Third Quarter Activities & Cashflow Reports 03-05 1602
ASHBURTON GOLD PROJECTS
PARABURDOO GOLD PROJECT (WHOLLY-OWNED BY SIPA)
MOUNT OLYMPUS GOLDMINING OPERATIONS
Sipa's Mount Olympus goldmining operations continue to perform above expectation. March Quarter and Year To Date (YTD) production statistics are tabled below:
TABLE 1 PRODUCTION STATISTICS
ORE MILLED RECOVERED GRADE GOLD PRODUCED CASH COSTS (DRY TONNES) (G/T AU) (OUNCES) ($/OUNCE) ACTUAL BUDGET ACTUAL BUDGET ACTUAL BUDGET ACTUAL BUDGET
The last Quarter Result is particularly pleasing since it included a two week milling trial of the Low Grade Stockpile resulting from mining of the Mount Olympus orebody. The trial displaced a similar tonnage of run-of-mine higher grade ore (about 3.5g/t), but still produced more gold than Budget at effectively the Budget cost.
The 14 day trial of the Low Grade Stockpile saw:
* 24,670 tonnes milled
* 876 ounces of gold produced from a head grade of 1.21g/t
* Recovery of 91.4%
This trial (which replaced the drill testing of this stockpile as flagged in the last Quarterly) indicated some 31,000 ounces of gold remains in the 785,000 tonne Low Grade Stockpile in addition to another 21,000 ounces of gold in the 325,000 tonne Medium Grade Stockpile which recently returned a head grade of 1.98g/t from a similar 14 day milling trial.
Mining ceased at the Zeus and Peake satellite pits in mid April, but milling of that ore will continue through to June at a head grade of about 3.5g/t.
The Medium Grade Stockpile will then be milled prior to commencement of production from the Waugh Deposit.
The Budget for the 3 months to 30 June 2002 is:
11,000 ounces of gold from 150,000 tonnes milled at a cash cost of $250/ounce
SIPA FORWARD SALES POSITION
Fixed Forwards: 8,995 ounces at $530.20 strike price
All gold produced from December 2001 has been sold at AUS dollars spot price.
WAUGH GOLD DEPOSIT EVALUATION
Early in April we announced a first Resource Estimate for the Waugh Gold Deposit located about 3 kilometres east of our Mount Olympus Gold treatment plant.
The Resource Estimate, which totals
704,000 tonnes @ 5.91 g/t for 134,000 ounces of gold,
was compiled by independent mining Consultants, Hellman and Schofield Pty Ltd. The Resources, which were estimated by Multiple Indicated Kriging and which are based on all drilling to date (though the deposit remains "open"), are shown in Table 2:
CATEGORY TOTAL TONNES G/T OZ AU AU Waugh Sole Risk %100 Sipa 492 000 7.00 111 000
Limerick Hill JV * 212 000 3.37 23 000 NOL may earn 70% Total** 704 000 5.91 134 000
* NOL is Newcrest Operations Limited ** All tonnes and ounces have been rounded
The Estimate is based on 295 Reverse Circulation drillholes totalling 22,097 metres and five diamond core holes totalling 499 metres as shown on Figure 4. Drilling ceased about 4 weeks ago.
Mine planning for the exploitation of Waugh is proceeding, with earthmoving cost estimates and geotechnical advice awaited to finalise pit optimisations and Ore Reserve calculations. Preliminary pit optimisations indicate that only a small proportion of Resource in the Limerick Hill Joint Venture is likely to translate to Reserve. A Notice of Intent to Mine will be submitted upon completion of the mine plan and it is anticipated that Waugh will be developed in the second half of 2002.
Nearly all of Waugh, as presently defined, is within a 400 metre long zone of "Sipa Sole-Risk Excision" from the Limerick Hill Joint Venture, which surrounds the Paraburdoo Gold Project (Newcrest Operations Limited, as Manager, may earn a 70% interest in Limerick Hill). The excision extends at depth to the 400 metre RL, which is between 75 metres and 150 metres from surface. Some of the Waugh mineralisation extends at depth, as well as to the east, into the Limerick Hill Joint Venture (as detailed in the Resource Estimate).
Waugh is an oxide gold deposit hosted by massive ironstones, ironstone-veined siltstones (the ironstone is 'gossan', or oxidised pyrite) and brecciated gossanous quartz, collectively referred to as the Waugh 'lode'. There is little evidence of surface mineralisation at Waugh, with only several small ironstone outcrops (which assayed up to 10 g/t gold at surface) scattered over only about 200 metres of strike. They are however hosted by a much more extensive zone of bleaching and alteration traceable for some 11 kilometres around the Diligence Dome. This 'Diligence Dome Alteration Zone', most of which is within the Limerick Hill Joint Venture, contains twelve other areas of ironstone outcrops and ironstone veining, a number of which have strongly anomalous geochemistry.
There are three very important points regarding the present status of Waugh:
1. Waugh hosts a very high-grade 'shoot' of mineralisation which averages more than 30g/t gold, is traceable for over 100 metres down-plunge with a horizontal width of typically 15 metres to 25 metres and a vertical thickness of 10 metres to 15 metres.
