a general update

Hi folks,

I thought it may be useful to provide a general update on MGO to assist digesting news of the past few weeks.

Four rigs on site have been (and still are) undertaking infill drilling, designed to move inferred resources to the indicated category.

One rig has been assigned to the deep drilling campaign, which is continuing to deliver high grade returns at depth.

The drilling is providing results that assist in understanding of the geological model controlling mineralisation at Yandera.

An updated resource will be delivered close to the end December this year.

It is important to manage expectations at this point. We don't want another CDU situation here, where hype exceeds reality.


A few other interesting pieces of news have probably been under - reported.

The first being an element of the MOU with NFC. The DFS is being modified to incorporate material cost savings in the development phase. NFC has the capacity to offer MGO these savings in return for offtake arrangements.


This was validated by MGO Friday:

".... In addition, the MOU contemplates NFC placing a substantial amount of the project copper and molybdenum concentrate off-take with a variety of customers, including NFC itself and investing in either Marengo or the Yandera Project or both, on terms to be agreed.

Under the proposed construction agreement, NFC will be permitted, to the extent reasonably practicable, to maximise the use and procurement of engineering services, mechanical equipment, fabricated steel, and other construction materials, and mining equipment required for the Yandera Project in China.

NFC, which is based in Beijing and listed on the Shenzen Stock Exchange, is currently capitalised at US$3.2 billion. NFC undertakes international contracts for non-ferrous metal projects and exports related engineering technologies, equipment, and labour services. In addition, NFC has either built or is currently building major copper and other base metal projects in Iran, Zambia, Myanmar, Mongolia and Kazakhstan."


The second, yet very significant matter that has not been widely reported, is that Madang has been granted Special Economic Zone status. Initially, a Pacific Marine Industrial Zone (SMIZ), a US$300 million project, will be established. The first US$79 million is being funded by a Chinese company.

This augers well for Ramu Nickel, which has been leading representations supporting DST (tailings disposal) in the lead up to production. Marengo will, in all probability, be utilising DST for Yandera.


The third matter not attracting a lot of comment, is the regional exploration Marengo has been undertaking and planning.

Results are expected within the next six weeks for initial sampling. This ground has never been properly evaluated, however alluvial Au mining has been noted.

Regional exploration during the quarter focussed on reconnaissance mapping and stream sediment sampling in EL1665 Koinambe (Figure 4). A team investigated principal drainages to the north of Koinambe Station: Miyang, Nondong, Riyamb and Pind Creeks and noted a considerable amount of alluvial mining activity in the area. A total of 115 stream sediment samples and 4 pan concentrates were collected over a period of one month.

Assay results from this work are expected before the end of 2010. Follow-up work will be scheduled for the onset of the dry season in 2011.


Have a good weekend all.