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LEGEND MINING LIMITED Interim / Quarterly Report 2005
65223_rns_2005-04-28_660acf2a-0db2-48cd-8663-5a58392fd52f.pdf
Interim / Quarterly Report
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MARCH 2005 OUARTERLY REPORT
HIGHLIGHTS
- Spectacular Gold Results From New Premium and Gulliver Lodes at Gidgee
- Focus on Exploration Drilling Gives Early Success
- Sherwood and Golden Hind RAB Reconnaissance Targets Show Promise
- Base Metal Exploration Underway for World-Class Deposits
- \$5 Million Raised by Placements/SPP
- Mineral Resources of 320,000oz as at 31 December 2004
- Creasy Group Deal Approved by Shareholders
- Mine/Mill Moved to Care & Maintenance
- Gold Production 6,860oz, Revenue \$3.7 million
1. OVERVIEW
Spectacular RC (reverse circulation) drilling results at Gidgee were reported during February and March 2005, with two new high grade gold lodes discovered near the Swan Bitter mine. This new exploration success has continued through April, and results are being reported on a regular basis as they are received.
Legend's decision during the quarter to place the mine and mill on temporary care and maintenance and use all available resources to implement major drilling programmes has clearly been justified by this early and significant exploration success.
Currently there are 3 drill rigs on site. Results have confirmed the high-grade and extensive nature of gold mineralisation at Gidgee (see ASX releases on Legend's website at www.legendmining.com.au for full details).
Following overwhelming shareholder approval of the acquisition of Gidgee Resources and its large tenement holding at a General Meeting on 10th January, Legend now controls almost all of the Gidgee greenstone belt which lies between Sandstone and Meekatharra and has produced about 1.5 million ounces of gold.
Legend believes this significant consolidation has the potential to propel the Gidgee Gold Project into one of Australia's major exploration plays and ultimately, a major gold producer.
Gold production from the Swan Bitter underground gold mine for the quarter was 12% above forecast at 6,860 ounces. The operation has been scaled down during the reporting period and was moved to temporary suspension at the end of March 2005.
Mining and milling will be resumed when substantial resources and ore reserves have been delineated by the aggressive drilling programmes which are currently underway.
2. RC DRILLING SUCCESS CONTINUES, GIDGEE MINE AREA
Since commencement of RC drilling programmes in mid January 2005, Legend has completed 10,715 metres for 43 holes to the end of March. Results for holes GDC011-043 were reported during the period, with many spectacular high grade intervals reported from both Swift and North Swan Bitter.
During April further results have been reported, up to hole GDC068. Two RC rigs capable of drilling +500 metre deep holes are currently on site, together with a RAB (rotary air blast)/aircore rig.
Drilling at Gidgee will continue with three rigs, and results will routinely continue to be reported on an ongoing basis over the next 6 to 9 months.
SWIFT LINE: Initial RC drilling in 2005 was beneath the Swift line of shallow oxide open pits, some 500 metres east of the main Swan Bitter mine. The target was a series of stacked quartz-gold high grade lodes, similar to those mined in the Swan Bitter-Butcherbird open pit and underground mines.
As previously reported, the size of this exploration target is considered to be at least one million ounces of gold, from near-surface to depths of 400 metres.
This statement is based on strong geological similarities intersected to date, between the Swift gold mineralisation and Swan Bitter - Butcherbird mined lodes with regard to host rock lithologies, alteration styles, high gold grades, interpreted geometry of the quartz lodes intersected and overall structural setting.
The first three holes of the 2005 RC programme included intercepts of 10 metres at 5.7g/t gold (including 3 metres at 15.2g/t gold) in GDC011, 3 metres at 9.8g/t gold (including 1 metre of 10.8g/t gold) in GDC012 and 8 metres at 9.2g/t gold (including 4 metres at 16.5 g/t gold) in GDC013 together with 2 metres at $13.5g/t$ gold and 1 metre at 64.3g/t gold further downhole.
Some of the better intercepts in subsequent holes at Swift to the end of March include 16 metres at 4.0g/t gold (GDC018), 2 metres at 17.1g/t gold (GDC019), 10 metres at 4.5g/t gold (including 2.0 metres at 16.0g/t gold (GDC024) 15 metres at 8.5g/t gold (including 3 metres at 32.7g/t gold (GDC027), 5 metres at 15.1g/t gold (including 2 metres at 33.8g/t gold (GDC028), and 12 metres at 9.5g/t gold including 4 metres at $23.2g/t$ gold (GDC039, 4m composite samples).
