not listed by preference or priority:
Deflector Deposit
• targeted infill and step-out resource drilling should be carried out on West Lode in particular;
• cored samples of oxide and transitional mineralized material from the West and Central
Lodes should be secured for purposes of carrying out sealed (wax coated) immersion density
measurements to confirm the materials’ densities;
• once the drilling program or programs reach their objectives (to be defined), an updated
Mineral Resource estimate should be compiled and refreshed engineering studies of mining
and processing options should be completed; and
• a full and independent verification of the drilling and assay database for the Deflector deposit
should be completed, as part of the process leading to an updated Mineral Resource estimate;
• prior to starting any drilling program, a comprehensive QA/QC procedure for RC and
diamond drillcore sampling should be compiled, which procedures should equal or exceed
industry standards and include formal check-assay programs;
• drillhole numbers, intersection lengths and other pertinent details of the drillcore stored at the
Mining Centre should be ascertained and verified, and the trays should be tagged with
aluminium tags summarizing relevant data, as appropriate;
• existing (and verified) half-core sections of mineralized material should be cut lengthways
with a diamond saw to generate quarter-core samples for purposes of formal check-assaying
existing results;
• RC splits samples of mineralized material should be selected from the material stored at the
Mining Camp for purposes of check-assaying existing results; and
• a covered and secure drillcore and RC split sample storage facility should be built at the
Mining Centre;
• CIMM 2005 compliant estimates of the tonnes and average grades of the various stockpiles
of Deflector mineralized material should be compiled;
• the locations of the available tailings materials, inclusive of those at the sites of historical
underground workings, should be identified and the amounts and average grades of each
tailings deposit should be estimated in accordance with CIMM 2005; and
• engineering studies of the efficacy of extracting, transporting and processing the various
tailings materials should be carried out to identify which tailings, if any, are suitable for re-
processing;
• a drilling and assay database for the mineralized material remaining at the Monarch deposit
should be compiled and verified to ascertain whether it is suitable for the formal estimation,
to CIMM 2005 standards, of Mineral Resources for the deposit and if so, a formal Mineral
Resource estimate for the deposit should be compiled;
• the databases on which the current (2004) Mineral Resource estimates for the Michelangelo,
King Solomon/New Phoenix and Rock Steady Mineral Resource estimates are based should
be reviewed and independently verified, following which the Mineral Resource estimates
should be re-assessed and re-classified, as appropriate;
• the geological contexts of the identified and verified Mineral Resources at the Michelangelo,
Monarch, King Solomon/New Phoenix and Rock Steady deposits should be ascertained to
establish whether further resource development is justified (e.g. additional resource drilling);
and
• contingent on the results of the above, additional resource drilling and/or engineering studies
of mining and processing options should then be carried out, as appropriate;
• the results of the stockpile, tailings and Mineral Resource investigations outlined above
should be integrated into an overall Project strategy for processing mineralized material,
which might not, in the first place, necessarily require the construction of a flotation circuit;
• a suite of metallurgical tests reporting silver in addition to gold and copper should be carried
out to confirm silver recovery rates into concentrates from oxide, transitional and
primary/fresh mineralized material from the Deflector deposit; and
• a suite of metallurgical tests should be carried out on mixed oxide and transitional material
from the Deflector deposit, to determine the effect of such mixing on gold, copper and silver
recovery rates into concentrate;
Exploration
• the planned, A$300,000 gravity survey of the Gullewa Project area should be carried out
during the current (2008) exploration season;
• a thorough review of the exploration results to date should be carried out, inclusive of
considerations of the details of the structural environment and its influence on selective gold
and gold-copper mineralization (the importance of close understandings of the structural
context of the notional corridor between King Solomon mine and the Mugga King workings
is emphasized in this regard);
• an updated exploration targeting model or models should be compiled, based on the results of
the recommended review and inclusive of detailed considerations of the structural contexts of
each of the previously exploited deposits;
• contingent on the nature and implications of the defined exploration target model or models,
suitable exploration programs should be devised, inclusive of considerations of the sensitivity
and/or spacing between rockmass sampling points; and
• a digital database of laterite geochemistry results and gold anomaly plans should be
compiled, inclusive of considerations of possible variations in gold content with increasing
depth; and
• to the extent possible a contour plan of the surface of the Archaean bedrocks should be
compiled to aid in the overall understanding of the geological complexities of the Gullewa
Project area;
Other
• the Yalgoo tenement and its related assets should be reviewed to ascertain the future benefit
of continuing to maintain the tenement as part of Gullewa Project (as stated in Sub-Section
4.2, the Yalgoo tenement was not visited as part of SGA’s April 2008 Gullewa Project site
visit as it is not material to either the purchase or future planned development of Gullewa
Project).
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January 2005 to 31 December 2005. Unpublished Regulatory Report to the Department of
Industry and Minerals by Batavia Mining Limited. December 2005.
Standing, J. (2004) The Structural Geology of the Deflector Au-Cu Deposit, Gullewa W.A. An
unpublished consultancy report by Fluid Focus (Pty) Ltd for Batavia Mining Limited.
September 2004.
The Definitive Agreement between the Company, the Subsidiary, Batavia and South Murchison,
in respect of the purchase of Gullewa Project. April 18. 2008 and June 10, 2008.
The Mining Act 1978 (W.A.), available on either www.mpr.wa.gov.au or
www.austlii.edu.au/au/legis/wa/consol_act/ma197881/s10.html.
Various Company news releases available on www.atwventure.com and Batavia news releases
available on www.bataviamining.com.au.
Various Western Australia government documents relating to taxation and royalty matters,
available on www.dtf.wa.gov.au and www.doir.wa.gov.au.
Watkins, K.P. & Hickman, A.H. (1987) Geological Evolution and Mineralization of the
Murchison Province, Western Australia. Geological Survey of Western Australia, Bulletin 137.
APPENDIX A
Deflector Deposit
Figure A1 – West Lode, Domain 11, Slicing Validation Plots for Gold,
August 2006 Resource Estimate
(from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Figure A2 – Central Lode, Domain 20, Slicing Validation Plots for Gold,
August 2006 Resource Estimate
(from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Figure A3 – West Lode, Domain 11, Slicing Validation Plots for Silver,
August 2006 Resource Estimate
(from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Figure A4 – Central Lode, Domain 20, Slicing Validation Plots for Silver,
August 2006 Resource Estimate
(from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Figure A5 – West Lode, Domain 11, Slicing Validation Plots for Copper,
August 2006 Resource Estimate
(from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
Figure A6 – Central Lode, Domain 20, Slicing Validation Plots for Copper,
August 2006 Resource Estimate
(from Snowden’s August 2006 Mineral Resource estimate report to Batavia)
APPENDIX B
Michelangelo Deposit
APPENDIX C