Ramelius hoping to crack 1Moz ‘bank vault’ at Wattle Dam Monday,...

Ramelius hoping to crack 1Moz ‘bank vault’ at Wattle Dam

Monday, 16 June 2008 - MINING NEWS -

RAMELIUS Resources is pursuing a 1 million ounce grading over 20 grams per tonne gold at its low-cost Wattle Dam gold mine near Kalgoorlie. By Mark Mentiplay

Continuing recent bonanza gold grades have given the green light to the restart of mining at the opencut operation in the Spargoville gold and nickel belt, 25km west of Kambalda in Western Australia’s Eastern Goldfields.

A low-cost pit cutback, decline and maiden underground operation are expected to yield an initial 67,000oz-plus during 2008-09.

High-grade drilling results over the past few months, from different diamond holes, have included 1m at 1114 grams per tonne from 88m, 1m at 902gpt from 208m and 2m at 561gpt from 88m.

“These and other intercepts, continue an extremely exciting picture of a high-grade resource which is continuing up and down plunge, and at depth. It’s like drilling into a bank vault,” Ramelius’ managing director Joe Houldsworth told MiningNews.net.

The situation is further enhanced by the fact that a number of these drilling results are outside the current resource and not incorporated within the existing Wattle Dam mine plan, to be reviewed once all results are received from the continuing reverse circulation (RC) and diamond drilling programs.

“As high-grade intersections continue to emerge, we expect the underground mine plan to evolve and change as ongoing drilling continues to delineate the plunging extension of the mine’s high-grade gold zones,” Houldsworth said.

The cutback, now underway, decline and underground developments are expected to produce over 67,000oz in the 2008-2009 at an estimated cost of $A360oz.

The JORC resource stands at a conservative indicated and inferred 540,000t at 4.8gpt containing 83,200oz. But Houldsworth expects much more.

That resource is based on cut grades between 16.5-17gpt and jumps to 271,000oz using uncut grades ranging from 46gpt to 112gpt.

Drilling was expected to continue at least until year-end, after which there would be a complete resource review, which would probably necessitate a new mine plan, Houldsworth said.

However, he points out that even at current resource levels, Wattle Dam would still be an extremely profitable operation even with the gold price at half its current $A1000oz levels.

The cutback is expected to continue into the December 2008 quarter, with the decline to begin by December, followed by underground production early in the New Year.

The Wattle Dam pit is at about 53m and will go down to 75m, with the current high-grade zone beginning at 90m down to 200m.

Capital costs stand at $A15 million, with operating costs of $9 million. Ramelius has no debt, about $A19 million in the bank, and no hedging, but has some minor put options in place.

Another ace for Ramelius is its 200,000 tonnes a year carbon-in-leach Burbanks treatment plant, about 60km north of Wattle Dam. The company bought the plant last year and refurbished it for a total cost of $A4.5 million.

Ramelius holds about 300 square kilometres around Wattle Dam, which is already returning excellent drilling results and expected to add significantly to the company’s resource base.

But it is the extensions to the existing Wattle Dam resource that excites Houldsworth and underpins the company’s 1Moz strategy.

Results released last week included 1m at 225gpt from 211m at the lower limit of the northern end of the current resource. Another, nearby, yielded 2m at 9.7gpt.

These and other results support potential for the Wattle Dam resource to extend down dip and along strike to the south.

Intercepts of 3m at 23.2gpt from 199m and 2m at 452gpt from 208m also support the potential for the high-grade zone to continue down plunge to the north.