Since the end of the reporting period, additional high grade gold results have continued to be received and reported from Swift. In mid April, Legend announced discovery of the Gulliver lode, a gently east-dipping broad mineralised zone which is open to the north, south and east.
Gulliver lies just below the eastern flanks of the Swift pit, between 70 and 110 metres depth, and within weathered mafic rocks which could potentially be mined from surface through cut-back of existing shallow oxide pits.
NORTH SWAN BITTER - TNA/PREMIUM LODE: Drilling in late 2004 of holes GDC001-010 targeted on the TNA lode returned some excellent gold results. Geological interpretation and further drilling during the quarter has shown that some of these intercepts lie within the Premium Lode, a newly defined high grade tabular lode structure to the east of the deeper TNA target.
As recently announced, the Premium Lode has now been identified over 300 metres strike length north-south and 200 metres down dip. It is open both at depth and along strike, and drilling to test a further 800 metres of strike potential will start next week.
The Premium Lode attains a true thickness of 12 metres on Section 50275m N, some 175 metres north of existing Swan Bitter underground workings. Hole GDC058 was drilled earlier this month to test 50 metres below a previous intercept of 13 metres at 19.5g/t gold in GDC044. Provisional results have returned 16 metres at 30.2g/t gold including 8 metres at 57.8g/t gold from 4 metre composite samples.
Other high grade intercepts from the Premium Lode reported between January and March 2005 include 20 metres at 4.5g/t gold (GDC006), 5 metres at 15.4g/t gold (GDC029), 11 metres at 17.8g/t gold including 2 metres at 73.8g/t gold (GDC030) and 12 metres at $7.1g/t$ gold (GDC047, 4m composite samples).
3. REGIONAL EXPLORATION FOR GOLD, BASE METALS
Legend also completed nearly 13,000 metres of reconnaissance RAB (rotary air blast) and aircore drilling in 190 holes during the quarter, on regional targets as far as 10 kilometres from the mine. Follow-up and infill work on these targets is ongoing, and RAB drilling will continue to generate and test for large-scale mineralised systems.
This exploration has greatly extended knowledge of geology and structure of the Gidgee greenstone belt away from the mine area, leading to revision and expansion of the area of potential host rock mafics. Significant gold associated with quartz veining has been intersected at Golden Hind and Sherwood, including 4 metres at 1.43g/t gold (SHA017), 4 metres at 1.29g/t gold (SHA023) and 4 metres at 1.07g/t gold (GHA014).
Exploration for copper-zinc deposits of Golden Grove style has commenced at Altair and Bevan, 24 kilometres north and 11 kilometres southeast from Swan Bitter. Construction and evaluation of a digital database of previous base metal drilling and sample data is in progress, and field mapping and selection of drill targets is planned.
PO Box 626 West Perth Western Australia 6872 EMAR [email protected] ABN 22 069 966 145 WWW.irgendmining.com.au
Level 5 50 Colin Street West Ferth Western Australia 6005 TELEPHONE +61 8 9322 3700 PACSIMILE + 61 8 9322 3800
4. CORPORATE
Company Secretary Andrew Chapman was appointed a Director of Legend for an interim period, pending the appointment of a new Executive Director to replace Murray McDonald who will consult to the company he founded.
As previously reported in the December quarterly, a placement and share purchase plan have been completed raising \$5 million.
A further placement of 20 million shares at 10.77 cents and 14 million unlisted free options exercisable at 20 cents each with a two year expiry date, has been placed through Findlay & Co Stockbrokers with London institutional client Maple Leaf Capital, raising an additional \$2,154,000. This placement was finalised on $22^{nd}$ April, 2005
All funds will be used to support the current drilling programmes at Gidgee and for working capital.
