highly leveraged play on aud gold price ..., page-38

In the context of resources available at Murchison it is worthwhile re-reading Keith Goode's report of August 2013 which is on the SLR web site

Pages 9 to 11 says:

Murchison Project (SLR : 100%) Treatment

At the time of our August 2013 visit, the sealed gravity circuit unit had recently been installed and
commissioned at the Murchison Plant. The ~1.2mtpa plant as shown in Figure 17 a consists of a 2-stage crushing circuit and one ball mill and was achieving a rate of ~1.3mtpa at a unit cost of ~75% of the Randalls plant. The ex -
Tarmoola crushing circuit is impressive with dust suppression, automatic metal and disposal detectors etc
The plant's unit costs were expected to fall by ~10% to ~$20/t at the end of September 2013 with the new LNG power turbines(about twice the size of the existing diesel turbines), and hence estimated to reduce the plant's powe
r costs by ~20%. The capex for the new LNG power plant wa
s regarded as relatively negligible, as the cost to SLR is delivery of the LNG to site to the mega - sized LNG tanks (shown in Figure 17b)and then payment for the power generated (plus a form of capex recoupment charge: the
power station being the property of the provider).
SLR's Murchison plant has a few additional innovations such as a small de-sal(ination) plant.
The intention was to use the desal plant to reduce the salinity of the borehole water for the plant's use (as
higher quality / less saline water results in higher recoveries), however, the rainwater from the existing pits
is being used first as it has extremely low salinity water, and the water from the desal plant is being used as waste water in the camp.
The plant has also been designed to allow the addition of a separate circuit should SLR's nearby copper - gold project at Hollandaire in the Eelya Complex receive approval.
In August 2013, the plant was treating a blend of ~ 50% from
~3g/t to 4 g/t open - cuts(such as Venus, Eclipse, Pinnacles and Comet North, having completed Genesis, and then expected to possibly start on Lena as shown in Figure 18a) and ~50% from some low (~0.7/0.8g/t to 1g/t) grade stockpiles resulting in an overall treatment grade of 1.6g/t to 1.7g/t & the production target with a ~92% recovery of ~60,000oz to 70,000oz in FY14
.
The low grade stockpiles are small according to the resource inventory shown in Table 2 , although there may still be some in the Lena vicinity as shown in Figure 24

Underground Operations

SLR's original intention was to produce ~100,000ozpa at the Murchison based on a number of underground and open - cut prospects. Two declines (a main and a vent) were sunk into what appeared to be hard rock in the Caustons pit, and despite cover drilling for the line of the decline:
weaker ground, some water inflow, but no stress, was encountered that required meshing and shotcrete which although do-able, slowed progress and with the fall in the gold price, resulted in SLR postponing underground
development there for 12 months. With the vent decline appearing to be in harder ground, it could become
the main decline when development restarts in Caustons (& the main decline becomes the vent decline)
The original concept was to go underground at Comet, partly because Comet has a number of double digit grades at depth compared to Causton's initial expected ~ 10g/t target shown
blocked in red (7.5g/t to 15g/t) in Figure 18b, however,the
Comet pit needed dewatering first (expected to be completed by October 2013), so Caustons became the first underground prospect.
It should be noted that the number of low grade blocks under Caustons South potentially appears to mostly
be due to sparse drilling.
However, a significant change has occurred at Comet North
in that the grade of the southern end of the pit
was realising ~4g/t instead of the ~2.5g/t expected, basically because although there are two lodes present,
they are shown as joining in the model, whereas instead they appear to be separate as shown in Figures 19a and 19b. This suggests a possible re-interpretation of Comet North to Comet in Figure 20a,with the perceived secondary lode
being the main Comet lode(and it appears to extend inside
the western wall of Comet North).
There does appear to be a secondary lode extending across and along the eastern hanging wall of Comet, and it is represented in some model sections but was regarded as
erratic (although that may have partly been a function of the grade mineralisation plunging northwards).
Unfortunately as shown in Figure 20b, the Comet pit has been partly backfilled so any potential visual
evidence on the NE wall has been covered. If there was some mineralisation, it may also have been overlooked as it would have conflicted with the access ramp. Apparently some drilling was historically undertaken through the waste dump (there were rumours that the waste dump cover
ed old workings), but with apparently little success.
However, add in Pinnacles and it appears that the conjunction possibilities between Comet and Pinnacles have not be en completely exploited as shown in Figure 21a
The northwards plunging grade distribution is more clearly
shown in Comet North in Figure 21b, along with some of the grade intersections. Hence with some recovery in the gold price, declining into Comet after the pit has been pumped out (expected by October 2013) could occur. If it did, then a portal could be cut with development to the Comet orebody occurring possibly by early 2014, and establishment of stopes by the end of June 2014, ready for underground production from SQ 2014.
The original underground plan focused on the southern end of the Comet pit, based on the historic model shown inset in Fig 21a. In drill core, Comet appears to be in good/hard siliceous ground with mineralisation associated with sulphides.

