SEPTEMBER 2015 QUARTERLY REPORT 29 OCTOBER 2015 NAGAMBIE MINING
HIGHLIGHTS The Company is preparing the surroundings of the water-filled West and East Pits at the Nagambie Mine to enable the pits to accept PASS from Melbourne excavations. Sulphidic material from excavations is known as PASS because of the potential for the sulphides to oxidise into acids and sulphates if the material is stored above ground. The best environmental solution for PASS is to store it under water to prevent the formation of acids and sulphates. PASS storage is a very exciting development for the Company and could be operational at the Nagambie Mine by early CY 2016 subject to approval by the Victorian Department of Economic Development, Jobs, Transport and Resources and the subsequent award of contracts. The potential scale of the PASS Project is: Total Capacity to Store PASS Under Water: 6.2 Million Tonnes Potential Life of PASS Project: 6.2 Years Potential Average Storage per Year: 1.0 Million Tonnes Comparative Market Storage Charge per Tonne: Around $140 NAG Storage Charge per Tonne: Commercially Less than $140 Nagambie Mining has commenced excavating three costeans at Apollo-Gladys in the Clonbinane Goldfield, 1.5 metres deep and totalling approximately 380 metres in length, to better define the surface gold mineralisation ahead of a mining licence application. A section of the existing heap leach pad at the Nagambie Mine has been selected to treat Clonbinane gold ore. This new heap leach section would also be used to treat Wandean gold ore and possibly gold ore from Doctors Gully (Rushworth) and Redcastle. A separate section of the existing heap leach pad has been selected to be the first residual hard inert landfill site at the Nagambie Mine. Nagambie Mining receives royalties on sales of gravel and aggregate that are produced by a contractor from the historic overburden dumps and heap leach pad respectively as part of mine rehabilitation. After extensive testing and small scale trials, the contractor is now producing excellent washed and screened aggregate products from the heap leach material. The contractor is now installing large scale equipment to satisfy the indicated demand from buyers, particularly Melbourne concrete suppliers. Royalties to Nagambie Mining in CY 2016 could be in the range of $300,000 to $500,000.COMMENTARYThe Company Chairman, Mike Trumbull said: “Nagambie Mining is planning to be far more than just a gold mining company. We intend to take full advantage of the resource opportunities arising from owning a large degraded mine site which is now connected by 120 km of the Goulburn Valley and Hume Freeways to Melbourne.“As a result, Nagambie Mining shareholders are being asked to approve a change of name to Nagambie Resources at this year’s AGM.” Page 1PASS PROJECT (100% Nagambie Mining Group)NAGAMBIE MINING LIMITEDSeptember 2015 Quarterly Report – 29 October 2015 The surroundings of the water-filled West and East Pits at the Nagambie Mine are currently being prepared to enable the pits to accept PASS from Melbourne excavations. The work involves the upgrading of haul roads from the 1990s-era mine site and the preparation of truck tipping areas with safety fencing and gating.PASS storage is a very exciting development for the Company and could be operational at the Nagambie Mine by early CY 2016 subject to approval by the Victorian Department of Economic Development, Jobs, Transport and Resources and the subsequent award of contracts.BackgroundThe sulphidic material is known as PASS because of the potential for the sulphides to break down into acids and sulphates once stored above ground. By far the best environmental storage solution for PASS is to put it under water to prevent the formation of acids and sulphates.The open pits could accept a total of around 6.2 million tonnes of PASS under water, with water depths in the West Pit and the East Pit being up to 40 metres and 50 metres respectively. Underwater topography for the two pits is indicated in Figure 1. A view of the East Pit is shown in Photo 1.Figure 1 Underwater Topography for the West and East PitsThe PASS would be dozed into the pits from the prepared truck tipping areas. Trucks would not be allowed to tip directly into the pits for safety reasons.A floating dredge would be used to pump the PASS from the sides of the pits to enable an even distribution of the PASS across the pits under water.The water in the pits is naturally alkaline with regular pH readings over the last eight years varying between 7.4 (7.0 is neutral) and 9.2. The range is thought to result from variations in rainfall. pH measurements would be regularly taken during PASS storage and agricultural lime would be added to the water if required to ensure the water remained alkaline.The water in the pits is also saline and neither potable (drinkable) or usable for farming purposes. Salt content in the pits, as measured by electrical conductivity (EC), over the last eight years has varied between 9,500 ECs and 19,000 ECs. Greater than 2,000 ECs is usually unsuitable for irrigation while good drinking water is less than 800 ECs.Nagambie Mining has investigated whether there are any alternative large under-water sites that could accept PASS and has concluded that none exist. PASS can be stored above ground in Melbourne landfill sites but that alternative is a poor environmental outcome for Victoria and a very expensive solution, typically costing at least $150 per tonne (including PASS mitigation costs of lime addition etc) plus the cost of trucking. The additional trucking cost to the Nagambie Mine of around $10 per tonne is quite small in comparison to the cost of landfill storage. Page 2NAGAMBIE MINING LIMITEDSeptember 2015 Quarterly Report – 29 October 2015Construction of numerous, large high-rise buildings in the Melbourne CBD and at Fishermans Bend, immediately south west of the CBD, are planned to commence in CY 2016. The large excavations required for solid foundations and underground car parking levels can result in large quantities of PASS that must be managed according to EPA policy. Nagambie Mining is aware that test drilling at a proposed building site at Fishermans Bend confirmed, as predicted, a thick layer of Coode Island Silt (PASS material) under one to two metres of introduced surface fill (bricks etc).Potential PASS in the excavations of all currently approved high-rise buildings in the CBD and Fishermans Bend would amount to millions of tonnes. In the medium term, the Victorian Government has to date committed $4.5 billion to the Melbourne Metro Rail Project, with construction planned to commence in CY 2018. This involves the excavation of five new underground rail stations and two nine-kilometre rail tunnels from South Kensington to South Yarra. Geotechnical drilling for the route is currently being carried out and is expected to indicate that millions of tonnes of PASS will need to be trucked away and stored.Potential RevenueThe potential revenue from the storage of PASS is very large for a small ASX-listed company such as Nagambie Mining.Storage of PASS under water in the Nagambie Mine open pits will always be a better environmental outcome than storing the material above ground in Melbourne landfill sites, which would require significant mitigation against the formation of acids and sulphates. To be the preferred solution in terms of direct cost, the Company will need to bid a storage charge that is less than around $140 per tonne, being the Melbourne landfill cost of at least $150 per tonne (including PASS mitigation costs) less the additional trucking cost to Nagambie of around $10 per tonne.Nagambie Mining considers that, if it bid commercially less than $140 per tonne to store PASS under water, it has the capacity to accept an average of around 1.0 million tonnes per year over a 6.2 year life.The potential scale of the PASS Project is illustrated below: Total Capacity to Store PASS Under Water: 6.2 Million Tonnes Potential Life of PASS Project: 6.2 Years Potential Average Storage per Year: 1.0 Million Tonnes Comparative Market Storage Charge per Tonne: Around $140 NAG Storage Charge per Tonne: Commercially Less than $140
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