"Review of operations AGD Mining focused its effort in the half year to 31 December 2005, on developing the Augusta gold and antimony project near Costerfield in Central Victoria.
Planning approvals were received from the City of Greater Bendigo for the Company to go ahead with the project and all necessary work permits were obtained from the Department of Primary Industry (“DPI”). Financing and asset acquisition agreements were entered into with AGD Mining’s parent company, Cambrian Mining Plc, and, with this support, directors authorised mine development and plant construction to go ahead.
A project team was appointed to finalise planning and to oversee the construction and commissioning of the project.
Contracts were let and work commenced on the plant refurbishment and construction, on mine development and on the infrastructure required to support the mining and treatment operation. A total of $3.75 million was spent on the project during the half year with about $1.8 million spent on construction activity and about $1.4 million spent on compensation agreements and environmental bonds to guarantee performance to government bodies and landowners.
Negotiations for the sale of antimony concentrate production were nearing finalisation at the close of the half year and prices for both antimony and gold continued to exceed prices utilised in the Company’s feasibility studies. Additional funding amounting to $8.05 million was arranged. Of this amount, $6.55 million was received after the close of the half year. The project remained on track to commence production in the second quarter of 2006.
Ore Reserves A number of mining options were evaluated and the decision was made to access the ore body by a limited open cut on E Lode while establishing the mine portal on C Lode. This means only a small amount of the ore will be recovered by open cut. The remainder will be accessed by the decline in the footwall of the orebody and utilising an uphole bench retreat mining method.
Based on this plan, probable mining reserves amounted to 204,000 tonnes grading 10.9g/t gold and 5.7% antimony, sufficient for a mine life of three years based on the proposed mining and treatment rate of 65,000 to 70,000 tonnes annually.
The Augusta deposit remains open at depth and the northern and southern limits have yet to be determined. In addition, a number of high grade intersections have been made in parallel structures that have yet to be fully tested.
Mine and plant construction An earthmoving contract was let in December for the open cut and preliminary mine portal excavations and was well advanced by January. A plant design and construction contract valued at $3.1 million was let to Bendigo-based, Timora Pty Ltd in November for the modification and refurbishment of the processing plant. All major plant items were sourced and acquired during the half year. Where necessary, Timora refurbished the plant along with major items in the existing plant. The main modification to the existing plant was the addition of flotation equipment which was acquired and refurbished during the half year with installation scheduled to commence in January. Most of the plant earthworks were completed by the end of December.
Contracts were let for major infrastructure items. Ground water studies were completed, a fresh water storage dam was prepared, work commenced on the evaporation pond and preparations were made to commence creek diversion work in January.
Personnel, health, safety and environment A team with broad experience in mine management, geology, mining and processing was appointed to manage development of the project, its commissioning stage and to continue as the key personnel in the production phase. The team worked well and were largely responsible for keeping the project to the tight schedules and low-cost approach set down for the project.
Health, safety and environmental codes were drawn up to govern present and future operations. The health and safety practices were audited and approved by the DPI while environmental monitoring continued and expanded to include the new environmental plan."
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