This 'shoot' is hosted by a much larger halo of lower grade mineralisation, or 'lode'.
2. The Waugh lode is open (as shown on Figure 4):
* down-dip to the west within Sipa's sole-Risk Excision, where: WAC 295 intersected 4 metres @ 37.3 g/t gold from 77 metres
* along strike to the east - the last two sections drilled, which were, 60 metres and 80 metres respectively within the Limerick Hill Joint Venture - returned the following intersections:
WAC228 intersected 4 metres @ 9.2 g/t gold from 61 metres WAC 234 intersected 4 metres @ 9.2 g/t gold from 154 metres, and
3. There are three very important implications that result from the Waugh discovery:
* Relatively small outcrops of ironstone may represent much larger mineralised systems
* These systems may contain very high-grade 'shoots', which require close-spaced drilling to discover and delineate
* There are many more outcrops similar to those at Waugh within the Diligence Dome Alteration System
Drilling will recommence at Waugh early May.
NEW DRILLING TARGETS
Recent exploration within the two Paraburdoo Gold Project Mining Leases have generated four drill targets as shown on Figure 3:
* at Dinosaur (3 kilometres east of Mount Olympus) there is an 800 metre long, by up to 200m wide, soil geochemical anomaly that peaks at 750ppb gold and contains outcrops of lode similar to the Peake and Zeus deposits (recently mined) and ironstones similar to Waugh, with strongly anomalous gold (up to 7 g/t). Limited drilling by the previous mine operator was ineffective.
* at the 1,000 metre long Diligence Dome South (5 kilometres east of Mount Olympus) there are 250 metres of ironstone outcrops within the Paraburdoo Gold Project (750metres of the outcrops lie within the Limerick Hill Joint Venture) with anomalous geochemistry similar to Waugh.
* at Dragonfly (5 kilometres southeast of Mount Olympus) there is a 1.5 kilometre long zone of scattered mineralised outcrops, visually and geochemically very similar to Zeus, with surface samples assaying up to 5 g/t gold.
* Marcus, which is located 1.5 kilometres west of Mount Olympus and which is part of the same mineralised system, has had some relatively wide spaced drilling in the past, but recent detailed mapping and sampling suggests the presence of small, but potentially high grade shoots, with surface samples assaying to 26 g/t gold.
All these prospects are earmarked for drilling.
SIPA - NEWCREST JOINT VENTURES
Newcrest Operations Limited (Newcrest) operate two Joint Ventures on land wholly owned by Sipa (Limerick Hill, where Newcrest may earn 70% by spending $3.5 million, and Ashburton Regional, where Newcrest may earn 70% by spending $5 million) and five Joint Ventures on land owned by others where Sipa, and Newcrest participate 30% and 70% respectively in earning interests by exploration expenditure (Rocklea, House Creek, Anthiby Well, Ausicaribian and Mt Wall). Table 3 summarises the Joint Ventures and their locations are shown on Figures 1 and 2.
TABLE 3 SIPA-NEWCREST ASHBURTON JOINT VENTURES
JV NAME CURRENT OWNERSHIP INTEREST THAT MAY BE EARNED
Drilling in the Ashburton over the last three years throughout a 150 kilometre long mineralised corridor to the northwest of the Paraburdoo Gold Project has discovered two areas of very strong and persistent gold anomalies:
* At Cheela Plains there is a "chain" of RAB drill anomalies in the weathered rock as deep as 100 metres. Best results to date are:
* Electric Dingo (Ashburton Regional JV) - 17 metres @ 3.5g/t Au * Cheela West (Ashburton Regional JV) - 36 metres @ 2.2g/t Au
In addition, a significant area of outcropping mineralisation, assaying up to 8.8 g/t Au, has been found about 10km west of Electric Dingo in the Ashburton Regional Joint Venture and has been named New Morning.
* At Cairn Hill in the Rocklea IV, a prospect named Ibex has returned some high grade intersections including:
* 14 metres @ 5.5g/t Au (including 1 metre @ 500g/t Au cut to 30g/t Au for the 5.5g/t average)
Recent fieldwork in the Limerick Hill Joint Venture has focussed on the Diligence Dome Alteration Zone, where detailed mapping, rock chip and soil sampling and shallow Reverse Circulation drilling has been conducted.
Four zones of geochemically anomalous ironstones (or 'gossans') have been defined and one (Diligence) has been drilled. The others are named Diligence Nose North, Diligence Nose South, and Diligence Dome South.
Drilling at Diligence intersected the lode over 420 metres of strike with a mineralised zone about 100 metres long returning results ranging up to 4 metres @ 20.7g/t Au and averaging 2 metres @ 7.2g/t Au from 13 holes out of 22 which returned above 2 gram metres of gold.
Drilling by Newcrest is due to recommence early May, with New Morning, the Cheela Chain of Anomalies, Ibex and the Diligence Dome being initial targets.
MORE TO FOLLOW
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