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Copper Hill
Copper Hill Geological Resource Estimate
618,000 tonnes of copper and 1.6 million ounces of gold
The flagship 100%-owned Copper Hill project is near Molong in central New South Wales, about four hours drive from Sydney via Orange.
Copper Hill is a typical low-grade porphyry copper-gold deposit and is extractable by open pit mining. It has excellent infrastructure and its development is supported by the Molong community in the Central West of New South Wales (Figure 2). It remains the Company’s most advanced project, with currently defined total geological resources of 197 million tonnes at 0.31 percent copper and 0.26 grams per tonne gold.
Efforts to maximise the returns from Copper Hill with high throughputs and a comprehensive copper-gold-sulphur recovery process could not clear the capital cost hurdles and a more achievable 2 million tonnes per annum (Mtpa) mining and milling strategy is now being studied.
Figure 2: Copper Hill Project and Cargo Prospect – Regional Location
Resource and Economics
The Copper Hill Resource, at a range of copper cut-off grades, is summarised in the following table. The preferred 0.2% copper cut-off grade is highlighted.
Table 1: Copper Hill JORC-Compliant Resources, 0.1% to 0.5% copper cut-off grades, June 2011
Mining Plans
From the resources above, pit optimisation studies demonstrate that just over 100 million tonnes will be available for mining using a staged production strategy. The plan is for the Copper Hill mine to commence production as a smaller but higher grade operation as set out in the stages below. The operation will have lower initial capital costs, water and power requirements will be reduced, the project ‘footprint’ will be smaller and the approval process will be less complicated. Mine and mill throughput levels for Stage 1 are being modelled at 2 million tonnes per annum (Mtpa) and designs will incorporate expansion capacity to match future robust copper-gold market conditions.
Stage 1: 10 Mt ore at 0.49% copper and 0.55g/t gold to produce 36,500 tonnes copper and 79,100 ounces gold in concentrate.
Stage 2: 9.7 Mt ore at 0.40% copper and 0.40 g/t gold to produce 29,200 tonnes copper and 55,900 ounces gold in concentrate.
Stage 3: 10.6 Mt ore at 0.32% copper and 0.32g/t gold 26,100 tonnes copper and 49,300 ounces gold in concentrate.
Stage 4: 72.8 Mt ore at 0.24% copper and 0.23g/t gold to produce 132,400t tonnes copper in concentrate and 245,300 ounces gold in concentrate.
Maximising the returns from Copper Hill requires minimising dilution during mining, minimising haul distances, achieving the highest metallurgical recoveries possible and containing costs at every stage of the operation. The mine development team has designed multiple optimised pits using a range of metal price and copper and gold recovery assumptions. More work is required, especially metallurgical testing, but at this stage preliminary economic modelling demonstrates that Copper Hill may be profitably mined.
Scoping Study as part of the Feasibility Study
Internationally renowned Nanchang-based Mine Design Group NERIN was retained to conduct Stage 1 of the Feasibility Study which was completed in January 2011.
NERIN’s engineers and technicians modelled mine outputs, mill throughputs, costs and recoveries based on the earlier 133 million tonne Resource. The intent was to maximise recoveries and extract maximum value from the copper, gold and sulphur present at Copper Hill. NERIN examined the supply, costs and quality of the capital equipment required for a fully integrated mill and processing plants for Copper Hill including the roaster-acid plant-SXEW-CIL complex proposed for Port Pirie. The capital costs (+$700 million) for this strategy, and the difficulties in producing a satisfactory sulphide concentrate to be railed from Copper Hill, rendered this approach uneconomic.
A more straight-forward and achievable approach of producing a copper-gold concentrate for sale to smelters is now being studied. Much of the previous information and analysis of the project can be applied to Stage 2 of the Feasibility Study which has now commenced using an in-house team with outside consultants.
Brisbane-based engineering firm, Calder Maloney Pty Limited, has been retained to complete a Scoping Study of the proposed 2 million tonne per annum mining and mill throughput plan.
The study will be very comprehensive and has produced a complete equipment list, design criteria and mass balance for the mill and plant flow-sheet. A detailed high voltage distribution network for the concentrate plant has been designed.
Over 50% of the capital cost of the process plant and site infrastructure will be attributable to the crushing, grinding and flotation process to recover copper and gold in concentrate for sale. Accurate determinations of mill size and residence time (affecting power cost estimates) require finalisation of the metallurgical test work, due in the next quarter.
A project capital cost estimate is anticipated in the December Quarter.
Following completion of the latest round of drilling, a new Copper Hill geological resource will be estimated and will also be announced early in the December Quarter.