Open-cut Operations

Aside from low grade stockpiles, the current open-cut ore has mostly been coming from the Comet area shown in Figure 18a (being : Comet South [now in a goodbye cut], Pinnacles [final cuts], and Comet North[expected to last to MQ 2014]). Eclipse was also viewed as being near its end, while Venus was being stripped for production, plus a pit called Mercury under consideration, north of Venus.
Although TMC /Katies has been prepared for production, it was thought that Lena would probably be mined next.
TMC(or the Tuckabianna Mining Centre) pit has always
appeared to be anomalous because its bund wall as shown in Figures 18a and 22a,is so far away from the edge of its pit (that contains a few goodbye cuts/trenches), as usually bund walls are fairly close to the edge of a pit.as shown
inset in Figure 22a, the Katies area has been cleared ready for mining, and exploration has taken place south of TMC towards Tucka West, verifying the multiple stacked lode system shown in Figure 22b.
A number of the lodes are expected to be extended from Tucka West and Tucka North but there are gaps in the current model as shown in the plan view of Figure 22b.
The BIF (banded iron formation) mineralisation at Tuckabianna is completely different to that at Randalls,
with the gold grades often on contacts between BIFs, or BIFs and shales or associated with quartz, or apparently in almost anything in the region, as in it does not appear to be confined to a specific unit.
TMC(or the Tuckabianna Mining Centre) pit has always appear
ed to be anomalous because its bund wall as shown in Figures 18a and 22a, is so far away from the edge of its pit (that contains a few goodbye cuts/trenches), as usually bund walls are fairly close to the edge of a pit.
As shown inset in Figure 22a, the Katies area has been cleared ready for mining, and exploration has taken place south of TMC towards Tucka West, verifying the multiple stacked lode system shown in Figure 22b.
A number of the lodes are expected to be extended from Tucka West and Tucka North but there are gaps in the current model as shown in the plan view of Figure 22b.
The BIF (banded iron formation) mineralisation at Tuckabianna is completely different to that at Randalls,
with the gold grades often on contacts between BIFs, or BIFs and shales or associated with quartz, or
apparently in almost anything in the region, as in it does
not appear to be confined to a specific unit.

Lena

Apart from greater delineation as shown in Figure 2
3a, Lena located in the Moyagee field ~45km south of
Tuckabianna, covers a number of old worked areas, with a few spoil heaps. We did not visit the area this
time(August 2013), but were informed that it is apparently little changed from when we last saw the area in 2010
as shown in Figures 23b and 24, and at that time, it
inferred that there are parallel possibilities.

Hollandaire

We re-visited Hollandaire in the Eelya complex in August 2013,~13km north of the Tuckabianna plant. A PFS was completed and reported in the JQ2013 Quarterly report which
concluded that an operating profit (post ~$35m capex) of ~$6m could be realised based on mining the open-cut gold and copper zones shown inset in Figure 25a over a two-
year period. As shown in the 3d schematic, the Hollandaire
mineralisation consists of a main gold and copper (chalcocite, chalcopyrite) zone and a disseminated secondary zone further west. As shown in Figure 25a, there appeared to be negligible signs of mineralisation
on surface and the discovery was made using geophys EM plates