Legend's Annual General Meeting will be held on the 30th May 2005 at 50 Colin Street. West Perth. Details are being posted to all shareholders, together with the 2004 Annual Report.
| Detail | Mar 2005 Qtr | 2005 Year | Units | |
|---|---|---|---|---|
| Ore Mined (Swan Bitter $u/g$ ) | 25,070 | 25,070 | wet tonnes | |
| Ore Grade | 7.77 | 7.77 | g/t Au | |
| Low Grade Stocks drawn | 5,315 | 5,315 | wet tonnes | |
| Ore Grade | 0.58 | 0.58 | $g/t$ Au | |
| Ore Processed | 30,631 | 30,631 | dry tonnes | |
| Head Grade (calculated) | 6.61 | 6.61 | $g/t$ Au | |
| Recovery | 98.1 | 98.1 | % | |
| Gold Produced | 6,860 | 6,860 | ounces | |
| Production Cost Statement | ||||
| Net Cash Costs | 612 | 612 | $\sqrt{$}$ /0z | |
| Inventory Movements | (53) | (53) | $\sqrt{$}$ /oz | |
| Cash Operating Costs | 558 | 558 | $\sqrt{$}$ /0z | |
| Depreciation/Amortisation | 13 | 13 | $\sqrt{$}$ /oz | |
| Total Production Cost | 572 | 572 | $\sqrt{$}$ /oz | |
| Costs are reported to Australian Gold Council Standard |
5. GOLD PRODUCTION
Operating statistics for the quarter ending 31 December 2004 are as follows:
Level 5 50 Colin Street West Perth Western Australia 6005 PO Box 626 West Perth Western Australia 6872 ABN 22 069 966 145
TELEPHONE +61 8 9322 3700 PACSIMILE + 61 8 9322 3800 EMAR [email protected] WWW.legendmining.com.au
Gold production for the quarter totalled 6,860 ounces, being 12% up on forecast. Gold production levels reflected the continued reduced/campaign milling programme which continued through January and February. Early March saw the commencement of the implementation programme for placing the mine on temporary care and maintenance.
Underground production from Swan Bitter during the quarter focused on mining of all remaining fully developed stopes. Minimal underground development was undertaken, once the decision was taken in mid January to place the mine on temporary care and maintenance. Production from underground ceased at the end of February, with the care and maintenance program for the mine being completed by March 9 culminating in locking of the portal gates. All major electrical and dewatering equipment has been removed from the mine, and the relevant authorities notified
The care and maintenance programme in the processing plant was completed early in April with the mills being shut down, all tanks being cleaned out and the GIC recorded as gold shipped for March. Site security operations commenced early April and will continue in the near future. The Gidgee camp is now operating solely as an exploration support base, for Company geologists and drilling personnel only.
Legend's focus is now on major exploration and resource extension drilling programmes to find large gold orebodies, with the objective of adding significantly to the project's mineral resource and ore reserve base to allow full scale mining and milling to resume as soon as possible.
6. ORE RESERVES AND MINERAL RESOURCES
During the first Quarter of 2005, Legend commissioned an independent review of the Ore Reserves and Mineral Resources for the Gidgee project as at 31 December 2004. The work was carried out by Dr S Carras of Carras Mining Pty Ltd, an acknowledged expert in this field.
In compiling his report, Dr Carras took into consideration that the operation was scheduled to be placed on temporary care and maintenance effective from the end of March 2005. His review of previous estimates acknowledged that costs in the West Australian mining industry have risen by some 35%-45% over the last 15 months, while the price of gold has remained relatively fixed.
This has resulted in reclassification and downgrading of a large amount of previously reported Mineral Resources to "Mineral Inventory", which is not reported here as it falls outside the JORC Code classification but will continue to be used for internal company planning.
It is important to note that none of the excellent drilling results at Swift and North Swan Bitter/Premium Lode have been included in this resource review, as they were achieved during the first Quarter of 2005. Legend anticipates that upgraded mineral resource estimates for these projects will be reported during the coming year.