Mark Moddejongen, a senior mining engineering consultant has been appointed Project Manager for Copper Hill. Mark has over 30 years Australian and International experience in feasibility studies, mine planning and operational experience.
Richard Lewis, a geologist who spent almost 20 years with Placer Pacific, was a senior member of the Placer teams which built mines like Kidston, Porgera, Misima, Granny Smith, La Coipa and Osborne.
Lindsay Gilligan has also joined the leadership team from his previous job as Director of the NSW Geological Survey. Lindsay’s experience and contacts with government will help guide the Copper Hill development through the regulatory and approvals process.
Metallurgist Ken Kellett has been working closely with personnel from Metcon Laboratories (part of the Campbell Brothers’ AMMTEC – ALS – Metcon group) on the complex problems of recovering Copper Hill’s copper and gold. The current metallurgical test work progress has slowed somewhat as a result of laboratory testing and analytical backlogs but advances continue to be made. Extensive testing over a range of parameters for the various ore types includes milling parameters, flotation circuit configurations and reagent suites all of which require evaluation to ensure an optimum economic outcome.
Resource Development and Exploration
During the last year a total of 156 drill holes consisting of 7,320 metres RC and 4,723 metres of core were completed. The holes were designed to increase resources by testing strike and depth extensions of previously intersected mineralisation.
The most significant results in terms of grade, length, and exploration potential was returned in GCHR319, and GCHR 449, drilled to test the Buckley’s Hill Section 6150N (Figure 4). The intercept in GCHR449 yielded 118m of near surface mineralisation grading 0.40% copper, 0.19 g/t gold and GCHR319 yielded 313 metres grading 0.25% copper, 0.23 g/t gold (bulk interval, no cut-off) including 108 metres at grades of 0.43% copper, 0.3g/t gold.
This was supported by follow-up drilling in GCHR314 which returned wide intervals of higher grade.
Assay results from GCHR314 at a 0.2% copper cut-off the hole intersected 5 metres @ 0.47% Cu, 0.21 g/t Au from 77m metres, 63 metres @ 0.48% Cu, 0.23 g/t Au from 98 metres and 66 metres @ 0.61% Cu, 0.36 g/t Au from 186 metres.
Peak values for copper are 1.19%, 1.46% and 1.72% respectively. The two broad intercepts occur within a 154 metre long mineralised zone which is cut by a 24 metre-wide barren dyke. Metre intervals quoted are down-hole and approximate true thickness based on current geological interpretations. Gold assays correlate well with the copper zones. (Figure 4, also Figures 6 & 7)
The results generate down-dip, down-plunge and strike extension targets that will be followed up with further drilling.
To the south, in the central Copper Hill zone, GCHR313 was extended by coring to 701 metres, yielding a bulk interval (no cut-off) of 670 metres assaying 0.28% copper and 0.28 g/t gold (Figure 5). Within this zone, one interval is within reach of current pit planning with 70 metres grading 0.56% copper and 1.04 g/t gold from 25 metres. The potential 100Mt pit would capture the next interval of 174 metres grading 0.40% copper and 0.40 g/t gold from 121 metres.
GCHR314 was drilled to test up-dip extensions of the deeper intercept in GCHR298. Resource blocks created by these new intersections are likely to support the mining of the deeper mineralisation defined by GCHR298 in the next round of pit optimisations.
At the south end of the project area, at Wattle Hill, assay results from PQ core hole GCHR315 delivered, at a 0.2% copper cut-off, 21 metres @ 0.3% copper, 0.32 g/t gold from 37 metres, 3 metres @ 2.48% copper, 2.36 g/t gold from 82 metres & 25 metres @ 0.26% copper from 105 metres
GCHR315 was drilled as a “scissor-hole” to drill hole CHM18 and to provide metallurgical material from the gold-rich Wattle Hill zone, which is located 500m southeast along strike from the main Copper Hill deposit (Figures 8 & 9).
GCHR315 confirms and extends the intercepts in drill hole CHM18 of 26 metres @ 0.5g/t gold from 2 metres and 20 metres @ 0.32g/t gold from 74 metres. (Figures 8 & 9)
The 3m high grade intercept of 2.48% copper at 82 metres down-hole may correlate with the zone of 8m @ 3.72% copper in GCHR249, located 100m northwest on section 4500N. If this interpretation is correct, this zone may plunge further towards and beneath Copper Hill. Insufficient drilling has been completed at depth in this part of the deposit creating the possibility that narrow, but strike extensive zones of +1% copper could lie between Wattle Hill and extend beneath the current optimised Copper Hill open pit.
