HEG’s gold projects have over 570,000 ounces of contained gold located near Hill End and Hargraves in central New South Wales and the open pit gold projects at Hargraves and Red Hill have up to 140,000 recoverable ounces.
• The Hargraves project (100% owned) has a PreFeasibility Study completed in 2014 for a 100,000oz open pit and low impact processing project*.
• The Red Hill project (minimum 85%) is in preparation for a Pre-feasibility Study on an open pit project with an onsite processing plant or as a source of ore for an offsite plant.
• The Reward Gold Mine (minimum 85%) requires drilling of the near-surface Frenchmans - Stevens wide zone and modification of the mining permits.
HARGRAVES GOLD PROJECT The Hargraves Gold Project is located on the wholly-owned EL 6996 and a pre-development study based on pit optimisation studies, metallurgical test work and project design estimates has indicated that an initial project of two open pits producing 1.2Mt of ore at 2.9g/t would generate ~25,000 ounces per year over four years at a cash cost of <$900/ounce.* The project could be developed at a low capital cost of approximately $15M and produce a net profit of $40M after full cost recovery and payment of royalties at a gold price of $1,600/ounce. A simple low impact processing plant recovers ~95% of the gold at a relatively coarse grind size of P800.5mm. The proposed process is similar to the process used at the earlier Hill End project and capital cost savings would be realised using existing equipment.* The Study is to be updated to include a more detailed pit design and recent estimates of operating and capital costs.
Hargraves Gold Project development proposal results*:
• Initial production of ~100,000 ounces over four years at <$900/oz cash cost
• Production rate 300,000 tonnes per year at 2.5g/t from two initial open pits
• 11:1 waste to ore stripping ratio at a pit design gold price of $1,450/oz
• Gold recovery of ~95%
• Pre-development cost of $2m and project capital of A$13m
• Net profit of ~$40m after full cost recovery / royalty payments at $1,600/oz
• Potential for Hargraves development extensions at same production rate
* These project results were first announced 30.4.2013 and in a PFS report completed June 2014. We are not aware of any new information or data that materially affects the information included in the relevant market announcement and all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.
RED HILL GOLD PROJECT
The Red Hill deposit is located three kilometres north of Hill End on EL 5868 (minimum 85%). Preliminary studies suggest that Red Hill Gold Project development may be viable as a stand-alone project or could add significant value to any future development of the Hargraves Gold Project. Red Hill project design includes an open pit, gravity processing plant and infrastructure located at Red Hill, or for the Red Hill ore to be trucked to a planned processing plant near Hargraves approximately 30km to the north. Either development scenario for Red Hill includes approximately 30% Indicated Resources and more detailed studies are required prior to a development decision. Pit optimisation studies have provided encouragement that up to 40,000 ounces may be recoverable based on the relatively shallow drilling to date (approximately 150m below surface). Deeper drilling indicates that the mineralisation may extend at depth and along strike beyond the current pit designs, which cover about one kilometre of outcropping mineralisation. Metallurgical test work on oxide, transition and primary material from Red Hill has confirmed that a high gravity recovery of gold is achievable with simple processing at a coarse grind, which is similar processing performance to other Hill End and Hargraves deposits. A Preliminary Feasibility Study for Red Hill is to be completed over the coming period
31/12/17 Quarterly Report An economic feasibility study on the development of Red Hill has commenced with the completion of an initial pit optimisation study. The results of this work have confirmed the expectation of a positive economic outcome through the development of open pits along a strike length of 800m. The initial scope for the Red Hill Gold Project is to establish a 300,000 tonne per year mine and processing facility at Red Hill and produce approximately 20,000 ounces per year from shallow open pits at an operating cost of ~$900/ounce. The initial pit designs contain approximately 30% Indicated Resource based on the recent JORC 2012 estimate for Red Hill totalling 80,000 ounces as detailed in the ASX release dated 30 November 2015. Metallurgical test work on samples from Red Hill indicated high gold recovery using gravity processing.
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REWARD GOLD MINE
The Reward Gold Mine is located on the Hill End Mining Leases (minimum 85%) and between May 2008 and June 2010 a trial mining program completed 5,650 metres of underground development from the Amalgamated level, a 250m shaft was bored and equipped, 7,446 metres of underground diamond drilling completed and 35,446 tonnes of ore were mined and processed with a head grade of 11 g/t gold. The mine is part of the rich Hill End Hawkins Hill deposit which was partially mined during the 19th and early 20th century with high grade gold production from numerous small scale shafts. It is proposed to drill the upper portion of the Hawkins Hill – Reward deposit to delineate an economic resource for the Frenchmans - Stevens zone, which was encountered in the upper levels of the recent development during the trial mining program. The project development may include a short decline with a portal adjacent to the Patriarch shaft and three initial levels at 24m spacing. Existing drilling and development intersections indicate the Frenchmans - Stevens zone is 3 - 8 metres wide. The existing Amalgamated plant has a capacity of 35,000 tonnes per year and during the trial mining exercise an average gold recovery of 90.4% was achieved at a coarse grind of ~0.5mm. This plant can have its facilities upgraded to increase its capacity to over 100,000 tonnes per year. Its location and capacity for a bulk mining project based on the Reward Gold Mine would be determined following additional studies.
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