Eureka bulk sampling underway Michael VaughanThursday, July 06,...

Eureka bulk sampling underway

Michael Vaughan
Thursday, July 06, 2006

GOLDSTAR Resources is edging closer to the commercial development of the historic Walhalla goldfield in Victoria, with mining for the $5.2 million bulk sampling program at the Eureka dyke bulge set to get underway later in the current quarter following a successful scoping study.



A map of Goldstar Resources' Walhalla project in Victoria.

Civil works for the bulk sampling program started in May. Mining is set to get underway later in the current quarter and will continue until November, with final results from the program expected by the end of 2006.

Subject to a successful outcome, Goldstar intends to move to a full feasibility study at Eureka.

The start of the bulk sampling program is a major milestone for the company because it will give a strong indication of the gold grade of the Eureka dyke bulge, which could form the basis of a traditional JORC-compliant resource estimate.

Goldstar has found it difficult to put a grade on a resource estimate due to the nuggety, narrow-veined nature of mineralisation at the Walhalla field.

So far, the company has put an exploration target of 3.5 million ounces on the areas it has explored in the Walhalla field, though recent geophysical work has indicated the company may have underestimated the scope of gold mineralisation in the field.

The Eureka dyke bulge has not had an exploration target calculated, though Goldstar has estimated the eight mineralised reefs at the prospect have a tonnage of 430,000 tonnes.

The bulk sampling program will also assess a number of mining methods and determine the most suitable for Eureka with an eye to future development. Metallurgical and process parameters for a future plant at Walhalla will also be established.

The scoping study indicated the program would cost $5.2 million, which includes a 15% contingency. Significantly, about 80% of the expenditure is on development and infrastructure components that could support future commercial mining at Eureka, according to Goldstar.

In order to accommodate the hilly, heavily vegetated terrain at Walhalla in Victoria's Gippsland region, the company is using an innovative skipway haulage system to transport ore from the Eureka down the hill to a lower-lying, flat area.

From here, the ore will be trucked to the nearby Matthews Quarry for crushing and sampling.

The Eureka Skipway will be installed with a haulage capacity of 400,000t per annum in order to cater for early stages of production. Goldstar says it is fully transportable and will likely play an important role in future development.

The contract for construction of the skipway and the mining contract have been awarded to undisclosed local contracting groups based in the Gippsland area where Walhalla is located.

Shares in Goldstar closed up 2.5c (7.5%) at 36c. The company is capitalised at $35.6 million.