| Project | JORC | Tonnes | Grade | Qunces | Comments |
|---|---|---|---|---|---|
| Classification | $(g/t \text{ Au})$ | (gold) | |||
| Swan Bitter | Proved | 27,000 | 10.42 | 9,046 | Estimated from the |
| Underground | model | ||||
| Proved | 25,000 | 7.77 | 6,263 | Produced from 1/1/05 | |
| Total | Proved | 52,000 | 9.14 | 15,309 | |
| Swan Bitter | Probable | 3,000 | 11.52 | 1,111 | |
| Underground | |||||
| TOTAL | $PROVED +$ | 55,000 | 9.29 | 16,420 | |
| PROBABLE |
GIDGEE GOLD PROJECT ORE RESERVES AT 31 DECEMBER 2004
GIDGEE GOLD PROJECT MINERAL RESOURCES AT 31 DECEMBER 2004 ANCLUDING ORE RESERVES
| Project | JORC | Tonnes | Grade | Ounces | Comments |
|---|---|---|---|---|---|
| Classification | $(g/t \text{ Au})$ | (gold) | |||
| Swan Bitter | Measured | 27,000 | 10.42 | 9,046 | Estimated from the |
| Underground | model | ||||
| Measured | 25,000 | 7.77 | 6.263 | Produced from 1/1/05 | |
| Total | Measured | 52,000 | 9.14 | 15,309 | |
| Swan Bitter | Indicated | 29,000 | 10.71 | 9,987 | Recoverable |
| Underground | |||||
| Omega | Indicated | 31,000 | 9.20 | 9,170 | Below 385m RL |
| Underground | |||||
| Wilsons | Indicated | 448,000 | 7.30 | 105,158 | Diluted; above |
| Underground | 370mRL; refractory | ||||
| Open Pit | |||||
| Howards | Indicated | 50,000 | 3.79 | 6,093 | |
| Eagles Peak | Indicated | 13,000 | 3.46 | 1.446 | |
| Orion | Indicated | 22,000 | 3.04 | 2,150 | Based on Pit Shells & |
| Deep South | Indicated | 20,000 | 3.02 | 1.942 | Designs |
| Toedter | Indicated | 41,000 | 3.38 | 4.456 | |
| Specimen Well | Indicated | 24,000 | 5.35 | 4,129 | |
| Total | Indicated | 678,000 | 6.63 | 144,532 | |
| Swan Bitter | Inferred | 65,000 | 7.96 | 16,637 | Recoverable |
| Underground | |||||
| Wilsons | Inferred | 286,000 | 6.40 | 58,855 | Diluted; below |
| Underground | 370m RL; refractory | ||||
| Kingfisher | Inferred | 390,000 | 6.80 | 85,273 | |
| Underground | |||||
| Total | Inferred | 741,000 | 6.75 | 160,765 | |
| TOTAL (MEASURED, |
|||||
| INDICATED+ INFERRED) |
1,471,000 | 6.78 | 320,506 | ||
* These Mineral Resource Estimates at 31 December 2004 do not include any of the new 2005 drilling results from Swift/Gulliver or North Swan Bitter/Premium Lode.
PO Box 626 West Perth Western Australia 6872 EMAR [email protected]
Level 5 50 Colin Street West Perth Western Australia 6005 TELEPHONE +61 8 9322 3700 FACSIMILE + 61 8 9322 3800 ABN 22-069-966-145 WWW.irgendmining.com.au
The information on Ore Reserves and Mineral Resources at Gidgee contained in this report is based on data compiled by consulting geologist Dr S Carras FAusIMM of Carras Mining Pty Ltd. Dr Carras has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and consents to the inclusion in this report of the information in the form and context in which it appears.
6. MUNNI MUNNI JOINT VENTURE (LEGEND 33.33%)
In January, joint venture managers East Coast Minerals announced some analytical results from a short eight hole drilling programme at Munni Munni, in the West Pilbara of Western Australia.
Best results from Hole 6 at the new Liane occurrence, near the former silver mine at Elizabeth Hill, were reported as 6 metres at 1.4% combined copper+nickel+cobalt from 34m downhole, including 1 metre at 2.0% combined from 38m.
East Coast believes the discovery represents the top of a linear sulphide flow near the base of the Munni Munni complex and as such is possibly similar to the mineralised structures in the nearby Radio Hill nickel mine.
Plans for further drilling, to test down plunge extensions and three other targets, were also announced
7. KARRATHA GOLD AND BASE METAL PROJECT, WEST PILBARA
This project covers about 625 square kilometres of the West Pilbara greenstone belt between Karratha, Roebourne and Radio Hill and has significant potential for gold, copper, nickel and other metals. Further review and prospecting work was carried out during the quarter, and follow up field work has been planned.
Ian Cowden Director
29th April, 2005
The information on exploration results contained in this report is based on data compiled by consulting geologist Mr Ian Cowden FAusIMM CPGeo MAIG of Iana Pty Ltd. Mr Cowden has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and consents to the inclusion in this report of the information in the form and context in which it appears.