Further evidence for this is provided by the intersection in core hole MEXCHD01 on section 4700N of 73 metres @ 0.45% copper and 0.42g/t gold from 263 metres down-hole. This is currently interpreted to represent a northwesterly plunge of shallower higher grade mineralisation 100 metres to the southeast. These up-plunge intersections, of 23 metres @ 0.6% copper and 0.8 g/t gold and 60 metres @ 0.48% copper and 0.85g/t gold, give good indications of the potential to be realised at Wattle Hill and beneath the current defined resource at Copper Hill.
Previous drilling at Wattle Hill left open zones of mineralisation, and further drilling is planned to test for more extensions. Results to date confirm higher than average resource grade mineralisation extending from 4200N to 4700N, a strike distance of over 500 metres. The results from GCHR315 are anticipated to have a positive impact on pit optimisation by introducing higher grade blocks in an area currently modelled as Inferred and low grade.
Compliance Statements
The optimised pit was generated using Whittle software to maximise undiscounted cash flow using US$5.30/lb copper and US$2,120/oz gold commodity prices and recoveries of 85% for copper and 80% for gold and 45o overall pit slopes. The table above reports the resources that fall inside the pit shell on the left-hand side and the resource that is outside the shell on the right hand-side. The resource that falls inside the pit does not constitute a reserve. The block model size has been increased in plan and vertical extents to take into account the growing resource.
Statistics:
Number of drill holes: 736
Assays: 52,662
Nature of data:
A total of 85,236 metres of drill holes were available for the resource estimate and comprised 61,729 metres of reverse circulation percussion drilling (RCP) and 23,507 metres of diamond core (DD) drilling. The RCP holes were predominantly two metre composite samples and the DD holes were either sampled in one metre intervals for HQ or PQ sized core or two metre intervals for NQ sized core. For estimation purposes the assay data was composited into two metre intervals. The block model consists of blocks of 20m x 20m x 5m (XYZ).Block densities were modelled using the results from over 600 samples taken of drill core from GCHR046 and above. Densities were determined by classical methods on site with check measurements, comprising approximately 10% of the bulk density samples, conducted at Australian Laboratory Services (ALS) in Orange, NSW. Analyses were undertaken at ALS Orange using 50g Fire Assay (Method AA26) for gold and ICP41 for copper and a suite of other elements. Standards and blanks were inserted into the sample stream at regular intervals, nominally on a 25 metre cycle. Duplicate samples were submitted every 20 samples for RCP holes only.
Block Classification:
Ordinary kriging was used for the estimation with the search and data acceptance parameters used for the sulphide domains being; pass 1 (Measured) a search ellipse of 40m x 40m x 40m using a minimum of 12, 2 metre composites; pass 2 (Indicated) with a search ellipse of 60m x 67.5m x 60m and using a minimum of 10 composites; and a pass 3 (Inferred) with a search ellipse of 100m x 110m x 100m and using a minimum of 6 composites, all passes used a maximum of 32 data points. A flatter search with slightly larger search distances was used for oxide and transition domains. In addition to oxidation, additional domains were defined on the basis of position in relation to faulting and recognition of barren intrusives.
The information in this report that relates to Exploration Results is based on information compiled by Kim Stanton-Cook, who is a member of the Australian Institute of Geoscientists, is a full-time employee of GCR, and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Stanton-Cook consents to the inclusion in the report of the matters based on this information in the form and context in which it appears.
The Resource Estimates were performed by Dr Phillip Hellman, a Director of Hellman & Schofield, Consulting Geologists and specialists in resource estimation and geostatistics. Dr Hellman is a Fellow of the Australian Institute of Geoscientists (AIG), has more than five years experience in the field of activity in which he is reporting and consents to his report being incorporated into this report in the context in which it appears above.
GCR provided the drill hole database, which H&S has accepted in good faith as being reliable, accurate and complete. GCR also supplied a detailed geological interpretation of the Copper Hill deposit, which formed the framework for the resource estimates. The responsibility for the JORC Codes “reasonable prospects for eventual economic extraction”, is taken by GCR. H&S has not validated the GCR database or geological interpretation in any detail, so responsibility for these aspects of the resource estimates, including the quality of the data, resides with GCR.
Note: The Measured, Indicated and Inferred Resource Estimates are reported under the 2004 JORC Code and Guidelines. Significant figures quoted do not imply precision and are used to minimise round-off errors.
October 2011
If you’ve read this far and still want more there’s geological, geochemical and geophysical detail galore and may be seen at http://smedg.org.au/Kim_Stanton-Cook_Copper_Hill.pdf